Microsoft released its quarterly earnings report today for the second quarter of its 2019 fiscal year, or the fourth quarter of the 2018 calendar year. The firm reported $32.5 billion in revenue, an increase of 12% year-over-year (YoY). Operating income increased by 18% to $10.3 billion, and net income was $8.4 billion ($8.6 billion non-GAAP), an increase of 14%. And earnings per share increased by 14% to $1.08 ($1.10 non-GAAP).
This is broken down into three categories: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. Productivity and Business Processes accounted for $10.1 billion in revenue, a 13% growth YoY. Intelligent Cloud was $9.4 billion for 20% growth, and the bulk of the revenue once again comes from More Personal Computing with $13 billion, at 7% growth.
The 13% growth in Productivity and Business Processes is mainly driven by Office 365 and LinkedIn. Office commercial products and cloud services grew a total of 11%, with the products declining by 21%, and the cloud services (Office 365 Commercial) growing by 34% (33% in constant currency). Microsoft also noted that Office 365 Commercial seats are up 27%.
Office consumer products and cloud services only grew by 1% (2% CC), and Microsoft blamed that on "channel inventories normalizing and a weaker than expected consumer PC market". The firm did not go into greater detail on how that's balanced between a decline in regular Office vs growth in Office 365, although it did say that there are now 33.3 million Office 365 Consumer subscribers. That's only an increase of 0.8 million from last quarter.
LinkedIn revenue grew by 29% (30% CC), and sessions grew by 30%. Dynamics products and cloud services grew by 17%, with Dynamics 365 accounting for a 51% increase (50% CC).
Intelligent Cloud revenue grew by 20% (21% CC), and that's from server products and cloud services. Azure once again saw a huge increase, by 76% YoY. Server products are up 3% (4% CC), and that combines for a 24% growth in server products and cloud services. Enterprise services grew by 6% (7% CC).
In the More Personal Computing department, Windows OEM revenue declined by 5%, with Pro declining 2% and non-Pro declining 11%. Windows Commercial products and cloud services grew though, by 13% (14% CC).
Surface had massive growth though, growing by 39% (41% CC), and this was likely due to the hardware refresh last quarter that included the Surface Pro 6, Surface Laptop 2, and Surface Studio 2.
Gaming also once again showed growth, with a total increase of 8% (9% CC). Xbox software and services grew by 31% (32% CC), but hardware revenue declined by 19%, as the Xbox One X launched in the same quarter last year. Xbox Live monthly active users also grew by 8% to 64 million, although that includes mobile and PC.
Finally, search revenue grew by 14%, but that doesn't include traffic acquisition costs.
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