3 Huge Takeaways From Microsoft’s Revenues Call

3 Huge Takeaways From Microsoft’s Revenues Call

The company opened 2019 with a strong report — here’s what investors should be watching. Microsoft (NASDAQ:MSFT) is an incredible company that continues to deliver strong business performance and, in turn, value for its shareholders. Last quarter, the tech titan generated $30.6 billion in revenue, up 14% year over year. That revenue growth helped fuel…

The business opened 2019 with a strong report– here’s what financiers ought to be viewing.

Ashraf Eassa

Microsoft ( NASDAQ: MSFT) is an unbelievable business that continues to deliver strong company performance and, in turn, worth for its investors. Last quarter, the tech titan produced $306 billion in revenue, up 14%year over year. That profits growth assisted sustain a 25%surge in the company’s operating income, which reached an eye-popping $103 billion for the quarter.

As typical, it appears that Microsoft’s business strength was broad-based. On a year-over-year basis, Microsoft’s more individual computing section enjoyed 8%income development, its productivity and service procedures segment saw revenue rise 14%, and the company’s smart cloud section saw a 22%surge on the top line.

Microsoft's Joe Belfiore with a slide behind him that reads

Microsoft’s Joe Belfiore. Source: Microsoft.

Although these numbers practically speak for themselves, management provided some additional insight into the company’s performance on its latest incomes call Here are three major highlights from that conversation.

How’s LinkedIn doing?

Microsoft closed its $262 billion purchase of LinkedIn back in late2016 Although big acquisitions in tech are frequently struck or miss out on, it’s clear that the software application giant’s social media deal has been a blockbuster. The business reported that LinkedIn revenue increased 27%year over year in the quarter “with record levels of engagement highlighted by LinkedIn sessions growth of 24%.”

Microsoft CEO Satya Nadella said that its LinkedIn organisation “again gone beyond expectations throughout all line of work, driven by record levels of engagement in the feed, content shared throughout the platform, [and] the messages sent this quarter.”

He also said that LinkedIn’s marketing options (simply put, its advertising organisation) revenue rose 46%in the quarter, observing that “consumers are counting on our new pages experience and audience-targeting capabilities to link with LinkedIn’s almost 630 million members.”

Simply put, Microsoft’s acquisition of LinkedIn didn’t dull the shine on the latter– if anything, Microsoft took a solid business and made it even much better.

Squashing it in the cloud

Microsoft’s Azure cloud computing company is also on fire, growing 73%year over year and sustaining a 27%increase in the company’s total server items and cloud services segment.

On the call, Nadella talked up the competitive benefits of its Azure cloud and likewise provided some intriguing information points for financiers to chew on. For instance, he said “[more] than 95%of the Fortune 500 runs their workloads on our cloud.”

Microsoft’s chief also highlighted how the company’s Azure Internet of Things(IoT) platform “enables customers to develop, handle and protect their linked devices.” He pointed to the company’s recent acquisition of Express Logic, which makes “actual time operating systems (RTOS) for IoT and edge devices powered by micro-controller units (MCUs),” as permitting it to bring its “cloud to more than 6 billion MCU-powered endpoints.”

Microsoft’s cloud company is assisting to sustain excellent development for the company, and investors must be pleased with management’s execution here.

Strength in PCs, weakness in gaming

Microsoft’s more individual computer system organisation, per CFO Amy Hood, saw “better-than-expected performance” in its Windows os company, though that excellent news was “partly offset by lower-than-expected video gaming income.”

The PC market as a whole, Hood discussed, “was more powerful than we prepared for, driven by enhanced chip supply that met both unfinished [second-quarter] commercial and exceptional customer need, along with better-than-expected [third-quarter] industrial demand.”

Putting some numbers to that, Hood said that earnings in its Windows OEM Pro grew 15%year over year, while its Windows OEM non-Pro revenue declined 1%throughout that exact same time.

As far as video gaming went, Hood elaborated on the weak point that the company’s efforts here experienced, with “lower-than-expected money making throughout third-party titles and console sales.” On the bright side, Microsoft saw its Xbox software and services income rise 12%, thanks to “continued momentum in Xbox LIVE and Video game Pass subscriber growth.”

Microsoft continues to be an outstanding, well-diversified business that not just has direct exposure to a lot of the hottest areas within technology like cloud computing and gaming but also incredible execution. It is one of the very best business in the world and well positioned for continued success.


Ashraf Eassa has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Microsoft. The Motley Fool has a disclosure policy.

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Teresa Kersten, a worker of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Ashraf Eassa has no position in any of the stocks pointed out. The Motley Fool owns shares of and suggests Microsoft. The Motley Fool has a disclosure policy

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