Microsoft said sales growth would have been 11% in “constant currency” conditions and that the annualised revenue run rate for commercial cloud exceeds $9.4bn. Analysts don’t expect Microsoft to see revenue from Windows 10 until later this year. Server products and cloud services revenue grew 10%, accounting for currency fluctuations. Microsoft’s PC revenue drop was 5% from a year ago, generating $12.7 billion, with the decline in revenue clearly slowing down from Q1 when it was down 17% year over year.
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“Businesses everywhere are using the Microsoft cloud as their digital platform to drive their ambitious transformation agendas”, said Nadella, describing the enterprise cloud market opportunity as “massive” in an earnings call.
Microsoft’s shares were up 5.3 per cent in after-hours trading on Thursday.
Revenue for Windows phones fell 49% year-over-year.
“It was a strong holiday season for Microsoft, highlighted by Surface and Xbox”, Kevin Turner, COO at Microsoft, said in the call.
Microsoft’s fastest growing business is helping offset ongoing weakness in Windows sales.
Microsoft’s decision to focus more on cloud services – where its competitors include Amazon, Google, IBM and Cisco – has helped it move away from the declining PC market.
Overall these are quite positive results for Microsoft with its future-facing businesses, like cloud and Office 365 seeing continued and consistent growth, while its older divisions like Windows are weathering the storms of the PC market and outperforming it.
Azure revenues were up 140 percent in constant currency.
There was also good news for the company’s hugely popular games console, Xbox, with membership of its online platform Xbox Live rising by 30% to more than 48 million.
Microsoft also fared well with its Office 365 cloud product, a major part of the “intelligent cloud” sector, which saw revenue growth of almost 70% in constant currency.
Microsoft made $1.35 billion in revenue from Microsoft Surface tablets alone in the last quarter, largely due to the new Surface Pro 4 and the Surface Book laptops, the company reported.
“They nailed the cloud”, said Matt Howard, a venture capitalist at Norwest Ventures who monitors Microsoft closely. Meanwhile, Microsoft reported that its success in monetizing its search advertising had grown by 29%, which it attributed to the integration of search into Windows 10.
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Revenue in the business that includes Windows fell 5% to US$12.66bil (RM52.52bil).
