In Q2 2018, Microsoft has posted a whopping 56% year-over-year increase in ‘Commercial Cloud’ revenue now totaling $5.3 billion, while revenue in ‘Intelligent Cloud’ was $7.8 billion and increased 15% year-over-year. Total revenue during the second quarter was $28,9. It seems that Satya Nadella’s turnaround towards establishing a cloud-focused company is paying off after being in charge for four years now as the CEO of Microsoft.
When Mr. Nadella was promoted to CEO in February 2014, Microsoft had a huge problem as their core business of enterprise-owned and Windows-powered PCs and servers were declining at a rapid pace. Now, the company seems to be doing very well again with their focus on cloud innovation and cloud adoption and fast-growing interest for their global Azure platform.
“We delivered another strong quarter with commercial cloud revenue growing 56% year-over-year to $5.3 billion,” said Amy Hood, executive vice president and chief financial officer (CFO) of Microsoft. “Strong execution from our sales teams and partners is driving growth across our businesses.”
Revenue in Productivity and Business Processes – including Office, Dynamics and LinkedIn – was $9.0 billion and increased 25%, with the following business highlights:
- Office commercial products and cloud services – revenue increased 10% driven by Office 365 commercial revenue growth of 41%
- Office consumer products and cloud services – revenue increased 12% and Office 365 consumer subscribers increased to 29.2 million
- Dynamics products and cloud services – revenue increased 10% driven by Dynamics 365 revenue growth of 67%
- LinkedIn – contributed revenue of $1.3 billion during the quarter with sessions growth of over 20% for the fifth consecutive quarter
Revenue in Intelligent – including Microsoft Azure, Windows Server en SQL Server – was $7.8 billion and increased 15%, with the following business highlights:
- Server products and cloud services – revenue increased 18% (up 18% in constant currency) driven by Azure revenue growth of 98% (up 98% in constant currency)
- Enterprise Services – revenue increased 5% (up 3% in constant currency) driven by Premier Support Services
Revenue in More Personal Computing was $12.2 billion and increased 2%, with the following business highlights:
- Windows OEM – revenue increased 4% driven by OEM Pro revenue growth of 11%
- Windows commercial products and cloud services – revenue decreased 4% “due to the impact of a prior year large deal”
- Gaming – revenue increased 8% driven by Xbox hardware revenue growth from the Xbox One X launch
- Search advertising – revenue excluding traffic acquisition costs increased 15% driven by higher revenue per search and search volume
- Surface – revenue increased 1%
Microsoft took a $13.8 billion charge though in this quarter due to a tax bill signed into law in December. With the charge, Microsoft posted a $6.3 billion net loss loss, but without this charge, the company’s profits hit $8.7 billion – up 10% compared to the same period a year ago.