Microsoft Q4 delivers strong growth, commercial cloud revenue hits $11 billion for $44 billion run rate
Microsoft's fiscal fourth quarter handily exceeded expectations as the company commercial cloud revenue was up 49% to $11 billion and Azure grew at a 64% clip.
In fact, there were few Microsoft products that didn't generate revenue growth.
Microsoft reported fourth quarter net income of $13.2 billion, or $1.71 a share, on revenue of $33.7 billion, up 12%. Non-GAAP earnings were $1.37 a share.
Wall Street was looking for Microsoft to report fiscal fourth quarter revenue of $32.77 billion with adjusted earnings of $1.21 a share.
CEO Satya Nadella said that the company is landing more multi-year commercial cloud agreements. Meanwhile, Microsoft said Azure margins improved.
- Microsoft Azure: Everything you need to know about Redmond's cloud service
- Microsoft Office 365 for business: Everything you need to know
In the fourth quarter, revenue from the Intelligent Cloud unit showed growth of 19% to $11.4 billion. That sum topped revenue of $11 billion from the Productivity and Business Processes (Office, Dynamics, LinkedIn) group.
Microsoft's More Personal Computing unit had fourth quarter sales of $11.3 billion, up 4% from a year ago. Windows revenue was carried by commercial and OEM products. Surface revenue was up 14%. Windows 10: Has Microsoft cleaned up its update mess? (Spoiler: no)
For the year, Microsoft reported net income of $39.2 billion, or $5.06 a share, on revenue of $125.8 billion. The net income tally was boosted by a $2.6 billion tax benefit.
Microsoft spent $16.87 billion on research and development for fiscal 2019, up from $14.73 billion in fiscal 2018.
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By the numbers:
- LinkedIn revenue was up 25% in the fourth quarter with sessions growth of 22%.
- Dynamics products and cloud services revenue was up 12%, but Dynamics 365 sales jumped 455.
- Surface revenue was up 14% due to strong commercial demand.
- Search advertising sales excluding traffic acquisition was up 9%.
- There were 34.8 million consumer Office 365 subscribers at the end of the quarter.
- Gross margins improved at LinkedIn and Office 365.
- Microsoft's Intelligent Cloud unit saw operating expenses surge 23% due to GitHub and investments in cloud and AI engineering.
- XBox Live had 65 million monthly active users at the end of the quarter.