Windows revenue closely tracks sales of personal computers, which fell 10.6% globally in the December quarter from a year earlier, according to research firm IDC.
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Revenue from Productivity & Business segment declined 2%, down to $6.7 billion, as opposed to the 3% decline in the quarter prior, as the company transitioned from software licensing to Office 365 subscriptions for clients.
Microsoft has reported a five percent growth in its “Intelligent Cloud” division, which includes sales of its Azure public cloud services. Meanwhile Surface revenues were up 29 percent, search ad revenue (ex TAC) rose 21 percent, server products and cloud services revenue grew 10 percent, and Office 365 increased revenues almost 70 percent. The Intelligent Cloud (IC) business, which includes service revenue and Enterprise Services, generated $6.4 billion, compared with $5.9 billion in the third quarter, more of what analysts want to see.
This division covers Microsoft’s Office productivity tools, including Office 365 and the Dynamics business software lines, where Office consumer revenue declined by 14 percent, or eight percent in constant currency. Microsoft did not release a revenue figure for Bing, but said it expects it to “continue to grow and remain profitable”, said Amy Hood, chief financial officer at Microsoft. The service brought in $2.4 billion in revenue, up 69% from previous year.
Microsoft’s stock had climbed more than 26% in the past 12 months to $52.06 at Thursday’s close, even as the broader market had dropped 5%.
Revenue from the company’s Surface devices increased 29pc, driven by the launch of the Surface Pro 4 and the Surface Book. This helped offset a 49 percent in Phone revenue, a decline that Microsoft said reflected its “strategy change announced in July 2015”.
Now the second largest cloud provider, Microsoft stands far ahead of rivals Salesforce, Oracle and Google, according to analysts at Goldman Sachs.
“Businesses everywhere are using the Microsoft Cloud as their digital platform to drive their ambitious transformation agendas”, said Microsoft CEO Satya Nadella in the statement.
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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.
