Microsoft (NASDAQ:MSFT) is on a roll. In the software and cloud company's fourth quarter of fiscal 2018, it posted double-digit growth across every major business segment and delivered exceptional growth in key cloud-based products. Microsoft's overall revenue and operating income jumped 17% and 35% year over year, respectively.
The tech giant's stellar fiscal 2018 has likely put the company on many new investors' watchlists. As investors get to know this reinvigorated Microsoft under the leadership of CEO Satya Nadella, it's worth going beyond the company's earnings release and tuning to its quarterly conference calls to get a better idea of what's driving Microsoft's success. Here are three insightful quotes from the company's fourth-quarter earnings call, where management discusses LinkedIn, gaming, and more.
Microsoft's 2016 acquisition of LinkedIn is increasingly looking like a winning bet. Sure, Microsoft had to fork over more than $26 billion to acquire the company, but LinkedIn continues to see incredible momentum nearly two years after the social network for professionals was acquired.
Over 575 million members strong, fiscal 2018 was a record year for LinkedIn. Further, Nadella said LinkedIn's year-over-year revenue growth accelerated for the fifth quarter in a row in Q4, to 37%.
"We saw record levels of engagement and job postings again this quarter, with sessions growth up 41% year-over-year," Nadella said. "This strong engagement is driven by quality of the feed, video, messaging and the acceleration of mobile usage, with mobile sessions up more than 55% year-over-year."
With 2018 gaming revenue surpassing $10 billion for the first time in company history, Microsoft's momentum in the segment is undeniable. Microsoft's gaming revenue increased an impressive 39% year over year in the company's fourth quarter. Xbox software and services revenue, specifically, rose 36% year over year.
Nadella explained Microsoft's commitment to capitalizing on this opportunity and summarized how the company is driving engagement in gaming.
"We are investing aggressively in content, community and cloud services across every endpoint to expand usage and deepen engagement with gamers," Nadella said. "The combination of Xbox Live, Game Pass subscriptions and Mixer are driving record levels of growth and engagement."
If there's one area that likely has Microsoft investors the most excited, it's in the company's fast-growing cloud offerings. Microsoft's fourth-quarter commercial cloud revenue increased 53% year over year to nearly $6.9 billion. For the fiscal year, commercial cloud revenue surpassed $23 billion -- up from less than $15 billion in fiscal 2017.
Microsoft CFO Amy Hood further detailed the company's strong growth in the cloud during Microsoft's fourth-quarter earnings call:
Customer commitment to our cloud platform continues to increase. In FY18, we closed a record number of multi-million dollar commercial cloud agreements and more than doubled the number of $10 million-plus Azure agreements. Our annuity mix increased 3 points year-over-year to 89%. As a result, commercial bookings increased 18%, even with a strong prior year comparable.
Microsoft's momentum spanned beyond LinkedIn, gaming, and commercial cloud. For instance, Surface revenue increased 25% year over year in Q4, and Office consumer revenue even rose a solid 8% thanks to growth in the product's subscriber base and higher recurring subscription revenue.
Management's optimistic update on its business gives investors more reasons to keep holding onto this winning investment.