5 Keys From Microsoft's Q4 Financials

Big Quarter For Redmond

Microsoft capped its 2017 fiscal year with strong financial results for the fourth quarter, which ended June 30. Revenue rose 13 percent, to $23.31 billion, over the same quarter a year earlier, while profits surged. Fiscal 2017 was "a tremendous year of customer momentum, with cloud, AI and digital transformation," CEO Satya Nadella said during the company's earnings call Thursday. The Redmond, Wash.-based software giant announced the results a week after holding its Inspire partner conference, where the company unveiled a flood of enhancements to how it will work with channel partners.

Click through to read about five of the notable and surprising revelations from Microsoft's fiscal Q4 results.

Azure Steps Up The Pace

We already knew that Microsoft's Azure cloud platform has been the fastest growing offering in the company's portfolio. But Azure sales accelerated even further in Microsoft's fiscal fourth quarter, with year-over-year growth of 97 percent. That was even better than its fiscal third quarter, when Azure soared 93 percent year over year.

The fiscal Q4 Azure results helped propel Microsoft's intelligent cloud segment to 11 percent growth, to $7.4 billion, from the same period in 2016.

Office 365 Surpassed Traditional Office Licensing

One milestone from Microsoft's fiscal Q4: For the first time, Office 365 revenue surpassed that of its traditional Office licensing business. Office 365 commercial revenue rose 43 percent year over year during the quarter, while revenue from traditional commercial Office licenses fell 17 percent.

Office 365 was a main factor in giving Microsoft's productivity and business processes segment its strongest growth in Q4, with sales jumping 21 percent to $8.4 billion. Dynamics 365 revenue also helped boost the segment, with revenue jumping 74 percent during the quarter.

LinkedIn Surpassed $1B In Revenue

A second milestone for Microsoft during Q4 was that LinkedIn — which Microsoft bought last year for $26.2 — passed the $1 billion revenue mark for the first time in a fiscal quarter. Microsoft disclosed that LinkedIn revenue came in at $1.06 billion in Q4, representing 9.2 percent growth from the fiscal third quarter's results of $975 million. The LinkedIn acquisition closed Dec. 8, making this just the second time that Microsoft has been able to count a full quarter of financial results from the social media site used chiefly by professionals. LinkedIn's revenue growth also contributed to the strong results from Microsoft's productivity and business processes segment.

Surface Results Improved

For Microsoft's fiscal third quarter, which ended March 31, Nadella said that "Surface results fell short of expectations" as sales plunged 26 percent from a year earlier. Surface didn't return to growth during the fiscal fourth quarter, although its revenue declined by only 2 percent. Microsoft attributed the results to the timing of Surface product transitions; the Surface Pro line was last updated in the fall of 2015, before Microsoft released a new Surface Pro tablet in June. Therefore, only a small portion of the sales were counted in the fourth-quarter results. Microsoft also debuted the Surface Laptop in June, and during the company's earnings call Thursday, CFO Amy Hood said Microsoft has seen "early positive signals" from the launch of the Surface Laptop.

Profits Surged In Q4

While revenue rose 13 percent year over year during the fiscal fourth quarter, profits climbed by a substantially higher percentage. Microsoft reported that net income more than doubled, rising to $6.51 billion, or 83 cents per share, compared with $3.1 billion, or 39 cents per share, in the fiscal fourth quarter of 2016.