Software-giant Microsoft (MSFT 0.23%) has seen impressive growth recently. In the company's fiscal 2018, revenue and earnings per share saw double-digit year-over-year growth, helped by a thriving commercial-cloud business. This momentum continued into the company's first quarter of fiscal 2019, which saw more strong revenue and earnings-per-share growth as commercial cloud revenue soared.

Investors have been pleased with Microsoft's momentum, sending shares 17% higher over the past 12 months. Can the company keep up its strong growth? Investors will get a glimpse into the software giant's business later this month. Microsoft reports fiscal second-quarter results on Jan. 30.

Leading up to Microsoft's earnings release, here's a preview of some of the key items worth watching.

Microsoft executive discusses the power of Microsoft Azure

Image source: Microsoft.

Commercial cloud revenue

No other revenue category captures Microsoft's momentum better than its commercial-cloud revenue. Encapsulating revenue from Office 365 commercial, Azure, and Dynamics 365, the revenue category lumps together some of Microsoft's most important catalysts. Not only are these products seeing rapid growth, but they also represent sustainable sources of revenue for the company.

Commercial cloud revenue increased 47% year over year to $8.5 billion in the company's fiscal first quarter, outpacing Microsoft's year-over-year growth in overall revenue of 19% for the same period. Notably, the segment accounts for 29% of revenue, playing a key role in the company's consolidated results.

With management indicating that Office 365 commercial, Azure, and Dynamics 365 all continued to thrive in its first quarter, investors should look for similar year-over-year growth in commercial cloud revenue in Microsoft's fiscal second quarter.


Microsoft's cloud-computing business, Azure, has been integral to the company's strong growth in its commercial cloud revenue. Even more, Azure's growth is helping drive gross margin expansion for the company.

Azure revenue soared 76% year over year in Q1. Because of its higher margin profile compared to the company's overall commercial cloud revenue category, Azure's outsize growth helped the company's commercial cloud gross margin improve by 4 percentage points to 62%.  

Given Azure's importance to Microsoft's growth story, investors should look for similarly strong growth from the cloud-computing business in fiscal Q2.


Another area to check on is LinkedIn. Since Microsoft acquired the social network for professionals in 2016, LinkedIn has been a strong performer for the company. In fiscal Q1, Microsoft said LinkedIn revenue was up 33% year over year. In addition, management noted that the social network saw record levels of engagement, evident by a 33% year-over-year increase in sessions.

For the company's fiscal second quarter, LinkedIn should continue growing rapidly, as management indicated in its first-quarter earnings call that execution has been strong across every aspect of LinkedIn's business.

Microsoft will report its fiscal second-quarter results after the market closes on Wednesday, Jan. 30.

Check out the latest Microsoft earnings call transcript.