Microsoft Corporation's Impressive Growth in 5 Metrics
Microsoft (NASDAQ: MSFT) managed to beat expectations when the company reported fourth-quarter results for fiscal 2018 on Thursday. Shares jumped 3% in after-hours trading at the time of this writing. The gain adds to the stock's run-up recently as the Microsoft's transformation to a cloud-centric business model continues to gain traction and impress investors.
The quarter was solid all around. Not only did Microsoft report better-than-expected revenue and earnings per share, but the software and cloud giant delivered strong growth across all of its segments.
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To appreciate the meaningful growth Microsoft is seeing, here are some metrics that capture the momentum.
Total revenue increased 17%
This 17% year-over-year increase in revenue for Microsoft's fourth quarter marks an acceleration from the company's 16% revenue growth in Q3. Microsoft's total revenue of $30.1 billion was notably well above a consensus analyst estimate for fourth-quarter revenue of $29.2 billion.
Microsoft's strong revenue growth was driven primarily by a sharp rise in commercial cloud revenue, or a categorization of revenue that lumps together revenue from Office 365 commercial, Azure, Dynamics 365, and other enterprise cloud products. But all of Microsoft's business segments contributed double-digit revenue growth for the company.
Commercial cloud revenue soared 53%
Microsoft's commercial cloud revenue has consistently been a strong growth driver for the company recently. After increasing 56% and 58% year over year in Microsoft's second and third quarters of fiscal 2018, respectively, commercial cloud revenue rose 53% year over year in Q4 to $6.9 billion. Commercial cloud revenue during the period accounted for 23% of total revenue.
Azure revenue jumped 89%
Azure — Microsoft's biggest contributor to its commercial cloud revenue — continues to deliver handsomely for the company. Azure revenue was up 89%. This growth is down slightly from 93% year-over-year growth in the third quarter of fiscal 2018. But Azure's growth continues to easily outpace cloud services leader Amazon.com (NASDAQ: AMZN). Amazon Web Services (AWS), which generated $5.4 billion of sales and $1.4 billion in operating income for the company in its most recently reported quarter, saw 49% year-over-year growth in Amazon's most recent quarter. But Amazon has yet to report results for its quarter ending June 30.
Microsoft's strong growth in Azure revenue played a primary role in the company's 23% year-over-year growth in its intelligent cloud segment — a segment that includes revenue from server products and cloud services (Azure falls into this segment) and enterprise services like commercial support and consulting.
LinkedIn revenue increased 37%
Acquired by Microsoft in late 2016, LinkedIn continues to be a growth driver for Microsoft. Accounted for in the company's productivity and business processes segment, LinkedIn revenue was up 37% year over year.
“More personal computing” revenue climbed 17%
This 17% year-over-year growth was helped by strong growth across a range of products in the segment, including:
- 7% growth in Windows original equipment manufacturer (OEM) revenue
- 23% growth in Windows commercial products and cloud services revenue
- 39% growth in gaming revenue
- 25% growth in Surface revenue
- 17% growth in search advertising revenue
The quarter capped off an exceptional fiscal year for Microsoft, with total revenue increasing 14% year over year to $110 billion and non-GAAP earnings per share rising 18%.
Despite its $800 billion-plus market capitalization, Microsoft continues to grow rapidly.
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