Microsoft First Quarter 2019 Financial Results: Cloud, Surface, and Games

Microsoft today released its financial results for the first quarter of 2019 with a business turnover of $ 29.1 billion and a net profit of $ 8.8 billion. Revenues increased by 19% and net income increased by 34%. Microsoft claims that this first quarter is record, mainly due to the strong growth of the cloud.

Surface products jumped 14% from this quarter to $ 1.1 billion. This is the first quarter since Microsoft launched the Surface Go tablet last August. It is clear that Surface now represents a solid multi-billion dollar turnover. Microsoft has also managed to become one of the top five PC makers in the US in the last quarter, thanks to Surface.

Microsoft has also recently unveiled its new Surface Pro 6 and Surface Laptop 2 laptops, but since these devices were not on sale until October, revenues will be accounted for in the next quarter. Likewise, new Surface Studio 2 and Surface headsets will not be available until next month. We will have to wait for Microsoft's second quarter of 2019 financial results to see if they have an impact.

Photo of Amelia Holowaty Krales / The Verge

Microsoft's gaming sector has experienced steady growth recently and its sales grew 44% this quarter. Xbox hardware revenue grew 94% in the quarter, due to the timing of the launch of Xbox One X. The number of active users on Xbox Live also increased to 57 million during the last quarter.

Microsoft has even recently announced plans to begin testing its xCloud streaming service in 2019. Microsoft's cloud-based games will be heavily competing with services such as GeForce Now, PlayStation Now, Shadow, and Liquid Sky. Even Google is testing its own Project Stream service that will allow players to play Assassin's Creed Odyssey via its Chrome browser on a laptop or desktop.

Although Surface has propelled Microsoft into the top five PC makers in the US, the company has also performed well for its Windows license revenues. Windows OEM Pro revenues increased by 8% this quarter, which means that PC manufacturers have purchased more Premium licenses. Non-professional revenue was down 5% as PC makers continue to market more and more high-end Windows laptops to consumers and business customers. Sales of commercial products and Windows cloud services also increased by 12% due to the multiplication of multi-year contracts with companies.

Photo of Tom Warren / The Verge

About companies, Microsoft is growing impressively. The sales figure of commercial office products and services rose 17 cents this quarter and that of Office 365 trade by 36%. Businesses have adopted Office 365 aggressively over the past year and the number of monthly active users has now surpassed 155 million. Even Office consumer revenue has grown by 16% and 32.5 million consumers are now subscribing to Office 365.

In the cloud and on the server, Microsoft Azure revenue grew 76 percent in the quarter. Server products and cloud services in general also grew by 28%. The entire "smart cloud" division grew by 24 percent, accounting for $ 8.6 billion of Microsfot's $ 29.1 billion in revenue this quarter. More personal computing, including Windows, games, search and Surface, represents the largest division with a total revenue of $ 10.7 billion. Together, the cloud, servers and the Office account for $ 18.4 billion in revenue.

Microsoft's $ 26 billion bet on the acquisition of LinkedIn, the enterprise-based social and data networking company, remains promising. The business revenue of LinkedIn increased by 33% this quarter, thanks to an increase in the number of sessions.

Bing and Microsoft's research efforts also consistently contribute to Microsoft's overall revenue. Search advertising revenue increased 17% in the quarter and has steadily increased over the last year. This seems to be related to higher income per search and an increase in search volume as a whole.

Microsoft is now planning to hold a results conference call at 5:30 pm ET and we will update this article with important information.