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Microsoft Q4 Revenue Up 12%, Xbox Slumps

Microsoft’s cloud computing business has continued to drive earnings, with Q4 revenue up 12% year-on-year to US$33.72 billion – blowing past analyst expectations.

Adjusted earnings also trumped investor forecasts (US$1.37/share versus US$1.21/share).

Microsoft’s personal computing division (inc. Xbox) also generated better-than-expected results – US$11.3 billion versus US$10.98 billion.

Surface revenue has continued to climb (up 14% YoY), driven by strong “commercial segment” growth.

By contrast, the company’s gaming division has relatively stalled, with Q4 gaming revenue down 10%, and Xbox software and services revenue slipping 3%.

Whilst the company does not provide explicit Xbox unit sales numbers, Xbox hardware revenue did slump 48%, amid volume decreases.

Xbox LIVE active users notched 65 million in Q4, with a wide breadth of devices now available (e.g. Xbox One, Windows 10 PCs, Android and iOS devices).

The company is also getting closer to public previews of its xCloud game streaming service.

The news comes as Chief Executive, Satya Nadella, further moves the company away from Windows, and towards Microsoft managed cloud services (and associated products).

According to Canalys, rival Amazon Web Service still dominates the market (32.8% market share), however, Microsoft is fast gaining ground (14.6% market share).

The company has gained momentum by bundling its Azure computing service for developers with Office and other end user software.

Office and commercial products and cloud services revenue has jumped 14% YoY, whilst notching 180 million active monthly Office 365 business users.

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