Service Provider Cloud

Microsoft's Cloud Bet Keeps Paying Off

Cloud growth helped drive sunny quarterly results for Microsoft, as the company reported quarterly revenue on Wednesday of $28.9 billion, up 12% year-over-year. Commercial cloud revenue was $5.3 billion, up 56% year-over-year. But the company took a $13.6 billion one-time net charge due to tax reform, and wound up with a $6.302 billion GAAP loss.

In a statement, Microsoft Corp. (Nasdaq: MSFT) CEO Satya credited growth to "differentiated value... across our productivity solutions and as the hybrid cloud provider of choice... Our investments in IoT, data and AI services across the cloud and edge position us to further accelerate growth."

Breaking down results by sectors of interest to Enterprise Cloud News readers:

  • Office commercial products and cloud services revenue increased 10%, driven by Office 365 commercial revenue growth of 41%.
  • Office consumer products and cloud services revenue increased 12% (up 11% in constant currency) and Office 365 consumer subscribers increased to 29.2 million.
  • Dynamics CRM products and cloud services revenue increased 10% (up 9% in constant currency) driven by Dynamics 365 revenue growth of 67% (up 68% in constant currency).
  • LinkedIn contributed revenue of $1.3 billion during the quarter with sessions growth of over 20% for the fifth consecutive quarter.

Photo by Wonderlane (CC BY 2.0)
Photo by Wonderlane (CC BY 2.0)

Revenue for the Intelligent Cloud area was $7.8 billion and increased 15%, including server products and cloud services revenue up 18%, driven by Azure revenue growth of a whopping 98%. It was the tenth straight quarter of better-than-90% growth for Microsoft Azure , according to Reuters.

Microsoft returned $5 billion to shareholders in share repurchases and dividends in the second quarter of fiscal 2018.

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But the news wasn't all good. Non-GAAP net income was $7.498 billion, down 201% year-over-year, with earnings per share of $0.96, down 203%, for the second quarter ending Dec. 31. (See Microsoft Cloud Growth Fuels Second Quarter Results.)

The Tax Cuts and Jobs Act resulted in a $13.8 billion net charge, driving GAAP net income far down, to a $6.302 billion loss, or $0.82 per share.

Microsoft traded at $94.82 down 0.20% after hours Wednesday.

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— Mitch Wagner Follow me on Twitter Visit my LinkedIn profile Visit my blog Follow me on Facebook Editor, Enterprise Cloud News

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kq4ym 2/15/2018 | 8:34:44 AM
Re: Linkedin doing well, I see Although I'm certainly not a heavy user of video conferencing, I've used Google video products for years and have wondered why their "hangout" and video conferencing, while free and relatively simple to use, are not mentioned by the press or used more or commercial and corporate use especially since the completed video can also be store for free on Youtube for later review and training. 
kq4ym 2/7/2018 | 8:33:05 AM
Re: Linkedin doing well, I see I haven't used Skype in a long while and do wonder what might be it's future. Meanwhile as Microsot's earning went down by an incredible 203% one might wonder about what's happening as they had the "$13.6 billion one-time net charge due to tax reform, and wound up with a $6.302 billion GAAP loss."
Susan Fourtané 2/7/2018 | 7:59:27 AM
Re: Linkedin doing well, I see Are people using WhatsApp and the others for business? Some businesses are still using Skype.
mhhfive 2/5/2018 | 3:02:13 PM
Re: Linkedin doing well, I see I assume Skype will go the way of AOL messenger and all those other popular messenger apps that used to clutter desktops. Skype isn't a "mobile first" app -- so unless it catches up quickly to Signal/WhatsAp/Viber/etc/etc... it's going to be left behind soon.
Susan Fourtané 2/4/2018 | 1:18:07 AM
Re: Linkedin doing well, I see Joe — I also prefer Skype to FB or G+. I am not sure why, though. It’s just the way I have been doing things. I never had real big issues using Skype. And perhaps never saw the point in replacing it.
mhhfive 2/3/2018 | 4:52:01 PM
Re: Linkedin doing well, I see I haven't used Skype in a while, but when I did it was pretty good for what it did. It's just that Slack does some things Skype doesn't (and vice versa), and for productivity apps, Skype falls short bc it has been neglected. I stopped using Skype bc it had a spam problem-- a problem that only Facebook seems to have solved with any effectiveness.
Joe Stanganelli 2/3/2018 | 4:13:42 PM
Re: Linkedin doing well, I see @mhh: I will say this for Skype: For free video call services, I prefer it to FB and G+. FB and G+ require a bunch of extra installations, and frankly I trust Skype/MSFT more than Facebook and Google -- renowned (fairly or unfairly) for being two of the biggest private-sector data-privacy goons on the planet.
Joe Stanganelli 2/3/2018 | 4:11:27 PM
Re: Linkedin doing well, I see @mhh: I tend to suspect that Microsoft purchased Skype more as a prophylactic measure to keep it from becoming too competitive with Microsoft and/or to keep another would-be purchaser from leveraging it against Redmond. Since the acquisition, MSFT hasn't done much with the company.
mhhfive 2/2/2018 | 12:49:46 PM
Re: Linkedin doing well, I see Skype only very recently added encrypted messaging! Wow. That's a feature that every other popular messaging platform already has.. and Skype just got it. Skype development is really lagging. 


And it seems like MSFT doesn't even know that Skype exists -- because it built Teams from scratch as a Slack competitor... 

mhhfive 2/2/2018 | 12:46:03 PM
Re: Linkedin doing well, I see Skype has really bounced around a lot -- and it's never really gotten the right partner or complementary feature to boost its own functions. Skype could have been better than Slack or any of the other productivity messaging apps out there, but it's just not there. I think Facebook messenger probably gets more use than Skype now. 

I suppose Skype's technology is just hard to integrate with existing platforms. eBay couldn't do it effectively. And I haven't seen Skype making its way onto Xboxes or Office365 with much success either. 
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