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Microsoft Q1 results hit a record on cloud power, beat view

Tech conglomerate Microsoft (MSFT) Wednesday said its earnings and revenues jumped to a record high in the first quarter, aided by strong performance by the cloud division. The results topped Wall Street estimates and the company’s stock gained sharply in the after-hours trading. The announcement comes days after the demise of Microsoft’s co-founder Paul Allen.

First-quarter net income rose to $8.8 billion or $1.14 per share from $6.6 billion or $0.84 per share in the corresponding period last year, far exceeding the market’s prediction. Total operating revenue jumped 19% annually to $29.1 billion, driven mainly a 24% growth in the Intelligent Cloud segment. The top-line surpassed estimates.

Microsoft first quarter 2019 Earnings Infographic
Microsoft Corporation Q1 2019 Earnings Infographic

Revenues of Business Processes and More Personal Computing grew 19% and 15% respectively. The Surface notebook, a revamped revision of which was rolled out recently, registered a 14% growth, while gaming revenue got a push from third-party titles for the Xbox software and surged 44%.

During the quarter, the company returned $6.1 billion to shareholders in the form of dividends and share repurchases, representing a 27% increase compared to last year.

Gaming revenue got a push from third-party titles for the Xbox software and surged 44% year-on-year

“Our record results for Q1 reflect our commitment to long-term strategic investments and consistent execution to drive revenue growth and operating margin expansion. We see continued demand for our cloud offerings, reflected in our commercial cloud revenue of $8.5 billion, up 47% year over year,” said CFO Amy Hood.

Microsoft’s latest update gives more power to users on app selection

The overall outlook for Microsoft remains bullish, considering the growth strategies being laid out by the management such as the acquisition of business networking platform LinkedIn for $26 billion. Initiatives like the xCloud game streaming service, which is scheduled to be rolled out next year, and the growing demand for Office 365 also look promising. For the time being, the stress will be on broadening the business-focused cloud service and achieving sufficient growth momentum for Azure.

Microsoft shares gained 4% during the extended trading session Wednesday following the announcement, after closing the regular session down 5%. Meanwhile, the stock is yet to recover from the sharp loss suffered earlier this month, marking the worst single-day fall since 2011.

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