• Microsoft reported earnings for the holiday quarter of 2018 and came in just about exactly at Wall Street expectations on revenue.
  • Notably, Microsoft just barely missed expectations on earnings per share – but Microsoft said it’s because of a one-time charge involving the new tax laws, and it would have beaten the estimates otherwise.
  • Overall, Microsoft showed strong growth in all three of its business units, with Microsoft Azure, Office 365, and the Surface hardware line as standouts.
  • Microsoft stock is down about 2.5% in after-hours trading at the time of writing.

Microsoft reported results for its holiday quarter on Wednesday after the bell – and posted earnings that fell short of Wall Street expectations, though it showed stronger-than-expected cloud revenue.

Microsoft stock is down about 2.5% in after-hours trading at the time of writing. Microsoft came into this earnings season from a position of strength: Microsoft holds the title of most valuable company, with Amazon in a very close second.

Specifically, Microsoft reported:

  • Earnings of $1.08 a share, versus Wall Street estimates of $1.09.
  • Revenues of $32.5 billion, exactly in line with analyst consensus.
  • Intelligent-cloud revenue of $9.38 billion, above analyst estimates of $9.27 billion.

Importantly, Microsoft would have actually beaten Wall Street estimates on earnings per share by $0.01, except that the company took a one-time charge related to new tax legislation in the United States. Other than that, Microsoft delivered growth across all three of its major business units – and showed that its cloud-computing play isn’t slowing down.

Revenue from the intelligent-cloud business unit, which encompasses the Microsoft Azure cloud and other related products, was up 20% from the period a year ago, notching up $9.4 billion. The Microsoft Azure cloud, in particular, saw 76% revenue growth from the period a year ago, though the company doesn't share specific figures.

Similarly, the productivity-and-business-processes segment of its business was up 13% from the period a year ago, to $10.1 billion. That unit encompasses the Microsoft Office 365 cloud suite for businesses, which saw revenue growth of 34% from the same timeframe. Revenue from LinkedIn was up 29% from the period a year ago, as well.

Finally, the more-personal-computing segment, which includes Windows, showed signs of life. Revenue in this unit was up 7% from the quarter a year ago, to 13%. Revenue from licensing Windows to PC manufacturers was down 5%, Microsoft said.

However, Microsoft's Surface line of PC and tablet hardware had a very happy holiday indeed, with 39% growth from the same period in 2017. The gaming division saw 8% growth in the same timeframe, with revenue from Xbox subscriptions and services, including the Xbox Live subscription service, up 31%.