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Microsoft Q2 2019 financial results: a strong Surface earnings as Windows slip

Microsoft released the second quarter of its financial results in 2019, publishing revenues of $ 32.5 billion and net income of $ 8.4 billion. The surface and games are marked, but the Windows license fees slip.

While Surface earnings rose just one percent in the same quarter last year, it reached a huge 39 percent this year to $ 1.86 billion. The big leap is not quite surprising, as Microsoft released Surface Pro 6 and Surface Laptop 2 during the latest quarter, along with the new Surface Studio 2 and surface headsets. It was a busy rest period for the surface, and the revenue reflected it.

Surface Book 2 and Surface Go sales increased sales of $ 1.1 billion in the previous quarter, so it is clear that demand continues through new surface devices. That means Surface is now almost $ 2 billion for Microsoft.

Microsoft's gaming business is a recent highlight of the company's revenue, and the fiscal K2 2019 is no different. Revenues from games have increased by 8 percent this quarter, although Xbox hardware revenue has declined by 19 percent mainly due to the launch of Xbox One X in the same quarter a year ago. Active users of Xbox Live also hit 64 million during the holidays, which is 8 percent more than the previous year.

We are still waiting to hear more about Microsoft's xCloud game streaming service, and the company is due to launch public testing this year. It's all part of Microsoft's plan to create its own Netflix games, but it will face competition from Google, Nvidia, Sony, and even maybe Amazon in the future.

Cloud games can become a key battleground for Microsoft and other technology companies, and the software manufacturer is already stepping ahead of some rivals thanks to cloud domination. Microsoft's Azure revenues rose 76 percent this quarter. Server and cloud services in general have also increased by 28 percent. The overall division of the "intelligent cloud" is now increased by 24 percent, which means that this quarter was $ 8.6 billion of Microsoft's total revenue of $ 29.1 billion.

Beyond the Windows side, OEM Pro's revenue has dropped by 5 percent this quarter, which Microsoft says is roughly in line with computer sales for businesses. Non-Pro revenues fell 11 percent, and Microsoft blames this for "continued pressure in the entry level category". In other words: Chromebooks. Microsoft unveiled its latest challenge on the Chromebook to appeal to students and schools in an attempt to protect Google's hardware for 2019. It is clear that pricing and entry-level devices threaten Windows licensing revenues because consumers have very different choices for devices.

As always, Microsoft's future growth seems increasingly dependent on its cloudy success. Azure revenue increased by 76 percent over the year, while commercial products and cloud services rose 11 percent. Microsoft also now has 33.3 million subscribers to Office 365, up from 29.2 million last year. LinkedIn, a $ 26 billion earnings from Microsoft, also saw solid revenue growth of 29 percent.

Microsoft will now hold a call for investors at 17:30 ET, and we will update this article with any additional information.

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