Microsoft reports $36.9 billion in Q2 2020 revenue: Azure up 62%, Surface up 6%, and LinkedIn up 24%

Microsoft today reported earnings for its second fiscal quarter of 2020, including revenue of $36.9 billion, net income of $11.6 billion, and earnings per share of $1.51 (compared to revenue of $32.5 billion, net income of $8.4 billion, and earnings per share of $1.08 in Q2 2019). All three of the company’s operating groups saw year-over-year growth.

Analysts had expected Microsoft to earn $35.7 billion in revenue and report earnings per share of $1.32. The company thus easily beat expectations. The company’s stock was up 1.5% in regular trading, and up another 1.5% in after-hours trading. Microsoft said it returned $8.5 billion to shareholders in the form of share repurchases and dividends during the quarter.

“We are innovating across every layer of our differentiated technology stack and leading in key secular areas that are critical to our customers’ success,” Microsoft CEO Satya Nadella said in a statement. “Along with our expanding opportunity, we are working to ensure the technology we build is inclusive, trusted and creates a more sustainable world, so every person and every organization can benefit.”

A 62% revenue increase for Azure indicates a slight rebound from the slowing cloud growth for the company. The figure has been falling steadily lately: 76% in Q2 2019, 73% in Q3 2019, 64% in Q4 2019, and 59% in Q1 2020. This is expected — growth has to slow eventually — but Microsoft needs to control the message — if not growth, then what? Microsoft does not break out exact Azure revenue numbers, likely to avoid comparisons with industry leader AWS.

Operating group highlights

Here are the highlights across Microsoft’s three operating groups:

  • Productivity and Business Processes: Up 17% to $11.8 billion. Office commercial revenue grew 16%, Office consumer and cloud revenue was up 19%, and Dynamics revenue increased 12%. LinkedIn revenue jumped a solid 24%. Office 365 consumer subscribers hit 37.2 million.
  • Intelligent Cloud: Up 27% to $11.9 billion. Server products and cloud services revenue grew 30%, while Enterprise Services revenue increased 6%. The big number as always was Azure revenue, which was up 62%.
  • More Personal Computing: Up 2% to $13.2 billion. Windows OEM revenue was up 18%, while Windows commercial revenue increased 25%. Search advertising revenue minus traffic acquisition costs increased 6%. Surface revenue increased by 6%, and Xbox content and services revenue decreased 11%.

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