Microsoft posted the first quarter of its 2019 financial results today, reporting revenue of $29.1 billion and net income of $8.8 billion. Revenue is up 19 percent, and net income has increased by 34 percent. Microsoft says this is a record first quarter, thanks primarily to strong cloud growth. Surface revenue has jumped 14 percent year over year this quarter to $1.1 billion. This is the first quarter since Microsoft launched its Surface Go tablet in August, and it’s clear Surface is now a solid billion dollar business. Microsoft has also managed to become a top five PC manufacturer in the US during the recent quarter, thanks to Surface. On a call with investors, Microsoft CFO Amy Hood revealed that Surface revenue this quarter has been driven by Surface Book 2 and Surface Go sales. Microsoft also unveiled its new Surface Pro 6 and Surface Laptop 2 laptops recently, but these devices didn’t go on sale until October so the revenue will be counted next quarter. Likewise, the new Surface Studio 2 and Surface Headphones won’t be available until next month so we’ll have to wait for Microsoft’s Q2 2019 financial results to see if these have an impact. Xbox is up this quarter Microsoft’s gaming business has been growing steadily recently, and revenue is up 44 percent this quarter. Xbox hardware revenue has grown 94 percent this quarter, due to the timing of the Xbox One X launch. Xbox Live active users has also grown to 57 million in the recent quarter. In a call with investors, Microsoft CEO Satya Nadella says that “bringing [Xbox] Game Pass to the PC” is a big part of the company’s future for its Xbox services. Microsoft revealed recently that it plans to start trials of its xCloud game streaming service in 2019. Microsoft’s cloud gaming will have strong competition from services like GeForce Now, PlayStation Now, Shadow, and Liquid Sky. Even Google is testing its own Project Stream service that will let gamers play Assassin’s Creed Odyssey through its Chrome browser on a laptop or desktop. While Surface has pushed Microsoft into the top five PC makers in the US, the company also saw good results for its Windows licensing revenue. Windows OEM Pro revenue is up 8 percent this quarter, which means there was a higher mix of premium licenses being purchased by PC makers. Non-Pro revenue has decreased by 5 percent, as PC makers continue to market more and more high-end Windows laptops to consumers and commercial customers. Windows commercial products and cloud services revenue is also up 12 percent, due to an increase in multi-year agreements with businesses. Cloud and Office are strong Speaking of businesses, this is where Microsoft is recording impressive growth. Office commercial products and services revenue grew 17 precent this quarter, and Office 365 commercial revenue grew 36 percent. Businesses have been aggressively adopting Office 365 over the past year, and monthly active users has now surpassed 155 million. Even Office consumer revenue has grown by 16 percent, and 32.5 million consumers now subscribe to Office 365. Over on the cloud and server side, Microsoft’s Azure revenue has grown 76 percent this quarter. Server products and cloud services in general has also grown by 28 percent. The entire “intelligent cloud” division has now increased by 24 percent, marking $8.6 billion of Microsoft’s overall $29.1 billion revenue this quarter. More personal computing, that includes Windows, gaming, search, and Surface is the top division at $10.7 billion of overall revenue. Cloud, server, and Office combined makes up for $18.4 billion in revenue. Microsoft’s $26 billion bet on acquiring LinkedIn, the business-focused data and social networking company, is still looking promising. LinkedIn revenue grew 33 percent this quarter, thanks to an increase in sessions. Bing, and Microsoft’s search efforts, is also contributing steadily to Microsoft’s overall revenue. Search advertising revenue increased 17 percent this quarter, and it has been increasing like this consistently over the past year. It appears to be related to higher revenue per search and an increase in search volume overall. Looking forward, Microsoft CEO Satya Nadella now says the company’s GitHub acquisition will close “shortly.” The European Union approved the deal last week, and the $7.5 billion acquisition is a big part of Microsoft’s continued push towards supporting the open source community. Update, October 24th 6:10PM ET: Article updated with comments from Microsoft CEO Satya Nadella and Microsoft CFO Amy Hood.