Wondering how strong the cloud is? Plenty strong, if you go by Microsoft’s fourth-quarter financial results, released today after the markets closed.
Is your PC business weak? Join the club. Microsoft’s is flat, as well.
“I’m proud of the results, especially our commercial cloud results,” said Satya Nadella, Microsoft’s CEO, during a conference call this evening with investors.
Overall financial results
For the three months ended June 30, Microsoft reported total revenue of $23.32 billion, up from $20.61 billion in year-earlier quarter. That’s a solid gain of 13 percent.
Net income for the fourth quarter was $6.51 billion, Microsoft said. That’s more than double its year-earlier quarterly profit of $3.12 billion.
Things get even more interesting in Microsoft’s cloud business.
Overall, Microsoft’s commercial cloud business had an annualized run rate exceeding $18.9 billion, a year-over-year increase of 56 percent, the company said. That includes revenue from Office 365 commercial, Azure, Dynamics 365 and other cloud properties.
Q4 revenue from office consumer products and cloud services revenue, which the company bunches together, increased 13 percent. The number of Office 365 consumer subscribers, part of that bundle, reached 27 million, up from 23.1 million a year earlier.
As for Office 365 commercial subscribers, that number increased in Q4 by 31 percent, Microsoft said. But that was actually a slow-down from the year-earlier quarter, when the number of subscribers increased 45 percent.
Revenue in the quarter from dynamic products and cloud services, including Dynamics 365, increased 7 percent in the quarter. Dynamics 365 alone showed revenue growth of a super-high 74 percent.
Azure revenue growth? That was up 97 percent in Microsoft’s Q4 — almost doubling! That contributed to the 15 percent revenue growth in Microsoft’s server products and cloud services category.
The one dark spot on Microsoft’s “intelligent cloud” business was a 3 percent year-over-year decline in quarterly revenue from enterprise services.
Windows & Surface flattish
As we recently reported, both Gartner and IDC agree the PC business is shrinking. That’s certainly reflected in Microsoft’s Q4 “personal computing” results.
Windows OEM revenue in Q4 grew by only 1 percent. Windows commercial products and related cloud services did better, with revenue up by 8 percent.
That said, the company says commercial adoption of Windows 10 increased in the quarter by a solid 33 percent. This is driving demand for new PC hardware, too.
The Surface hardware business wasn’t great. Fourth-quarter revenue from Surface hardware declined by 2 percent from the year-earlier quarter. Microsoft said the downturn is “mainly due to product lifecycle transitions.”
Gaming revenue — for Microsoft, that means Xbox — increased 3 percent in the quarter to about $9 billion. Hardware sales actually declined, offset by growth in software and services.
As goes Microsoft, so goes the industry. And, most likely, your business.