Microsoft has released their Q1 earnings, reporting $29.1 billion revenue and net income of $8.8 billion. This is a 19% increase in revenue and 34% increase in net income to the previous corresponding quarter in the last fiscal year. Microsoft is showing strong growth in many of its businesses and product lines, notably gaming and their Intelligent Cloud services.
The “intelligent cloud businesses”, which includes Azure, saw 24% growth, marking $8.6 billion of Microsoft’s overall revenue this quarter.
Although on the face very impressive, the Azure cloud-computing service grew at a 76% annual pace, slowing down significantly from the 89% rate in Microsoft’s reported fourth quarter.
Its “productivity and business processes” group, which includes its Office products and LinkedIn, grew at an 18.6% pace.
Office 365 commercial revenue grew 36% with $32.5 million users. LinkedIn revenue grew 33% this quarter, ensuring that Microsoft’s acquisition of LinkedIn for $26 billion a worthwhile investment.
Its “more personal computing” group, which includes Windows, gaming, search, and Surface is the top category at $10.7 billion of overall revenue with sales up 14.6%.
Microsoft’s gaming business has been growing steadily with revenue increased 44% and Xbox software and services revenue growing 36% mainly from third-party title strength according to their earnings report.
Search advertising revenue increased 17% this quarter, a consistent increase over the past year reflecting Bing and Microsoft’s efforts in improving in that area, going up against Google. It seems to be connected to an increase in revenue per search and higher search volume overall.
Notably, many of Microsoft’s next-generation Surface products have only been announced and have not reached the market yet, no doubt their release will increase earnings for Microsoft.
Overall, Microsoft’s results were strong, even with the slowdown of Azure sales. However, their reported increases in the gaming sector – and their planned xCloud game streaming service in 2019 – and the release of the Surface products in the coming months, the company is in a very strong position it appears they will be expecting continued investment and growth in gaming in the future.