Revenue for Microsoft’s cloud division rose 5 percent, to $6.3 billion, for the December quarter.
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The company’s shares rose more than three per cent to US$54.08 in after-market trades.
By the estimates of most analysts, Microsoft comes in second place for the most prominent segment of the market for cloud services, wherein storage and other service are being rented out to clients from data centers, behind Amazon. The software maker is focusing on its cloud-services segment, which includes services like Azure and was recently broken out into a new reporting segment.
Analysts surveyed by Thomson Reuters were expecting an adjusted profit of 71 cents a share for the quarter, the second of the company’s fiscal year.
Microsoft, while often seen as not possessing the cool factor of Google and Apple, has nonetheless continued to top expectations in recent quarters amid strong sales to businesses.
Excluding items, the company earned 78 cents per share.
Microsoft’s aggressive campaign to promote the latest version of its flagship software has already led to the deployment of Windows 10 on more than 200 million devices since its release last summer. On the flip side, the launch of the Surface Pro 4 and Surface Book saw Surface revenue grow by 29 percent in constant currency. Sales for server products and cloud services revenue grew 10% in constant currency, while Azure revenue grew 140% in constant currency with revenue from Azure premium services growing almost 3x year-over-year. This was largely driven by increased sales of Microsoft’s surface line, though phone revenue expectedly declined by 49 percent.
Non-GAAP revenues were down 10 per cent on the year at $25.7bn, with the Personal Computing division’s takings of $12.7bn down 5 per cent, and Productivity and Business Processes down 2 per cent at $6.7bn.
On the earnings call, CEO Satya Nadella said Microsoft is seeing “network effects” in its cloud business; for example, some customers are using Azure to funnel Office 365 data into other apps, he said. And finally Xbox Live active users grew to 48 million, that’s 30 per cent up year-on-year.
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Microsoft broke with tradition past year by releasing Windows 10 as a free upgrade for older PCs, with no charge for future updates.
