Microsoft meets Q2 2019 revenue target as Azure growth rate stagnates

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