Microsoft (MSFT) posts nearly $50B in quarterly revenue, beats expectations due to cloud growth. Continued growth in Microsoft’s cloud business boosted its quarterly revenue to $49.4 billion, up 18%, with profits of $16.7 billion, up 8%, beating Wall Street’s expectations with earnings per share of $2.2.
Revenue increased $8.2 billion or 22% driven by growth across each of our segments. Intelligent Cloud revenue increased driven by Azure and other cloud services. Productivity and Business Processes revenue increased driven by Office 365 Commercial and LinkedIn. More Personal Computing revenue increased driven by Search and news advertising, Windows, and Gaming.
Cost of revenue increased $2.6 billion or 24% driven by growth in Microsoft Cloud and Gaming.
Gross margin increased $5.5 billion or 21% driven by growth across each of our segments.
-Gross margin percentage decreased slightly. Excluding the impact of the change in accounting estimate for the useful lives of our server and network equipment, gross margin percentage increased 1 point, driven by improvements in Productivity and Business Processes and Intelligent Cloud.
–Microsoft Cloud gross margin percentage decreased slightly to 71%. Excluding the impact of the change in accounting estimate, Microsoft Cloud gross margin percentage increased 4 points, driven by improvement in Azure and other cloud services, offset in part by sales mix shift to Azure and other cloud services.
Operating expenses increased $1.2 billion or 11% driven by investments in cloud engineering, Gaming, and commercial sales.
Key changes in operating expenses were:
-Research and development expenses increased $673 million or 14% driven by investments in cloud engineering and Gaming.
-Sales and marketing expenses increased $316 million or 7% driven by investments in commercial sales, Windows marketing, and LinkedIn.
-General and administrative expenses increased $168 million or 15%, driven by an increase in headcount.
Operating income increased $4.4 billion or 27% driven by growth across each of our segments.
Current year net income and diluted EPS were positively impacted by the net tax benefit related to the transfer of intangible properties, which resulted in an increase to net income and diluted EPS of $3.3 billion and $0.44, respectively.
(Photo/Credit: Credit:SunflowerEY )
