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Microsoft financial growth driven by cloud revenue

Microsoft has today announced their financial results for the quarter ended September 30, 2017, reporting better-than-expected annual cloud revenue run rate of $20.4 billion (USD).

Satya Nadella, chief executive officer at Microsoft says, “This quarter we exceeded $20 billion in commercial cloud Annual Run Rate (ARR), outpacing the goal we set just over two years ago.”

“Our results reflect accelerating innovation and increased usage and engagement across our businesses as customers continue to choose Microsoft to help them transform.”

The main highlights from the fiscal results include a total reported revenue of $24.5 billion (an increase of 12%), operating income of $7.7 billion (an increase of 15%), net income of $6.6 billion (an increase of 16%) and Diluted earnings per share of $0.84 (an increase of 17%).

Microsoft has reported a return of $4.8 billion to shareholders in the form of share repurchases and dividends in the first quarter of the fiscal year 2017.

During the quarter, the company announced an 8% increase in its quarterly dividend to $0.42 per share.

Amy Hood, Microsoft executive vice president and chief financial officer says her company is pleased with the results, which reflect their commitment to investment in innovative products.

“Our strong start to the fiscal year reflects the impact of our continued investment in product innovation and sales capacity to capture expanding market opportunities, ” she says.

Microsoft also reports an increase in revenue for Productivity and Business Processes of 28% to $8.2 billion, with the following business highlights:

  • Office commercial products and cloud services revenue increased 10% driven by Office 365 commercial revenue growth of 42% 

  • Office consumer products and cloud services revenue increased 12% (up 10% in constant currency) and Office 365 consumer subscribers increased to 28.0 million

  • Dynamics products and cloud services revenue increased 13% (up 12% in constant currency) driven by Dynamics 365 revenue growth of 69% (up 69% in constant currency)

  • LinkedIn contributed revenue of $1.1 billion during the quarter

During a call to shareholders, Nadella revealed Office 365 commercial also has 120 Million monthly active users, and Linkedin has exceeded 530 million members.

He also mentioned healthy growth for Azure, with total compute usage more-than-doubling during the quarter, and revenue growing by 90%.

Revenue in Intelligent Cloud is also reported as $6.9 billion (an increase of 14%), with server products and cloud services revenue increasing 17% and Enterprise Services revenue increasing by 1% (0% in constant currency).

Revenue in More Personal Computing was $9.4 billion and relatively unchanged (down 1% in constant currency), with an increase in Windows OEM revenue of 4%, ahead of the overall PC market.

Surface revenue also increased 12% (up 11% in constant currency) driven by sales of the new Surface laptop.

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