Microsoft yesterday posted its second quarter of 2018 financial results, the fourth quarter of 2017 being the company’s second fiscal frame. Once again the results are positive, driven by the Microsoft cloud strategy, which continues to pay off. Redmond will also be happy to see the Xbox division perform so well.
Surface and Windows also performed in the positive, making this financial round a good one for the company. Overall, Microsoft reported revenue of $28.9 billion for the timeframe ending December 31, 2017. In terms of net income, the company made $7.5 billion. Over the holiday frame, Microsoft saw revenue jump 12 percent compared to the same quarter in 2016.
Microsoft cloud strategy has seen CEO Satya Nadella push the company towards a cloud-first model. Azure is the core product for that drive, and the platform grew a massive 98 percent last quarter. Overall Dynamics products and cloud services revenue grew 10 percent. The Productivity and Business Processes division brought in revenue of $9 billion, up from 25%.
Cloud growth is now hugely important for Microsoft and will make or break the company over the next decade. Luckily, Microsoft cloud is thriving and overall server and cloud services revenue grew 18 percent year-on-year. Office 365 is a major factor behind cloud success and now has 29.2 million consumer users.
Office consumer and cloud saw a 12 percent revenue bump, while the commercial side enjoyed a 10 percent increase.
Surface and Windows
While a Microsoft cloud push has been happening for several years, Windows continues to perform. OEM revenue for the platform increase 4 percent compared to the same time in 2016. However, Windows commercial and cloud services revenue fell 4 percent. Microsoft says this because of a “large deal in the prior year.”
Microsoft released three new Surface products in 2017, the Surface Pro, Surface Laptop, and Surface Book 2. Those devices could not push the division to huge gains, but the company says Surface revenue increased by 1 percent. It seems there was no major Surface surge during the Christmas period.
Arguably the star of Microsoft’s Q2, 2018 earnings is the Xbox division. Once a business Microsoft seemed to be losing interest in, Xbox is now thriving. It is hard to believe after the shaky start of the Xbox One that the division would be an increasingly important one for Microsoft.
Some very important strategic moves and the launch of the Xbox One X have paid off. Microsoft reports the division increased 8 percent in overall revenue. In terms of hardware, the Xbox One X pushed the division to a 14 percent year-on-year increase. It also seems gamers are purchasing software to enjoy on their new console. Xbox software revenue increased 4 percent, while Xbox Live users grew by 7 percent. Microsoft says it now has 59 million active users on the service.