As technology companies seem to do these days, software giant Microsoft has cited its investment in ‘intelligent edge’ and ‘intelligent cloud’ technology as a key driver behind its strong 2018 financials.
The company’s Q4 results saw revenue rise to $30.1bn, an increase of 17% and net income was $8.9bn (GAAP) and $8.8bn (non-GAAP).
Microsoft CEO, Satya Nadella, said “We had an incredible year, surpassing $100 billion in revenue as a result of our teams’ relentless focus on customer success and the trust customers are placing in Microsoft,”
Breaking it down
If you go more granular with the results, the following nuggets are highlighted by Microsoft:
Revenue in Productivity and Business Processes was $9.7 billion, an increase of 13%, with the following highlights:
• Office commercial products and cloud services revenue increased 10% which was driven by Office 365 commercial revenue growing 38%
• Office consumer products and cloud services revenue increased 8% and Office 365 consumer subscribers increased to 31.4 million
• LinkedIn revenue increased 37%
Revenue in Intelligent Cloud was $9.6 billion, an increase of 23%, with the following highlights:
• Server products and cloud services revenue increased 26% driven by Azure revenue growth of 89%
• Enterprise Services revenue increased 8%
Revenue in More Personal Computing was $10.8 billion, an increase of 17%, with the following business highlights:
• Windows OEM revenue increased 7%
• Windows commercial products and cloud services revenue increased 23% driven by an increased volume of multi-year agreements
• Gaming revenue increased 39% with Xbox software and services showing a revenue growth of 36% – mainly from third party title strength
• Surface revenue increased 25%
Fiscal 2018 overall
For its fiscal year Microsoft posted revenue of $110.4bn (an increase of 14%) with an operating income of $35.1bn. Net income was $16.6bn (GAAP) and $30.3bn (non-GAAP).
So, what does this mean?
Simply put, Microsoft’s redefining of itself under Nadella’s leadership is very much on track. If you look at other firms’ performance in 2018, you will see that not all finished the year on such a high. Take Oracle as an example, total revenue for 2018 was up 6% to $39.8bn with the company citing cloud services revenue as growing, but cloud licences as falling. Net income (GAAP) was $3.8bn and $13.2bn (non-GAAP) for the year.
Larry Ellison, chairman and CTO of Oracle, looked to 2019 as he predicted that many large customers have now started porting their Oracle databases to the Oracle Cloud. He used AT&T as an example of an organisation which was “moving thousands of databases and tens of thousands of terabytes of data into the Oracle Cloud.”
