Microsoft’s Cloud Strategy Working, Company Smashes Q4 Expectations

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Software giant Microsoft recently reported 4Q2016 earnings of $22.6 billion ($20.6 billion GAP) and $0.69 ($0.39 GAAP) per-share profit which were well above Wall Street expectations thanks in large part to strong performance in their cloud business.

Microsoft is organized into three major business segments – Productivity and Business Processes which basically includes all the different versions of Office, Intelligent Cloud which includes enterprise services, server products, and cloud services, and Personal Computing which includes devices, gaming, search advertising, and Windows.

For 4QFY2016, Microsoft’s Intelligent Cloud business segment came in with the biggest gains with revenue increasing $415 million, or 7%. This is due in large part from high revenue in their cloud services division which saw Microsoft’s Azure revenue increase by 102% since 3QFY2016.

Microsoft’s Productivity and Business Processes business segment came in second place with an increase of $415 million, or 5%, revenue. This is due to higher revenues from both Office 365 Commercial and Office 365 Consumer, both of which saw a significant growth in subscribers.

Microsoft’s Personal Computing business segment unfortunately decreased in revenue droppping $346 million, or 4%, revenue. This is due to significantly lower revenue from the devices and gaming divisions. Microsoft’s mobile business suffered the most dropping 71% in revenue. This however was offset by search advertising revenue which increased 54% in the quarter.

 

Source: Microsoft

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