Microsoft returned $5.3 billion to shareholders in the form of dividends and share repurchases in the fourth quarter of fiscal year 2018, an increase of 16 per cent compared to the fourth quarter of fiscal year 2017. Microsoft reported that Office commercial products and cloud services revenue increased 10% (up 8% in constant currency) mainly driven by strong Office 365 commercial revenue growth of 38% (up 35% in constant currency). Let's dive in and examine how each performed. "Given the trend of accelerating cloud computing revenue growth (11%, 13%, 15% last 3Qs) we are raising our free-cash-flow multiple", he wrote in a note out to clients.
Microsoft's overall revenue for the fourth fiscal quarter reached $30.1 billion, up 17 percent YoY and beating analysts' predictions of $29.2 billion.
"The strength of our results reflects accelerating innovation and the trust customers are placing in us to power their digital transformation", Nadella said.
Microsoft had fired several thousand employees a year ago as it announced a huge do-over in its sales strategy.
"Our hybrid value proposition has continued to resonate, so there are a bunch of workloads that are migrating to the cloud", the Microsoft boss said. The company cited record levels of job postings and LinkedIn sessions, 41% gain over a year prior.
Microsoft posts bumper Q4, with Windows, Surface, Azure all up
These results will surely make Microsoft happy, and it's now an $800 billion company. The devil is in the detail with this growth number as Microsoft states it occurred across Xbox One Windows 10 and mobile platforms signaling that perhaps more Windows 10 owners were signing up for Xbox Live than were people who owned Xbox One consoles. Windows OEM revenue is up 14% Y-o-Y and Windows Commercial did even better with 23% growth.
Intelligent Cloud revenues were $9.6bn, up 20 per cent. Server business revenues were up 24 per cent. With a revenue of $30.1 billion (up 17%), you wouldn't blame Microsoft's chief executive officer Satya Nadella for declaring it "an incredible year". Search revenue was up 17 percent, with, as ever, the twin factors of increased revenue per search and increased search volume to thank.
Stifel analyst Brad Reback summed it up nicely in terms of the overall picture now at Microsoft.
He increased his price target to $118 from $107 which is in line with the majority of other analysts response to the positive earnings beat.
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