Microsoft 2Q18 earnings are up thanks to cloud, not Surface

Microsoft reported impressive earnings for the fourth quarter.

The company grossed revenues of $28.9 billion with operating turnover of $8.7 billion, both figures up roughly 10 percent from 2016. In taking advantage of reduced repatriation tax rates from the Tax Cut & Jobs Act, the company has taken a $13.8 billion charge for the quarter, resulting in a $6.3 billion loss. Barring that, the company actually converted net income of $7.5 billion, up 20 percent.

As a software company that has a hand in hardware, earnings have been fairly flat for the quarter. Surface revenue was up 1 percent while OEM licensing fees were up 4 percent. The Xbox One X led the gaming division upwards by a more respectable 8 percent. The best performance? Bing. Search advertisements gave Microsoft 15 percent more cash than last year.

LinkedIn continues to grow rapidly with this being the fifth consecutive quarter of growth of at least 20 percent. Subscription revenue for Office 365 and Dynamics 365 recorded the best growth with these subdivisions gaining anywhere from 41 percent to 64 percent on an annual basis. Posing as the biggest challenger to Amazon, Azure cloud services continued its streak of more than 90 percent growth every quarter for 10 quarters.

Overall, the results impressed the market with after-hours trading nudging MSFT up yesterday and a 0.9 percent rise today.

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About The Author
Jules Wang
Jules Wang is News Editor for Pocketnow and one of the hosts of the Pocketnow Weekly Podcast. He came onto the team in 2014 as an intern editing and producing videos and the podcast while he was studying journalism at Emerson College. He graduated the year after and entered into his current position at Pocketnow, full-time.