<doc-sep>Bloomberg (Bloomberg) -- Credit Suisse Group AG executives ignored warnings from colleagues about troubled steel tycoon Sanjeev Gupta as they channeled $1.2 billion of client funds to his businesses, according to people familiar with the matter.Bankers in Credit Suisse’s commodity trade-finance unit blacklisted Gupta’s Liberty Commodities Ltd. in 2016 because they suspected some of its deals weren’t legitimate, the people said. When they learned about two years later that the bank was lending to his companies through a suite of investment funds, which eventually grew to $10 billion, they flagged their worries to leaders in compliance and the division that housed the loans, one of the people said.The disclosure that Credit Suisse may have put clients at risk despite internal concerns over Gupta’s businesses adds a new twist to the debacle stemming from the March implosion of Greensill Capital, the finance firm at the center of the three-way relationship.Investigations, LawsuitsThe U.K. Serious Fraud Office is now investigating Gupta’s group of companies for suspected fraud, including in its financing deals with Greensill, according to a May 14 statement. Credit Suisse has sued to force Gupta’s Liberty Commodities into insolvency and has since shut the funds that made the loans and launched an internal investigation. Investors are staring at losses as the bank confronts embarrassing lawsuits.“We are currently focusing our efforts on recovering our investors’ money,” Will Bowen, a spokesman for Credit Suisse in London, said in an emailed statement, adding that the bank’s internal probe will focus on “all of the issues” linked to the funds. “We are committed to learning the lessons and will share the relevant lessons learnt at the appropriate time.”Andrew Mitchell, a spokesman for the Gupta Family Group Alliance, or GFG Alliance, a collective of businesses linked to Gupta including Liberty Commodities, denied any wrongdoing.The Greensill saga represents just one of the two disasters that rocked Credit Suisse in the first half of 2021. Since Greensill began unraveling, the bank has announced a $5.5 billion hit from the blowup at Archegos Capital Management.ApologiesFormer Chairman Urs Rohner apologized to shareholders and his successor, Antonio Horta-Osorio, who arrived at the end of April, has promised a sweeping strategy review.Chief Executive Officer Thomas Gottstein, who was head of the division that oversaw trade finance, wasn’t aware of the internal concerns about Gupta that had prompted the bank to cut him off, according to a person familiar with the matter.Employees at the trade-finance unit, which lends money for the buying and selling of commodities, cut ties with Gupta in 2016 after becoming skeptical toward his Liberty Commodities, the people said. They distrusted the documents the company provided, triggering doubts about its transactions, they said. In one example reported by Bloomberg, the company had presented another bank with what seemed to be duplicate shipping receipts. A spokesman for Gupta has denied any wrongdoing.Banking TiesLiberty Commodities pledged assets to Credit Suisse as security for borrowings in 2013 but by early 2016, all such commitments had been extinguished, indicating that the financing relationship had ceased, U.K. Companies House filings show. And while Gupta’s company listed the Swiss bank as one of its lenders in its 2014 annual report, it didn’t in the following year’s report, which is dated May 2016, according to the filings.Their counterparts at other banks, including Macquarie Group Ltd. and Sberbank PJSC, halted trading with Liberty Commodities around the same time because of similar concerns; Goldman Sachs Group Inc. also stopped in 2016, Bloomberg has reported.Nevertheless, executives at Credit Suisse’s asset-management division -- which creates investment products for clients and charges a fee for overseeing them -- began arranging a suite of funds focused on supply-chain finance in 2017. The entities bought securitized loans packaged by Greensill, a firm created by Australian businessman Lex Greensill. Much of the debts were linked to Gupta’s businesses.WarningsOfficials at the commodity trade-finance unit were concerned when they found out about the funds’ links to Gupta and took their fears to Thomas Grotzer, general counsel for the bank’s Swiss division. They also warned Luc Mathys and Lukas Haas, the bankers who helped oversee the trades at the asset-management unit.Grotzer was promoted last month to interim global head of compliance at Credit Suisse. He didn’t respond to requests for comment. Mathys, head of fixed-income