SAN FRANCISCO (AFP) – Microsoft on Thursday posted quarterly earnings that trounced expectations, citing growth in partnerships with companies on technology and cloud computing services.
The United States (US) technology titan, shifting in recent years to business services from consumer tech, reported its net income rose 49 per cent to USD13.2 billion on revenue that was up 12 per cent to USD33.7 billion.
Microsoft’s profit in the fiscal fourth quarter that ended June 30 was helped by at USD2.6 billion tax benefit, according to the company.
The results showed the “strongest commercial quarter ever,” for Microsoft, said Chief Financial Officer Amy Hood.
Chief Executive Satya Nadella said the results closed out a record fiscal year for the tech giant, which has the largest market value of any company at more than USD1 trillion.
“It was a record fiscal year for Microsoft, a result of our deep partnerships with leading companies in every industry,” said Nadella.
“Every day, we work alongside our customers to help them build their own digital capability…This commitment to our customers’ success is resulting in larger, multi-year commercial cloud agreements and growing momentum across every layer of our technology stack.”
Net income for the fiscal year more than doubled to USD39.2 billion on revenue that was up 14 per cent to USD125.8 billion, according to the earnings report.
Microsoft shares rose 1.4 per cent to USD138.35 in after-market trading that followed release of the earnings figures.
“Microsoft is firing on all cylinders now, growing big in growing markets, and even managing growth in mature markets like PCs (personal computers),” said technology analyst Patrick Moorhead of Moor Insights and Strategy
The Redmond-based company is “cementing its spot” as a provider of software, infrastructure and platforms hosted as services in the internet cloud, according to Moorhead.
Microsoft reported growth across all it businesses except Xbox gaming unit where revenue declined 10 per cent.
A reason is likely that the latest generation Xbox console that debuted nearly six years ago is getting “long in the tooth,” with a successor on the horizon, Moorhead said.
Microsoft in June gave the world a first glimpse of a powerful next-generation Xbox that it aims to release late next year.
Xbox head Phil Spencer pulled back the curtain on “Project Scarlett,” a successor to the Xbox One that will give game makers “the power they need to bring their creative visions to life.”
The new Xbox was promised to be released in time for the Christmas holiday shopping season in 2020.
Xbox battles in the console gaming arena with Sony, which is working on a new generation PlayStation.
The commitment to consoles by longtime contenders in the market comes with the rise of video games hosted as subscription services streamed Netflix-style from data centres in the Internet cloud, which plays to Microsoft’s cloud and Xbox strengths.
Revenue from productivity and business processes division that includes business and consumer cloud services as well as career-focussed social network LinkedIn was up 14 per cent to USD11 billion, according to the earnings report.
Money taken in at LinkedIn jumped 25 per cent with the service seeing record levels of engagement, Microsoft said.
The company also saw revenue rise from server products; Windows operating software; online search advertising, and its Surface table computers.
Surface revenue growth was “surprising” considering the overall personal computer market was flat, according to Moorhead.