Microsoft Cloud Strength Drives First Quarter Results

October 24, 2019

REDMOND, Wash., October 24, 2019 — Microsoft Corp. today announced the following results for the quarter ended September 30, 2019, as compared to the corresponding period of last fiscal year:

  • Revenue was $33.1 billion and increased 14%
  • Operating income was $12.7 billion and increased 27%
  • Net income was $10.7 billion and increased 21%
  • Diluted earnings per share was $1.38 and increased 21%

“The world’s leading companies are choosing our cloud to build their digital capability,” said Satya Nadella, chief executive officer of Microsoft. “We are accelerating our innovation across the entire tech stack to deliver new value for customers and investing in large and growing markets with expansive opportunity.”

Microsoft returned $7.9 billion to shareholders in the form of dividends and share repurchases in the first quarter of fiscal year 2020, an increase of 28% compared to the first quarter of fiscal year 2019.

“It was a strong start to the fiscal year with our commercial cloud generating $11.6 billion in revenue for the quarter, up 36% year over year,” said Amy Hood, executive vice president and chief financial officer of Microsoft.

Revenue in Productivity and Business Processes was $11.1 billion and increased 13% (up 15% in constant currency), with the following business highlights:

  • Office Commercial products and cloud services revenue increased 13% (up 15% in constant currency) driven by Office 365 Commercial revenue growth of 25% (up 28% in constant currency)
  • Office Consumer products and cloud services revenue increased 5% (up 6% in constant currency) with continued growth in Office 365 Consumer subscribers to 35.6 million
  • LinkedIn revenue increased 25% (up 26% in constant currency)
  • Dynamics products and cloud services revenue increased 14% (up 16% in constant currency) driven by Dynamics 365 revenue growth of 41% (up 44% in constant currency)

Revenue in Intelligent Cloud was $10.8 billion and increased 27% (up 29% in constant currency), with the following business highlights:

  • Server products and cloud services revenue increased 30% (up 33% in constant currency) driven by Azure revenue growth of 59% (up 63% in constant currency)
  • Enterprise Services revenue increased 7% (up 8% in constant currency)

Revenue in More Personal Computing was $11.1 billion and increased 4% (up 5% in constant currency), with the following business highlights:

  • Windows OEM revenue increased 9% (up 9% in constant currency)
  • Windows Commercial products and cloud services revenue increased 26% (up 29% in constant currency)
  • Search advertising revenue excluding traffic acquisition costs increased 11% (up 13% in constant currency)
  • Xbox content and services revenue was relatively unchanged (up 1% in constant currency)
  • Surface revenue decreased 4% (down 2% in constant currency)

Business Outlook

Microsoft will provide forward-looking guidance in connection with this quarterly earnings announcement on its earnings conference call and webcast.

Quarterly Highlights, Product Releases, and Enhancements  

Every quarter Microsoft delivers hundreds of products, either as new releases, services, or enhancements to current products and services. These releases are a result of significant research and development investments, made over multiple years, designed to help customers be more productive and secure and to deliver differentiated value across the cloud and the edge.

Here are the major product releases and other highlights for the quarter, organized by product categories, to help illustrate how we are accelerating innovation across our businesses while expanding our market opportunities.

Webcast Details

Satya Nadella, chief executive officer, Amy Hood, executive vice president and chief financial officer, Frank Brod, chief accounting officer, Keith Dolliver, deputy general counsel, and Michael Spencer, general manager of investor relations, will host a conference call and webcast at 2:30 p.m. Pacific time (5:30 p.m. Eastern time) today to discuss details of the company’s performance for the quarter and certain forward-looking information. The session may be accessed at http://www.microsoft.com/en-us/investor. The webcast will be available for replay through the close of business on October 23, 2020.

Constant Currency

Microsoft presents constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars using the average exchange rates from the comparative period rather than the actual exchange rates in effect during the respective periods. All growth comparisons relate to the corresponding period in the last fiscal year. Microsoft has provided this non-GAAP financial information to aid investors in better understanding our performance. The non-GAAP financial measures presented in this release should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with generally accepted accounting principles (GAAP).

Financial Performance Constant Currency Reconciliation

  Three Months Ended September 30,
 ($ in millions, except per share amounts) Revenue Operating Income Net Income Diluted Earnings per Share
2018 As Reported $29,084_ $9,955_ $8,824_ $1.14_
2019 As Reported $33,055_ $12,686_ $10,678_ $1.38_
Percentage Change Y/Y 14%_ 27%_ 21%_ 21%_
Constant Currency Impact $(507) $(409) $(375) $(0.05)
Percentage Change Y/Y Constant Currency 15%_ 32%_ 25%_ 25%_

 Segment Revenue Constant Currency Reconciliation

  Three Months Ended September 30,
 ($ in millions) Productivity and Business Processes Intelligent Cloud More Personal Computing
2018 As Reported $9,771_ $8,567_ $10,746_
2019 As Reported $11,077_ $10,845_ $11,133_
Percentage Change Y/Y 13%_ 27%_ 4%_
Constant Currency Impact $(196) $(200) $(111)
Percentage Change Y/Y Constant Currency 15%_ 29%_ 5%_

Selected Product and Service Revenue Constant Currency Reconciliation       

  Three Months Ended September 30, 2019
Percentage Change Y/Y (GAAP) Constant Currency Impact Percentage Change Y/Y Constant Currency
Office commercial products and cloud services 13% 2% 15%
Office 365 commercial 25% 3% 28%
Office consumer products and cloud services 5% 1% 6%
LinkedIn 25% 1% 26%
Dynamics products and cloud services 14% 2% 16%
Dynamics 365 41% 3% 44%
Server products and cloud services 30% 3% 33%
Azure 59% 4% 63%
Enterprise Services 7% 1% 8%
Windows OEM 9% 0% 9%
Windows commercial products and cloud services 26% 3% 29%
Search advertising excluding traffic acquisition costs 11% 2% 13%
Surface (4)% 2% (2)%
Xbox content and services 0% 1% 1%

About Microsoft

Microsoft enables digital transformation for the era of an intelligent cloud and an intelligent edge. Its mission is to empower every person and every organization on the planet to achieve more.


Source: Microsoft 

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