Published: Sat, July 21, 2018
Markets | By Josh Butler

How Microsoft turned the cloud into a money-making machine

How Microsoft turned the cloud into a money-making machine

Non-GAAP earnings in the quarter were $1.13 a share.

Switching gears to the More Personal Computing category, revenue increased by 17 percent, moving up to $10.8 billion.

Microsoft today released its earnings report for FY18 Q4, showing revenues of $30.1 billion and $8.9 billion in net income.

Intelligent Cloud grew by 23% (20% CC), making it the fastest growing chunk of Microsoft's business, once again.

Microsoft's cloud trip has been expensive but is proving to be worth the price. Microsoft spent $14.73 billion on research and development in fiscal 2018.

CFO Amy Hood emphasized, "Exceptional sales execution delivered double-digit revenue growth across all segments and strong progress against our strategic priorities, anchored by commercial cloud revenue". Azure grew by 89% (85% CC), Server products grew by 8% (6% CC), Enterprise Mobility install base grew by 55% to 82 million, and server products and cloud services grew by 26% (24% CC).

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Operating income was $10.4 billion and increased 35%.

By unit, Microsoft's productivity and business processes division had fourth quarter revenue of $9.7 billion, up 13 percent from a year ago.

The Windows business was up 7% from the year-ago period, drawn by a stronger demand for PCs preinstalled with the professional version of Windows 10. The smash-hit console powered Nintendo to $9.7 billion in net sales for its fiscal year ending in March, up 105 percent from the year before. Despite the Surface line being a billion dollar business for the company, it's typically boarding on stagnate or declining revenue for Microsoft on the whole.

In recent weeks, Microsoft has announced several expansions of cloud deals with prominent business players, including GE and Amazon competitor Walmart.

"Our early investments in the intelligent cloud and intelligent edge are paying off, and we will continue to expand our reach in large and growing markets with differentiated innovation", Nadella said on a conference call on Thursday. Despite that being the case, Microsoft has managed to leverage its Xbox branded software and services to increase its gaming revenue by 39% and products such as Xbox Live, Xbox Game Pass, and Play Anywhere titles.

Microsoft has taken to offering software such as Office as subscription services hosted online, even providing applications for Android or Apple mobile devices.

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