Microsoft 4th Quarter 2018 Earnings: Cloud and Office Power Strong Growth

Ann Santiago
July 21, 2018

The Redmond tech company announced a revenue bump of more than 17 percent to $30.1 billion for its fourth quarter of the year, continuing its recent trend of beating Wall Street analyst expectations almost every period.

The software giant's fiscal fourth-quarter results reported late Thursday were just the latest evidence of its success at moving its business beyond the software typically found on PCs. Revenue was $30.1 billion (up 17 percent, year on year), operating income was $10.4 billion (up 35 percent), net income was $8.8 billion (a rise of 10 percent), and earnings per share were $1.14 (an increase of 11 percent).

Productivity and Business Processes-Office, Dynamics, LinkedIn-saw revenues jump 13 percent in the quarter to $9.7 billion. 'Our early investments in the intelligent cloud and intelligent edge are paying off, and we will continue to expand our reach in large and growing markets with differentiated innovation. But the star, as always, was Azure, which grew revenues 89 percent. Though Amazon Web Services has long led the cloud computing market, Microsoft is increasingly cementing its position as a strong second, ahead of its rival Google.

"We're investing aggressively to build Azure as the world's computer", Nadella said, referring to Microsoft's cloud computing platform that competes with services run by Amazon and Google.

Microsoft hits $100bn in revenue for the first time thanks to cloud, Surface growth

"Our hybrid value proposition has continued to resonate, so there are a bunch of workloads that are migrating to the cloud", the Microsoft boss said.

Beat earnings estimates. The company posted adjusted earnings of $1.13 per share, beating the Zacks Consensus Estimate of $1.07 per share. Revenue grew by 37% (34% CC).

Office 365 consumer costumers grew to 31.4 million, and Office products and cloud services revenue grew by 8% (6% CC). This is mostly being driven by more income from Xbox software and related services, which itself has grown by 36% thanks to the strength of recent third-party titles. Microsoft's Surface business also saw significant growth for the quarter, posting a 25 percent gain over the same time past year. The Surface business is up 25% from this time last year, something Microsoft credits to both a strong hardware lineup this year and a 2017 performance that set the bar lower.

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