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Microsoft beats on revenue, earnings on strength of cloud business

Daniel Howley · Technology Editor
Updated

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Microsoft (MSFT) reported its Q1 2020 earnings on Wednesday, beating analysts’ expectations on the top and bottom line.

Here are the most important numbers from the quarter, as well as what analysts were expecting based on consensus estimates from Bloomberg:

Revenue: $33.1 billion versus $32.2 billion expected

Adjusted earnings per share: $1.38 versus $1.24 expected

Intelligent cloud division: $10.85 billion versus $10.44 billion expected

The company’s stock was down 0.54% following the announcement.

Microsoft has seen incredible growth in the last few years due in large part to its investments in its Azure cloud services. In the quarter, the company's intelligent cloud unit raked in $10.8 billion, a 27% increase year over year. The company's Office division saw a 5% increase in revenue. Microsoft’s bet on LinkedIn also saw a 25% increase in revenue.

FILE- In this Wednesday, Nov. 28, 2018, file photo Microsoft CEO Satya Nadella listens to a question as he sits in front of the Windows logo during the annual Microsoft Corp. shareholders meeting in Bellevue, Wash. Microsoft on Friday, Nov. 30, surpassed Apple as the world's most valuable publicly traded company. Under Nadella Microsoft has found stability by moving away from its flagship Windows operating system and focusing on cloud-computing services with long-term business contracts. (AP Photo/Ted S. Warren, File)
Microsoft CEO Satya Nadella. (AP Photo/Ted S. Warren, File)

It wasn't just the cloud that helped the company, though. Microsoft's More Personal Computing division also pulled in $11.1 billion with its Windows OEM revenue up 9%, and Windows Commercial Products and Cloud up 26%. Its Surface line, however, was down 4%. That could change moving forward, as the company recently announced a slew of new Surface devices during a press event in October.

But investors are most interested in Azure and the continued growth opportunities it has to offer. While Azure is growing, that growth appears to be slowing. Microsoft reported revenue growth for Azure of 59% year over year, compared to 64% reported year over year last quarter.

It's why Microsoft's market cap is more than $1 trillion. If Microsoft wants to stay on track, it’ll need to make sure its cloud business is poised for continued expansion.

More from Dan:

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