Microsoft on Friday reported quarterly revenue and earnings that beat analysts’ estimates, powered by the continued momentum of its cloud business as well as strength in legacy software, tablets, and gaming.
For the fourth quarter, the tech giant’s revenue jumped 17% to $30.09 billion while operating income increased 35% to $10.4 billion. Earnings came in at $1.13 per share.
Analysts had predicted earnings of $1.08 per share on revenue of $29.21 billion.
The results appeared to vindicate Microsoft’s strategy of focusing on the cloud and other newer businesses. Server products and cloud revenue grew 26% in the latest quarter, driven by Azure cloud service revenue growth of 89%.
“We had an incredible year, surpassing $100 billion in revenue as a result of our teams’ relentless focus on customer success and the trust customers are placing in Microsoft,” CEO Satya Nadella said in a news release. “Our early investments in the intelligent cloud and intelligent edge are paying off, and we will continue to expand our reach in large and growing markets with differentiated innovation.”
According to research firm Canalys, Amazon Web Services is the cloud leader in terms of market share, followed by Microsoft, which is growing faster than AWS. Google is in third place.
“Microsoft has successfully come from behind to exceed Amazon’s cloud revenue, and that gap is only increasing in Microsoft’s favor,” Mark Sami, vice president at consultancy firm SPR, said. “I predict that Microsoft’s cloud market share will continue to grow and impress investors.”
But on the legacy software side, the company also showed strength, with revenue from core productivity and business processes unit, which includes the Office 365 software suite, rising 13.1% to $9.67 billion.
PC sales grew for the first time in six years amid strong business demand and Surface tablet revenue climbed 25% to $1.1 billion. Gaming revenue increased 39%, alongside Xbox software and services revenue growth of 36%.
“The cloud opportunity is a megatrend that will last for some time,” InvestorPlace said. “What’s more, Microsoft is positioning itself for other critical markets like IoT and AI.”