A division it calls “Intelligent Cloud”, which includes both Azure cloud business and Windows Server software sales, filed revenues of $6.3bn in the quarter, up by five per cent.
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Cloud services are going so well for Microsoft that Business Insider suggests it is growing faster than Amazon’s reported 127% in revenue gain.
“We are clear that long-term Windows growth and vibrancy rests on our ability to reinvent personal computers and personal computing”, Nadella said. Revenues here fell 2% to $12.7bn (at constant currencies), which the company said was ahead of the broader PC market, reflecting a higher proportion of premium devices, a strong 29% underlying growth in revenues from Surface devices and a 30% increase in Xbox Live active users.
Revenue for Microsoft’s productivity segment, which includes the cloud version of Office and a conventional version, rose 5% on a constant-currency basis, Microsoft said.
All this is in line with CEO Satya Nadella’s overall strategy of shifting the company more heavily into cloud, and this was reflected by the response of the stock market.
Microsoft plans to hold an earnings call at 5:30PM EST.
Satya Nadella, Microsoft’s chief executive said: “Businesses everywhere are using the Microsoft Cloud as their digital platform to drive their ambitious transformation agendas”.
Microsoft beat Wall Street’s estimates for sales in key segments, including its cloud-computing business and the division that sells PC software, Surface tablets and Xbox gaming consoles.
The Redmond firm’s latest financial results revealed that 4.5 million Windows phones were sold in the last fiscal quarter, down from 10.5 million a year ago.
Microsoft gets to head into the weekend on a positive note.
Without that deferral, Microsoft had $25.69 billion in revenue and 78 cents a share in earnings, better than the average forecast of analysts surveyed by Thomson Reuters of 71 cents a share in earnings and $25.26 billion in revenue.
“Our commercial business executed well as our sales teams and partners helped customers realise the value of Microsoft’s cloud technologies across Azure, Office 365 and CRM Online”.
Otherwise, Nadella says he’s focused on offsetting the shrinking market by continuing Windows 10 itself more enterprise friendly with new security and compliance features, which will encourage more of the crucial business market to take the plunge and upgrade.
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Looking ahead, Microsoft expects to see a further shift towards cloud and services in its revenue results for the current quarter.