at the asset-management division, and Haas, a portfolio manager, were put on temporary leave in March. Neither responded to requests for comment.The bank pushed ahead with the funds and marketed them to investors as being made up of short-term debt secured on invoices, assets considered so safe that Credit Suisse gave the largest vehicle its lowest rating for risk. Yet part of the loans were linked to mere possible future revenues.Other parts of the bank continued working with Gupta as well. Credit Suisse’s investment bankers were due to lead an initial public offering for Liberty’s U.S. steel arm, which was ultimately pulled, according to a statement from the company. Gupta also announced that the Swiss bank would finance his planned acquisition of Thyssenkrupp AG’s steel unit, which fell apart earlier this year.Credit Suisse has so far recouped about $5.9 billion of the $10 billion in these supply-chain funds, but it remains unclear how much will be returned ultimately to investors. Loans to Gupta’s businesses are among a batch of debts that are the “principal sources of valuation uncertainty,” the bank said earlier this month.Liberty Commodities’s external legal advisors investigated “alleged rumors concerning the paperwork” it used in 2019, according to Mitchell, the spokesman for GFG Alliance. They found no evidence to substantiate the rumors, nor was the company “ever subject to further complaints or proceedings,” he said.“LCL has ongoing banking relationships with separate financial institutions,” Mitchell said, referring to Liberty Commodities. “The trade-finance market has been hugely challenging for all but the very largest commodities traders in recent years. Nevertheless, no financial institution has been left out of pocket as a result of lending money to LCL. On the contrary, they have received substantial commercial returns.”More stories like this are available on bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.<doc-sep>Microsoft has posted the results of the first quarter of its 2019 financial year, which runs up until September 30, 2018. Revenue was $29.1 billion, up 19 percent year on year, to set a new record for the company's first quarter. Operating income rose 29 percent to $10.0 billion, and net income was up 34 percent to $8.8 billion. Earnings per share were up 36 percent at $1.14. Microsoft currently has three reporting segments: Productivity and Business Processes (covering Office, Exchange, SharePoint, Skype, Dynamics, and LinkedIn), Intelligent Cloud (including Azure, Windows Server, SQL Server, Visual Studio, and Enterprise Services), and More Personal Computing (covering Windows, hardware, and Xbox, as well as search and advertising). Productivity group revenue was up 19 percent to $9.8 billion, with operating income up 29 percent to $3.9 billion. Both commercial and consumer Office sales were up by 17 and 16 percent respectively, and Office 365 continues to grow; commercial seats were up 29 percent year on year, and it now has more than 155 million monthly active users. There are also now 32.5 million consumer subscribers. This ongoing switch to the cloud meant that perpetually licensed Office revenue was down 12 percent. Dynamics revenue is up 20 percent, and LinkedIn revenue has grown 33 percent. Intelligent Cloud revenue is up 24 percent to $8.6 billion, with operating income up 37 percent to $3.0 billion. Azure revenue was up 76 percent year-on-year, Server product revenue was up 10 percent, and Enterprise Services revenue grew by 6 percent. Enterprise Mobility Suite now has 88 million seats, up 59 percent year on year, and 6 million seats sequentially. Advertisement Over in More Personal Computing, revenue was up 15 percent to $10.8 billion, with operating income up 23 percent to $3.1 billion. We continue to see the split between corporate PC sales, which are growing, and home PC sales, which are not. Windows Pro revenue was up 8 percent, in contrast to non-Pro revenue dropping by 5 percent. Windows cloud services grew by 12 percent compared to one year ago. Surface Go Surface revenue was up 14 percent to $1.2 billion in a quarter that saw the launch of a new device, the Surface Go. Gaming looks strong, with revenue growing 44 percent to $2.8 billion, and a total of 57 million active Xbox Live users. Xbox hardware revenue nearly doubled, up by 94 percent. This is a product of having the Xbox One X on the market and the relatively weak hardware sales a year ago. Search revenue grew 17 percent. The numbers grow a bit bigger, but the story remains familiar: cloud services are growing, on-premises Office customers are adopting Office 365, and the corporate PC refresh cycle is bolstering some Windows revenue, partially offset by the continuing decline of the consumer PC market. Surface should start to reach new markets with the availability of the Surface Go, but thus far the revenue impact appears limited, leaving Microsoft's hardware division in this weird position: it's humming along steadily but still stuck at around that $1.1 billion-per-quarter mark, not shifting even when Microsoft adds new systems and price points to the mix.<doc-sep>
