Microsoft Q4: revenue up 13% YoY to $38B, net income of $11.2B, down 15% YoY, Intelligent Cloud revenue of $13.4B, up 17%, and Azure revenue up 47%
Microsoft Corp. today announced the following results for the quarter ended June 30, 2020, as compared to the corresponding period of last fiscal year:
Context & Ripple Effects
This quarter closes a three-year arc the coverage has been tracking: from the July 2017 report of $23.3B in revenue and just $7.4B in Intelligent Cloud sales (Microsoft's Q4 2017 results), through the 2018 quarter when Azure was still growing 89% (Q4 FY18's 89% Azure growth), to today's $13.4B Intelligent Cloud segment on 17% growth.
What changed is the shape of the P&L: revenue rose 13% to $38B and Azure still posted 47% growth, but net income fell 15% YoY to $11.2B — the first year-over-year decline in every quarter in this coverage run, which had previously shown double-digit net income growth each period.
First-order effects
- Intelligent Cloud at $13.4B is doing nearly all of Microsoft's growth work — the 17% segment gain outpaces the 13% consolidated figure, meaning non-cloud lines are effectively flat-to-declining this quarter.
Second-order effects
- Azure's deceleration from 89% growth in mid-2018 to 47% now signals a maturing base rather than weakening demand — the battle shifts from land-grab share gains to cost structure, where the 15% net income drop shows infrastructure spending outpacing revenue conversion for the first time in this series.
Third-order effects
- If the pattern holds across the next few quarters — the October report will test it — hyperscale cloud becomes a scale-and-capex business where growth rates compress mechanically and profitability hinges on utilization of owned datacenter capacity rather than license economics.
The trend: Hyperscale cloud is transitioning from hypergrowth land-grab to a capital-intensive scale business, with Microsoft's first net income decline in three years of reported quarters marking the inflection.