Microsoft revenue was $23.3 billion (+13 percent) — driven by the acquisition of LinkedIn and growth in Cloud business – in Q4 fiscal 2017.
Microsoft achieved gross margin of $14.9 billion (+18 percent) – reflecting growth across each of its segments including LinkedIn.
“Innovation across our cloud platforms drove strong results this quarter,” said Satya Nadella, chief executive officer at Microsoft, “Customers are looking to Microsoft and our thriving partner ecosystem to accelerate their own digital transformations and to unlock new opportunity in this era of intelligent cloud and intelligent edge.”
Q4 fiscal 2017
# Revenue of $23.3 billion
# Operating income of $5.3 billion
# Net income of $6.5 billion
Fiscal Year 2017
# Revenue of $90 billion
# Operating income of $22.3 billion
# Net income of $21.2 billion
Kelsey Mason, analyst at TBR, said Microsoft’s revenue growth reached double digits for the first time since 2014. While LinkedIn was a large contributor to this growth, organic growth was also strong, driven by an increasing mix of cloud revenue.
Gross margin percentage increased due to margin percent increase in More Personal Computing and segment sales mix, offset in part by margin percent declines in Productivity and Business Processes and Intelligent Cloud. Gross margin percentage includes a 10-point improvement in commercial cloud gross margin across Azure, Office 365, and Dynamics 365.
Microsoft said its operating income was $5.3 billion (+73 percent) — driven by higher gross margin and a reduction in impairment and restructuring expenses.
Operating income included an operating loss of $361 million related to the acquisition of LinkedIn, including $371 million of amortization of acquired intangible assets.
Microsoft’s Productivity and Business Processes revenue rose $1.5 billion or 21 percent, driven by the acquisition of LinkedIn and higher revenue from Office.
Microsoft said LinkedIn revenue was $1.1 billion, driven by revenue from Talent Solutions.
Office Commercial revenue increased $277 million or 5 percent, driven by higher revenue from Office 365 commercial, mainly due to growth in subscribers.
Office Consumer revenue increased $99 million or 13 percent, driven by higher revenue from Office 365 consumer, mainly due to growth in subscribers.
Dynamics revenue increased 7 percent, primarily due to higher revenue from Dynamics 365.
Microsoft’s Intelligent Cloud revenue increased $723 million or 11 percent, primarily due to higher revenue from server products and cloud services.
Server products and cloud services revenue grew $764 million or 15 percent, driven by Azure revenue growth of 97 percent and server products licensed on-premises revenue growth of 4 percent.
Enterprise Services revenue fell 3 percent, driven by a decline in revenue from custom support agreements, offset in part by higher revenue from Premier Support Services.
Microsoft’s More Personal Computing revenue fell $140 million or 2 percent, driven by lower revenue from Devices, offset in part by higher revenue from Windows, Search advertising, and Gaming.
Windows revenue grew $103 million or 2 percent, mainly due to higher revenue from Windows Commercial and Windows OEM. Windows Commercial revenue grew 8 percent, driven by multi-year agreement revenue.
Windows OEM revenue rose 1 percent. Windows OEM Pro revenue grew 3 percent, outperforming the commercial PC market, primarily due to a higher mix of premium licenses sold. Windows OEM non-Pro revenue decreased, outperforming the consumer PC market primarily due to a higher mix of premium devices sold.
Gaming revenue increased $44 million or 3 percent, driven by higher revenue from Xbox software and services. Xbox software and services revenue rose 11 percent, primarily due to a higher volume of Xbox Live transactions. Xbox hardware revenue fell 29 percent, driven by lower prices and a decline in volume of consoles sold.
Surface revenue decreased $20 million or 2 percent, primarily due to a reduction in volumes sold, offset in part by a higher mix of premium devices.
Microsoft said phone revenue decreased $361 million.