Start transforming your game’s economy and increase your bottom line. Get the free guide now. Elevate your enterprise data technology and strategy at Transform 2021. Microsoft today reported earnings for its first fiscal quarter of 2019, including revenue of $29.1 billion, net income of $8.8 billion, and earnings per share of $1.14 (compared to revenue of $24.5 billion, net income of $6.6 billion, and earnings per share of $0.84 in Q1 2018). All three of the company’s operating groups saw double-digit year-over-year growth. Analysts had expected Microsoft to earn $27.9 billion in revenue and earnings per share of $0.96. The company thus easily beat expectations. The company’s stock was down 5.35 percent in regular trading, but up more than 3 percent in after-hours trading. Microsoft said it returned $6.1 billion to shareholders in the form of share repurchases and dividends during the quarter. “We are off to a great start in fiscal 2019, a result of our innovation and the trust customers are placing in us to power their digital transformation,” Microsoft CEO Satya Nadella said in a statement. “We’re excited to help our customers build the digital capability they need to thrive and grow, with a business model that is fundamentally aligned to their success.” $MSFT RECORD Q1 EARNINGS Revenue: $29.1 billion ⬆️ 19% Operating income $10.0 billion ⬆️ 29% Net Income: $8.8 billion ⬆️ 34% EPS: $1.14 ⬆️ 36% pic.twitter.com/Epqwo1FCWw — Microsoft (@Microsoft) October 24, 2018 What Nadella didn’t say is that this was a record Q1 quarter for the company. The consistent quarterly success can be attributed to his plan to turn Microsoft into a cloud company. Last year, Microsoft’s cloud annualized run rate passed $20 billion, ahead of schedule. Here are the highlights across Microsoft’s three operating groups: Productivity and Business Processes: Up 19 percent to $9.8 billion. Office commercial revenue grew 17 percent, Office consumer and cloud revenue was up 16 percent, and Dynamics revenue increased 20 percent. LinkedIn revenue jumped a whopping 33 percent. Office 365 consumer subscribers hit 32.5 million. Intelligent Cloud: Up 24 percent to $8.6 billion. Server products and cloud services revenue grew 28 percent, while Enterprise Services revenue increased 6 percent. The big number as always was Azure revenue, which took off by 76 percent. More Personal Computing: Up 15 percent at $10.7 billion. Windows OEM revenue was up 3 percent, while Windows commercial revenue increased 12 percent. Search acquisition advertising revenue minus traffic acquisition costs jumped 17 percent. Surface revenue increased by 14 percent, and gaming revenue was up 44 percent (driven largely by Xbox software and service growth). Microsoft has effectively monetized its LinkedIn acquisition. It has been more than two years since Microsoft announced plans to acquire LinkedIn, although the acquisition closed in December 2016. But the water is only beginning to boil — just yesterday the Bing ads team announced profile targeting that leverages LinkedIn data for search campaigns. After Microsoft closes its $7.5 billion acquisition of GitHub, we’ll be watching to see if it can manage that investment as successfully. The EU only approved Microsoft’s GitHub acquisition last week. The steady growth of Surface is no longer questionable — five $1 billion quarters will do that. Earlier this month, Microsoft held a Surface hardware event in New York City, where it announced three refreshed devices: Surface Laptop 2, Surface Pro 6, and Surface Studio 2. A week later, we learned Microsoft had for the first time become a top 5 PC vendor in the U.S. That said, because Microsoft doesn’t break out Surface sales, we still don’t know how, for example, the new Surface Go is selling compared to the older Surface Book 2. Lastly, gaming has been a big winner for Microsoft lately. The aforementioned 44 percent gaming revenue growth was driven by Xbox software and services rising 36 percent and Xbox hardware revenue jumping 94 percent.