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Riding high on Cloud and Azure, Microsoft’s Q4 earnings exceeds estimates with $22.6 Bn revenues, $0.69 EPS

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Microsoft’s Q4 earnings report are out folks and the company has surprised everyone — including itself — with a sheet that has revenues and profits well above the figures expected by most financial pundits. And quite expectedly, most of those growth figures have been driven by company’s ever-growing cloud business.

Before we dive into the details, here is a quick list summarizing the salient points of the Q4 report.

  • Revenue was $20.6 billion GAAP, and $22.6 billion non-GAAP.
  • Operating income was $3.1 billion GAAP, and $6.2 billion non-GAAP.
  • Net income was $3.1 billion GAAP, and $5.5 billion non-GAAP.
  • Diluted earnings per share was $0.39 GAAP, and $0.69 non-GAAP.

The results are certainly good news for Microsoft and its investors. By way of comparison, the company had grossed $22.2 billion in revenue and a loss of $0.40 per share due to the $7.6 billion write down related to its acquisition of the Nokia Devices and Services business.

However, even without the charge, the Non-GAAP earnings per share would have come to $0.62. So yes, Microsoft has made significant progress in the positive direction. In case you are wondering about the significant part, allow us to gently remind you that a progress of $0.07 per share is pretty impressive for a company with as many stakeholders as Microsoft.

Interestingly, the company also managed to beat financial forecasts by a fair margin. Most analysts had expected Microsoft to clock just $22.14 billion in revenue and per share of earnings of $0.58.

The Q4 results, along with the previous 3 quarters, take up Microsoft’s total figures for the year upto $92 billion in non-GAAP revenue and $2.10 in adjusted earnings per share, putting it’s operating income at $27.9 billion on non-GAAP.

Speaking on the topic, Satya Nadella, Chief Executive Officer at Microsoft, said

This past year was pivotal in both our own transformation and in partnering with our customers who are navigating their own digital transformations.

He also commented upon the good showing by the company, stating that the company expects even better opportunities and results in the future.

The Microsoft Cloud is seeing significant customer momentum and we’re well positioned to reach new opportunities in the year ahead.

Azure up by 102 percent, Cloud continues to grow

Cloud and Azure, both of which are high expectation businesses for Microsoft, have also made a good showing of themselves. Revenue from its Intelligent Cloud business had grown to $6.7 billion, up from $6.1 Billion in Q3 with its Azure suite of services exhibiting a 102 percent year-over-year growth.

Apart from Microsoft’s cloud business, Productivity and Business Processes (Office, consumer Office et cetra) contributed around $7.0 billion to the $22.6 Billion revenue figure. This figure also shows a marked growth as compared to the last quarter,where it accounted for $6.3 billion in revenue.

Screen Shot 2016-07-20 at 2.58.31 am

Here is a further breakdown.

  • Office commercial products and cloud services revenue grew 5% driven by Office 365 commercial revenue growth of 54%
  • Office consumer products and cloud services revenue grew 19% with Office 365 consumer subscribers increasing to 23.1 million·
  • Dynamics products and cloud services revenue grew 6% with Dynamics CRM Online paid seats growing more than 2.5x year-over-year

The only disappointment for Microsoft was its Personal computing niche, which includes businesses like Windows, Devices, Gaming and Search. The section together clocked just $8.9 billion in revenue as compared to $12.7 billion in the last quarter. Like everything wrong that has heen happening with the Redmond giant lately, this is also in part thanks to the smartphone business which recorded a 71 percent drop.

Microsoft’s Search and advertising business also waxed strong with revenue excluding traffic acquisition costs growing by almost 16%. The company said that Windows 10, its latest platform, had a strong role to play in this growth.

In short, one of Microsoft’s better quarters. Following the happy news, Microsoft stocks exhibited their glee by jumping up 3.5 percents in after hour trading, from an initial depression of somewhere around 1.6 percent.

You can read more about the topic, by visiting Microsoft’s official press release, right here.

A bibliophile and a business enthusiast.

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