Microsoft continues cloud growth amid Xbox slowdown

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Microsoft has put its latest financial results success down to deep partnerships, despite a slowdown in sales of its Xbox gaming console.

The firm reported total revenue of $33.7 billion (£26.7 billion) for the last three months, up from $30.1 billion (£23.8 billion) during the same period in 2018.

It also revealed net income of $13.2 billion dollars (£10.4 billion) for the three months up until June 30.

Much of the growth came from its service offerings, particularly cloud computing which achieved revenue of $11 billion (£9 billion) – an increase of 39% year-over-year – Microsoft said.

However, there were disappointing numbers for gaming, with revenue said to be down 10%, and Xbox software and services revenue dropping 3%.

Xbox hardware revenue declined by almost half (48%), which the firm said was primarily due to a decrease in volume of consoles sold.

Chief executive Satya Nadella said the company’s performance was thanks to its commitment to working with other firms in the digital space.

“It was a record fiscal year for Microsoft, a result of our deep partnerships with leading companies in every industry,” Mr Nadella explained.

“Every day we work alongside our customers to help them build their own digital capability – innovating with them, creating new businesses with them, and earning their trust.

Satya Nadella
Microsoft chief executive Satya Nadella (Lauren Hurley/PA)

“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.”

Elsewhere, Office Consumer products and cloud services revenue increased 6%, with Office 365 Consumer subscriber numbers rising to 34.8 million.

It also said revenue for professional social network LinkedIn, which Microsoft acquired in 2016, jumped by 25%.

Commented Ryan Duguid, Chief Evangelist at Microsoft partner Nintex :

Microsoft has repeatedly beaten Wall Street’s expectations this year – its share price is up by one-third – and its latest results only reinforce this trend. Azure is a powerful differentiator, and it continues to gain market share. One key to Microsoft’s success with the cloud platform has been its embrace of openness and customer choice in tech stacks, and creating a common data model underneath everything.

“Microsoft is also seeing strong contributions from Office 365, and of course continuing strength in its original cash cow, Windows. It also has had a great year with Teams and has shown real momentum. Teams now claims 13 million users, 30% more than Slack.”

Chris Price
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