Microsoft crosses $100 billion annual revenue mark for the first time

Microsoft officials say the company also closed the highest number of multi-million-dollar deals ever across its commercial cloud during its fiscal 2018.
Written by Mary Jo Foley, Senior Contributing Editor

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With $110 billion of revenue for its fiscal 2018, Microsoft crossed the $100 billion annual-revenue milestone for the first time in the company's history.

As my ZDNet colleague Larry Dignan noted, all of the company's divisions are firing on all cylinders.

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"Commercial cloud"-- that Microsoft-made category that includes Azure, Office 365, Dynamics 365, Windows cloud revenues that are part of Microsoft 365 -- brought in $23 billion of those revenues. Microsoft officials have started using the "Microsoft Cloud" terminology lately as a synonym for "commercial cloud."

Surface contributed $4.6 billion in revenue in FY'18. Gaming brought in another $10 billion and LinkedIn, $5 billion during fiscal 2018, which ended on June 30, 2018, for Microsoft.

Windows Pro (a k a Windows on OEM business PCs) had a really big Q4, up 14 percent. Microsoft, for some reason, still hasn't managed to cross the 700 million "active device" threshold with Windows 10, however. Officials continue to say that Microsoft has "nearly" 700 million active Windows 10 devices, as they've been saying for the past four months or so.

A year ago, Microsoft announced a huge do-over in its sales strategy, which resulted in the company firing several thousands of people. Company execs told employees Microsoft intended to reduce the number of enterprise accounts it was targeting, retaining only the largest, and moving the rest to its Small, Medium and Corporate (SMC) segment.

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One result of this switch is Microsoft can focus more deeply on winning these larger accounts, especially in terms of making their workloads available in the cloud. Chief Financial Officer Amy Hood told press and analysts that, in FY'18, Microsoft "closed a record number of multimillion-dollar commercial cloud agreements and more than doubled the number of $10 million-plus Azure agreements."

CEO Satya Nadella told analysts and press on a July 19 earnings call:

"The one thing that I would say that I'm increasingly seeing is Tier 1 workloads. In some sense, when we think about some of the commitments being made by some of the biggest brands in the world in terms of what they're doing, one is very core."

Microsoft has been trumpeting its biggest customers' "digital transformations" as of late. Rather interestingly/tellingly, Microsoft officials call these "partnerships," rather than customer wins.

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Because Microsoft employees are working with these major customers in crafting new software, services and more, and many times (as they have in the past, by the way) are embedding people inside these companies' organizations, Microsoft seems more than willing to slap the "partnership" moniker on these sales. See Walmart, GE, Carlsberg and more for examples.

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