Analysts on average had expected a profit of 71c per share and revenue of $25.26bn, according to Thomson Reuters IBES.
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Shares in Microsoft were up more than 3% to $53.43 in after-hours trading in NY and have risen 10% in the past 12 months.
“They nailed the cloud”, said Matt Howard, a venture capitalist at Norwest Ventures who monitors Microsoft closely. The company reported earnings per share of $0.78 and has handed out $6.5bn to investors in share repurchases and dividends.
Revenue slipped to $23.80 billion, compared to $26.47 billion in the same period past year. Office commercial products and cloud services revenue grew 5 percent with Office 365 revenue growth of almost 70 percent. The company is slowly but surely converting its traditionally most lucrative software business into a subscription revenue stream.
Server products and cloud services grew 10 percent in constant currency, but the Intelligent Cloud sales were up 5 percent from a year ago.
Microsoft will endeavour to arrest the decline in the current quarter with the launch its new high-end Windows Phone devices, the Lumia 950 and Lumia 950 XL, in the current quarter.
“We delivered double-digit operating income growth in non-GAAP constant currency while investing in key strategic areas that position Microsoft for continued long-term growth”, said Amy Hood, executive vice president and chief financial officer of Microsoft, in a statement. Analysts don’t expect Microsoft to see revenue from Windows 10 until later this year.
The headline figure here is the phone revenue, which saw a decline of 49 percent in constant currency.
Microsoft also did not reveal how many Xbox One consoles it sold this quarter.
This quarter also brought major changes to Dynamics, where revenue grew 11% year over year when measured in constant currency.
Additionally, the company’s offerings with its XBox Live gaming service has now reached 48 million users, a 30% increase when compared to the same time past year.
“The enterprise cloud opportunity is massive”, said Nadella on the earnings call, describing the space as “larger than any market we have ever participated in”.
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Microsoft Office 365 consumer subscribers increased to 20.6 million.
