Microsoft (NASDAQ:MSFT) reported first-quarter results on Oct. 24. The software and cloud computing giant delivered sharply higher sales and profits, driven by the growth of its popular Office, Windows, and Azure franchises.

Microsoft results: The raw numbers

Metric

Q1 2019

Q1 2018

Change (YOY)

Revenue

$29.08 billion

$24.54 billion

19%

Operating income

$9.96 billion

$7.71 billion

29%

Net income

$8.82 billion

$6.58 billion

34%

Earnings per share

$1.14

$0.84

36%

Data source: Microsoft Q1 2019 earnings release. YOY = year over year.

What happened with Microsoft this quarter?

Revenue in the productivity and business processes segment, which includes Microsoft's Office, Dynamics, and LinkedIn businesses, jumped 19% to $9.8 billion. Growth was broad-based, with Office 365 commercial, Dynamics 365, and LinkedIn revenue increasing 36%, 51%, and 33%, respectively.

Microsoft's intelligent-cloud division, which includes its server and cloud computing businesses, also enjoyed strong gains. Revenue in this segment rose 24% to $5.9 billion, fueled by the continued torrid growth of Microsoft's Azure cloud computing platform, which saw sales soar 76%.

Even Microsoft's personal computing segment -- which has been impacted by a stagnating global PC market -- delivered solid growth. Windows commercial products and cloud services revenue grew 12%. Gaming sales surged 44%, driven by a 36% increase in Xbox software and services revenue. And Surface revenue rose 14%, as Microsoft's devices continue to gain market share.

A person pointing toward an upwardly sloping chart

Microsoft is enjoying broad-based growth. Image source: Getty Images.

Better still, several of Microsoft's key businesses are becoming more profitable. Commercial cloud gross margin expanded to 62% from 58% in the prior-year period, as Azure's margins continue to improve as it scales its operations. 

All told, Microsoft's operating income increased 19% to $10 billion. Net income -- aided by a lower effective tax rate brought about by tax reform -- jumped 34% to $8.8 billion. And earnings per share, which was boosted by stock buybacks, leapt 36% to $1.14.

Looking forward

For the second quarter, Microsoft's guidance includes: 

  • Productivity and business processes revenue of $9.95 billion to $10.15 billion
  • Intelligent-cloud revenue of $9.15 billion to $9.35 billion
  • Personal computing revenue of between $12.8 billion and $13.2 billion

And management expects growth to remain robust in the year ahead. "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," CEO Satya Nadella said in a press release. "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."

Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool's board of directors. Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.