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Microsoft’s cloud, server segments propel rise in earnings, revenue

Microsoft Corp.’s revenue was up by 14% ($36.9 billion) partly because of the revenue growth in server products and cloud services revenue, which increased 30% driven by Azure revenue growth of 62%. While its Office commercial products and cloud services revenue increased 16% driven by Office 365, which now has 37.2 million subscribers.

“We are innovating across every layer of our differentiated technology stack and leading in key secular areas that are critical to our customers’ success,” said Satya Nadella, CEO, Microsoft.

“Along with our expanding opportunity, we are working to ensure the technology we build is inclusive, trusted and creates a more sustainable world, so every person and every organization can benefit.”

Satya Nadella, CEO, Microsoft

Nadella took over the CEO job from Steve Balmer in 2014. The company was lagging behind other technology giants in terms of innovations.

Have you read “Microsoft, Genesys strengthen partnership to provide new cloud services”?

The following results are for the quarter ended Dec. 31, 2019:

  • Revenue was $36.9 billion and increased 14%
  • Operating income was $13.9 billion and increased 35%
  • Net income was $11.6 billion and increased 38% GAAP and 36% non-GAAP
  • Diluted earnings per share were $1.51 and increased 40% GAAP and 37% non-GAAP

“Strong execution from our sales teams and partners drove Commercial Cloud revenue to $12.5 billion, up 39% year over year,” said Amy Hood, executive vice president and chief financial officer of Microsoft.

Microsoft also posted an increased revenue of 17% in Productivity and Business Processes.

While the company is aggressively beefing up its data center and cloud services with the opening of a data center in South Africa, its personal computing revenue also increased by an incremental 2% led by Windows OEM posting an 18% increase. Surface revenue also posted a 6% increase.

However, Xbox content and services revenue decreased by 11%, this is amid the rumors circulating recently that PlayStation 5 performed better than Xbox. Mobile gaming has been gaining ground and consoles could be feeling the pinch of smartphones eating up various segments and services.

One of Microsoft’s wins is with LinkedIn, the professional networking and recruitment platform it acquired in 2016, posting an increased revenue of 24%.

Microsoft also bagged the multi-billion-dollar cloud contract with the US Department of National Defense, which Amazon Web Services is trying to defer.

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