Microsoft revenues up by 12 per cent driven by Azure cloud growth

Cloud - and Office 365 in particular - drove revenues up again, but Xbox hardware sales tanked

Microsoft has posted strong fourth-quarter and full-year results, partly driven by demand for cloud services.

Revenues rose by 12 per cent to $33.7 billion compared to the fourth quarter last year, while net income at weighed in at $13.2 billion.

For the full year to the end of June, meanwhile, Microsoft claimed revenues of $125.8 billion, "with double-digit topline and bottom-line growth", according to CEO Satya Nadella. That compares with $110.4 billion in fiscal 2018.

Much of the company's growth can be attributed to Microsoft's commercial cloud revenue, which grew by 39 per cent, year-over-year, to $11 billion in the fourth quarter - now accounting for one-third of the company's revenues.

This has been largely (but by no means exclusively) driven by the company's concerted effort to drive customers from on-premise Microsoft Office and Exchange email products to Office 365, which is hosted in Microsoft's Azure cloud. Office 365 revenues increased by 31 per cent.

Three years after Microsoft acquired LinkedIn for $26.2 billion, Microsoft has driven revenues derived from LinkedIn up by 25 per cent in the fourth quarter of fiscal 2019, compared to the same quarter a year earlier. Microsoft attributed this to "record levels of engagement highlighted by LinkedIn sessions growth of 22 per cent".

Meanwhile, revenue for Dynamics enterprise software products and cloud services increased by 12 per cent. Microsoft said this was driven by Dynamics 365 revenue growth of 45 per cent.

As for the Intelligent Cloud portfolio, revenues have increased by 19 per cent to $11.4 billion. Much of this growth was aided by strong uptake of Microsoft's server products and cloud services, with growth of 22 per cent.

In particular, Azure cloud computing service achieved revenue growth of 64 per cent. But revenue for enterprise services was less impressive, only increasing by 4 per cent.

Revenue for in what Microsoft calls its ‘More Personal Computing' portfolio was noticeably lower than other areas of the business, growing by just four per cent to $11.3 billion.

Highlights here include Windows OEM revenue growth of nine per cent; Windows Commercial products and cloud services revenue growth of 13 per cent; surface revenue growth of 14 per cent; and search advertising revenue growth of nine per cent.

But Microsoft will no doubt be disappointed with the results of its gaming business, with revenues declining by 10 per cent, with revenues for Xbox software and services down three per cent. However, revenues on Xbox hardware sales fell by 48 per cent as buyers hold off in the expectation of a new console, either later this year or next year. Microsoft has also revealed plans for a streaming games service coming later this year to compete with Google's Stadia gaming platform.