Microsoft breaks $100bn annual revenues barrier propelled by Azure and Dynamics

CEO Satya Nadella hails "incredible year" for Microsoft

Microsoft revenues grew by 14 per cent to $110.4 billion in the year to the end of June, propelled by growth across the board, but in its Azure cloud services and Dynamics enterprise resource planning (ERP) businesses, in particular.

And fourth quarter figures - the three months to the end of June - would appear to indicate that the company's growth is speeding up, with the company posting revenues of $30.1 billion, up 17 per cent compared to the $25.6bn if filed in the fourth quarter of 2017.

Overall, the company's cloud business grew by 23 per cent in fiscal 2018, with Azure growing by 89 per cent.

"We had an incredible year, surpassing $100 billion in revenue as a result of our teams' relentless focus on customer success and the trust customers are placing in Microsoft," CEO Satya Nadella said in a statement.

"Our early investments in the intelligent cloud and intelligent edge are paying off, and we will continue to expand our reach in large and growing markets with differentiated innovation."

He added that while Microsoft is far from catching up with Amazon Web Services (AWS) in cloud, it had established itself as a strong and growing challenger.

However, net income for the year fell by 35 pre cent to $16.6 billion due to one-off US tax changes and restructuring costs, as well as the cost of investing in new cloud data centres.

"Azure maintained high growth, up 89 per cent, while server and cloud products increased 23 per cent," said TechMarketView analyst Angela Eager.

"This," she added, "points to popularity around the hybrid proposition and investment in the Azure on-premise stack as part of enterprise's cloud migration. There is significant ‘lift and shift' but enterprises are also buying into higher value services. Tellingly, the number of $10m-plus Azure deals doubled, year on year, while commercial cloud sales grew 56 per cent to $6.9 billion."

Microsoft's Personal Computing group, which includes Windows, Surface and Xbox, also performed well during Q4 and saw growth of 17 per cent during the three month period.

Surface revenue jumped 25 per cent to $1.1 billion, "driven by strong performance of the latest editions of Surface" says Microsoft, while Xbox gaming revenues increased by 39 per cent.

Microsoft is also benefiting from growing PC sales for the first time in six years, as Windows OEM Pro revenue grew 14 per cent, year over year. Non-pro versions of Windows OEM licenses declined by three per cent, which Microsoft claimed was due to "continued pressure in the entry-level price category".

Even LinkedIn, which includes the popular training site Lynda.com, chipped-in with some growth, with revenues up by 37 per cent to $1.4 billion, although operating losses weighed in at $182 million.