Microsoft Q1 FY18: Office 365 is the new Windows

Microsoft today announced its Q1 FY18 earnings results. It posted a revenue of $24.5 billion and operating income of $6.6 billion. Microsoft reported that Office commercial products and cloud services revenue increased 10% (up 10% in constant currency) mainly driven by strong Office 365 commercial revenue growth of 42% (up 42% in constant currency).

Office 365 continues to grow in the consumer segment also. Office consumer products and cloud services revenue increased 12% (up 12% in constant currency). Microsoft mentioned that total Office 365 consumer subscribers increased to 28 million up from 27 million last quarter.

When you look at the earnings numbers of Office products and services for the past few years, you can notice that Office is quietly becoming the primary cash cow for Microsoft replacing Windows. Recently Microsoft mentioned that the adoption rate of Office 365 subscription service is much better than their internal projections.

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