Microsoft Corp, the first elder brother of US stocks, will announce his Q4 financial results for fiscal year 2019 after trading today.

Financial report review

Let's first review Microsoft Corp's performance in the last financial quarter. In fiscal year 2019, revenue from Q3 (Microsoft Corp's financial reporting time) was $30.571 billion, up 14% from $26.819 billion in the same period last year, and net profit was $8.809 billion, up 19% from $7.424 billion in the same period last year. Microsoft Corp Q3 adjusted EPS and revenue exceeded Wall Street expectations.

From a business point of view:

Microsoft Corp's new vitality

Microsoft Teams

According to Gartner, the market for videoconferencing solutions will reach $7.1 billion by 2022, and the main source of market growth is the growth of the cloud videoconferencing industry. Gartner expects the proportion of users attending via embedded audio conferencing to increase from 10 per cent in 2016 to 65 per cent in 2022.

Previously, our point of view wasBecause Teams is integrated into the Office 365 suite, this business contribution is more like an ecological complement to Office 365 collaborative work. Spiceworks previously reported that the increase in Teams usage is likely to be affected by the fact that Office 365users do not have to pay extra. With the gradual opening of the domestic cloud market in the future, Microsoft Corp Office 365 ecology has a huge space for development in China.

Recently, after the backup machine updated Windows 10 20H1 Insider Preview 18936, I found that Office365 users will pre-install the Team suite after the update. This also shows that Microsoft Corp will continue to promote Microsoft Team in the coming period of time to improve the larger Microsoft 365ecology.

Dynamics 365

In May this year, Microsoft Corp will officially bring Dynamics 365, including CRM and ERP, into the Chinese market, in cooperation with Office 365 and Azure. According to relevant media reports, Dynamics revenue in fiscal year 2017 is about $2 billion. Assuming a year-on-year growth rate of 40% in the fourth quarter of fiscal year 2019, Dynamics revenue could reach $4.8 billion in fiscal year 2019.

According to the previous Bloomberg survey of Microsoft Corp channel businessmen, channel businessmen are optimistic that Dynamics CRM will have the strength to challenge Salesforce.com Inc, the leader of the track, after being deeply bound with Adobe Inc. The survey shows that according to experience, Salesforce.com Inc and Dynamics have a market share of 70% and 30%. With the help of Adobe Inc, it is optimistically expected that the market share will reach 60% and 40%.

Q4 financial report focus

Azure and AWS race

Although compared with the annual growth rate of AWS 47% +, the growth rate of Azure 80% + is very dazzling. But in absolute terms, the gap is still there. According to Amazon.Com Inc's last financial report, AWS's quarterly revenue was 7.7 billion US dollars, up 41% from a year earlier, and the growth rate continued to slow. Microsoft Corp only disclosed Commercial cloud's revenue and Azure's revenue growth, with Commercial cloud's revenue of $9.6 billion, up 41 per cent from a year earlier.

In order to compare the revenue scale of Azure and AWS, we retrograde the revenue data of 2018 Q4 Azure based on Canalys. Combined with the fact that Azure accounted for about 40% of Commercial cloud revenue at that time, we finally got 2019 Q1 Azure revenue of about US $3.8 billion, which is basically half of that of AWS.

According to the questionnaire survey done by Bloomberg to Microsoft Corp channel merchants, the channel merchants revealed that Azure can win 90% of the large orders of more than 30 million US dollars and 40 million US dollars compared with AWS, while the orders won by AWS are more concentrated in small and medium-sized enterprises. Nadella also said in a conference call that 95% of Fortune 500 companies now use Azure. With Microsoft Corp's excellent political and business relations in the United States, Microsoft Corp has an advantage over Amazon.Com Inc in the face of big government contracts.

Recently, Microsoft Corp cloud business won a big order. AT&T Inc announced that he would use the company's Azure cloud and purchase Microsoft 365 packages for all employees. The contract is worth more than $2 billion, according to people familiar with the matter.

In fact, Microsoft Corp has an excellent opportunity to overtake at the corner, that is, to win a Pentagon super order worth 10 billion US dollars. Now only Microsoft Corp and Amazon.Com Inc are left in the finals.

What are the chances of a rebound in PC and Microsoft 365?

According to IDC data, the PC market ushered in a rare recovery. Shipments rose 4.7% year-on-year in the second quarter of 2019. According to the IDC report, in addition to the relief of the Intel production capacity crisis, it is also an important factor that Win7 is getting closer and closer to the timetable for stopping service. The former King Win7 has become an old age, and Windows 7 service support will expire on January 14, 2020.

Today, Win10 has led Win7 in market share for seven consecutive quarters. Nowadays, a large number of Win7 are still active in corporate offices, some for the needs of work, and some for the consideration of transfer costs and learning costs. And these enterprises are the target customers of the follow-up Microsoft 365 program. Whether the PC recovery has anything to do with Win10, we look forward to the Q4 financial report to give us the answer.

How is the Xbox line of business performing?

Without Sony Group Corp's E3 this year, Microsoft Corp sparkled the audience, showing what may be the strongest first-party lineup of Microsoft Corp in this generation. The scene predicted that the next-generation Xbox host will adopt the same AMD Zen 2 architecture as Sony Group Corp's PS5, Navi GPU, which supports the highest 8K/120fps game graphics and real-time ray tracing technology, and will also use SSD solid-state disk to improve game loading efficiency. The performance of the whole machine will reach 4 times that of Xbox One X, codenamed "Project Scarlett", which will be sold during the Christmas holiday next year.

In addition to hardware, Microsoft Corp's cloud gaming service Project xCloud will be launched in October, about a month earlier than Google's Stadia platform. Microsoft Corp also plans to land Xbox Game Pass on more platforms, including Nintendo Switch and even Sony Group Corp's PSN in addition to his own Xbox,Win10. Now, Microsoft Corp also gradually "software" the game business.

Conclusion

Finally, you can wait to get up tomorrow morning to see if Microsoft Corp's market capitalization is still above 1 trillion US dollars.