Microsoft Announces Record Fiscal Year

Microsoft CEO Satya Nadella and AT&T CEO John Donovan

Microsoft CEO Satya Nadella and AT&T CEO John Donovan

Microsoft Corp (MSFT.O) on Thursday beat analysts' estimates for fourth-quarter revenue and profit, driven by continued sales increases from its cloud business and sending its shares to all-time highs. For comparison, Microsoft reported server products and cloud services revenue growth of 27% (up 29% in constant currency) and Azure revenue growth of 73% (up 75% in constant currency) in the last quarter.

Microsoft that continues to be valued as a $1 trillion company returned $7.7 billion to shareholders in the form of share repurchases and dividends in the fourth quarter of fiscal year 2019.

"AT&T is at the forefront of defining how advances in technology, including 5G and edge computing, will transform every aspect of work and life", said Microsoft CEO Satya Nadella.

Microsoft shares traded up more than 2% after-hours Thursday following the earnings report.

Investors certainly seemed happy with the results, with Microsoft's share price increasing 3.4% in pre-market trading.

The biggest factor in the Microsoft's performance was its commercial cloud services business, which grew 39% in the quarter.

Revenue in the More Personal Computing business segment inched up 4% to $11.3 billion, with standouts in that segment including a 13% jump in Windows Commercial products and cloud services revenue.

Its highest jump was reported by the Intelligent Cloud segment at 19%, which includes server products, GitHub, enterprise services and Azure, the key driving business which itself posted a revenue growth of 64 percent. Analysts additionally estimate sales of $32.8 billion for the quarter ended June, more than around $30 billion recorded a year ago. Given Microsoft's "strong ambition", it plans to increase operating expenses by 11 per cent to 12 per cent for the fiscal year, and will raise capital spending to build out data centers, Chief Financial Officer Amy Hood said. This was the lowest rate of on-year revenue growth for the cloud computing platform.

"They expect to announce additional services later in 2019", a Microsoft spokesperson said.

Microsoft reported earnings of $1.71 per share (GAAP), up 50% from previous year. Nadella says Microsoft is seeing larger, multi-year commercial cloud agreements and "growing momentum across every layer of our technology stack". But, the company's Xbox Live monthly active users did pop up to 65 million, a growth of 14%.

Its productivity software unit earned 14.3 per cent more money this quarter, hitting $11.05 billion, again beating analysts' expectations of $10.71bn. As Reuters notes, the Microsoft-AT&T deal does not cover core networking operations for cell phones and other devices.

Despite its mammoth size, Microsoft has managed to maintain overall revenue growth in the double digits, outdoing other established tech giants like Amazon and Google parent Alphabet, which have seen growth slow in recent quarters.

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