Microsoft Q4 delivers strong growth, commercial cloud revenue hits $11 billion for $44 billion run rate

Microsoft didn't have many soft spots in its fourth quarter earnings as Azure, Dynamics 365 and Office 365 showed strong gains.
Written by Larry Dignan, Contributor

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.

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CEO Satya Nadella said that the company is landing more multi-year commercial cloud agreements. Meanwhile, Microsoft said Azure margins improved. 


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. 


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