Microsoft meets Q2 2019 revenue target as Azure growth rate stagnates
January 30 2019
Microsoft reported its second quarter earnings with a 12% revenue gain and 18% gain in operating income from the year prior, with earnings per share of $1.08.
Revenue of $32.5 billion was on target with analyst estimates.
Productivity and Business Processes sector revenue was $10.1 billion and increased 13% year over year. Dynamics 365 revenue grew 51%, with Dynamics products and cloud services revenue overall up 17%. Other performance highlights in the sector included:
- Office Commercial products and cloud services revenue increased 11% (up 11% in constant currency) driven by Office 365 Commercial revenue growth of 34% (up 33% in constant currency)
- Office Consumer products and cloud services revenue increased 1% (up 2% in constant currency) with growth in Office 365 Consumer subscribers to 33.3 million
- LinkedIn revenue increased 29% (up 30% in constant currency) with record levels of engagement highlighted by LinkedIn sessions growth of 30%
In FY2019 Q1, Microsoft reported Dynamics 365 revenue growth of 51%. In FY 2018 Q3, Dynamics revenue growth was 65%. In FY 2018 Q2 it was 67%.
Intelligent Cloud delivered revenue of $9.4 billion, an increase of 20%. The ever-important Azure revenue growth rate remaining steady at 76%.
“Our strong commercial cloud results reflect our deep and growing partnerships with leading companies in every industry including retail, financial services, and healthcare,” said Satya Nadella, CEO of Microsoft in a statement.
The earnings call presentation also notes other details including:
- Commercial revenue annuity mix is up a further 3 points to 89%
- Operating expenses rose 7% year-over-year, driven by investments in cloud engineering and commercial sales capacity
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