The good times keep rolling for Microsoft as the company announced record fiscal first quarter results yesterday. Revenue totaled $29.1 billion over the last three months, an increase of 19 percent year-on-year. The huge success follows Microsoft’s bumper fiscal 2018, which saw the company surpass $100 billion in revenue for the first time.
Net income reached $8.8 billion over the last period, an increase of 34 percent compared to the same timeframe last year. As normal, cloud and business have pushed Microsoft to record heights. However, this is a company firing on all cylinders, with all divisions contributing to the financial success.
This was another frame where the company bested analysts’ predictions. Wall Street predicted revenue of $27.9 billion, which would have still been a bumper quarter.
Cloud is Microsoft’s core revenue driver these days, and the Azure platform thrived again. The company says Azure cloud increased 76 percent this quarter, with server products and cloud services up 28 percent. Across the whole “intelligent cloud” division, Microsoft saw gains of 24 percent. Indeed, intelligent cloud accounted for $8.6 billion of the overall quarterly revenue.
— Microsoft (@Microsoft) October 24, 2018
Enterprise has seen Office gain traction in recent years and the productivity suite continued to perform over the first quarter. Microsoft says Office commercial products revenue increased an impressive 17 percent, with Office 365 commercial revenue growing 36 percent. Office 365 now boasts 155 million active users, with 32.5 million consumer subscribers.
“We are off to a great start in fiscal 2019, a result of our innovation and the trust customers are placing in us to power their digital transformation,” Microsoft CEO Satya Nadella said in a statement. “We’re excited to help our customers build the digital capability they need to thrive and grow, with a business model that is fundamentally aligned to their success.”
Surface and Xbox
Microsoft’s Surface hardware division is no longer a side project but is a fully participating part of the company’s success. Surface revenue stood at $1.1 billion, a handy 14 percent jump year-on-year. Microsoft will expect revenue to extend further as this quarter does not account for the recently launched Surface Pro 6, Surface Laptop 2 and Surface Studio 2.
The main driver for Surface sales was the Surface Book 2 and recently launched Surface Go. That latter device launched in the summer, so this is the first quarter where it is accounted for.
In terms of Xbox, Microsoft is enjoying a steady growth in its gaming division. Revenue across the business is up 44 percent. The Xbox One has struggled to compete with Sony’s PS4 in terms of sales, but the console is still a success in its own right. Microsoft says Xbox hardware sales increased 94 percent and Xbox Live active users stands at 57 million.
Windows OEM Pro revenue was also on the rise this quarter, increasing 8 percent over the three months. This essentially means more premium licenses were sold by PC manufacturers. Perhaps the one blemish on this financial report is a 5 percent decrease in Non-Pro revenues. This highlights the overall state of the PC market, which is in steady decline.