Microsoft Earnings Increase Almost 50%

July 19, 2019
362 Views

Earnings season is in full swing, and Microsoft Corp. (NASDAQ: MSFT) is the first major tech company to reveal its earnings from the second quarter. In a year where analysts predicted that earnings would slow, Microsoft is thriving. Earnings have increased almost 50% with growth in all major business lines except one.

Here’s what investors need to know about the latest data.

Microsoft Reports Growth Across All Divisions Except Xbox

The Redmond based technology company beat analyst expectations for its fourth fiscal quarter (the second fiscal quarter of 2019). Total revenue was $33.72 billion, up from $30.09 billion a year ago.

Cloud computing led growth, with the company’s Azure platform continuing to outperform the market. LinkedIn, cloud software, and productivity software earnings were also up. The only area where Microsoft failed to achieve growth was in its Xbox gaming segment.

Results Breakdown

Microsoft’s intelligent cloud segment saw a 19% year over year sales increase, with $11.4 billion generated. Azure, the company’s cloud computing service platform saw 64% growth, proving that the company’s pivot to cloud services was a smart business move.

Productivity software generated close to $11 billion for the company, increasing 14% year over year. This division includes Microsoft Office, which remains the global standard for business productivity. LinkedIn was a strong earner in this division. Revenue increased 25% to hit $1.9 billion.

Microsoft’s PC business was also strong, with $11.3 billion generated.

The Xbox gaming division saw a 10% decrease across the board, with a 48% decrease in console sales. Microsoft’s Xbox One console was released in 2013 and is near the end of its expected life cycle. The company is planning to release Project Scorpio in 2020, which will succeed the Xbox One. Investors should expect to see declining revenue from Xbox in the meantime.

The World’s Most Valuable Company

Microsoft isn’t just the most valuable tech company. It is the most valuable publicly traded company overall, with market capitalization of $1.04 trillion. Share price has increased 34.31% year to date and 30.67% when looking at data over the last 12 months.

Despite impressive growth, stock is still receiving strong BUY signals from top analysts, indicating that there’s room for upwards movement.  Microsoft has predicted revenue in the range of $31.7 billion to $32.4 billion for the current quarter, which will continue to drive investor confidence in the weeks ahead.

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