Microsoft reported quarterly sales and profit that topped analysts’ estimates, rekindling optimism about CEO Satya Nadella’s cloud strategy as more customers shifted to the company’s Internet-based software and services.
Advertisement
So far his plan has been well received by investors.
Microsoft, which has for the most part dropped its smartphone business, said phone revenue slid 71 percent from a year ago, while Surface saw a nine percent revenue gain from the release of Surface Pro 4 and Surface Book. Increasingly, that’s also true for big companies like General Electric and Boeing, which provide online data and other services for their commercial customers, and which recently signed deals to move some of those services to Microsoft’s cloud. Microsoft calculates run rate by multiplying revenue in the final month of the quarter by 12.
Office consumer products and cloud services revenue grew 19% with Office 365 consumer subscribers increasing to 23.1 million·.
“This past year was pivotal in both our own transformation and in partnering with our customers who are navigating their own digital transformations”. For the year, revenue from the More Personal Computing segment, which includes Windows, fell 6.3% to $40.46 billion.
In addition to the strong growth at Azure, Microsoft said server products and cloud services revenue increased 5 percent (up 8% in constant currency).
Not long ago, Microsoft’s failure to reach a Windows shipment goal would have sent the stock into the tank.
During the quarter, Microsoft recorded total charges of $1.11 billion, related to the restructuring of the phone business it acquired from Nokia and job cuts.
In comparison, Amazon Web Services is on track to do over billion of revenue in its current fiscal year.
Microsoft also announced that Xbox Live now has 49 million monthly active users and that its search advertising revenue was up 16 percent, largely due to the deeper integration of its search tools into Windows 10.
The software giant reported a net profit of $3.1bn (£2.4bn, €2.8bn) in the three months to 30 June, with earnings rising 2% year-on-year to $22.6bn.
Wall Street was expecting Microsoft to post per share earnings of 58 cents with revenue reaching $22.13 billion.
Advertisement
The company also said in June that it will launch the first major update to Windows 10 on August 2 which will reinforce security, improve the Cortana digital assistant, Windows Ink pencil tool and Microsoft Edge browser.
