The company’s Productivity and Business Processes group, responsible for applications like Office 365 and Dynamics CRM, took in $6.7 billion, down 2% year-over-year in Generally Accepted Accounting Principles (GAAP) terms but up 5% in constant currency. The software behemoth reported adjusted earnings per share (EPS) of $0.78 on revenues of $23.8 billion.
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Wall Street expected Microsoft to deliver an EPS of $0.71 on revenue of $25.26 billion.
The company reported a rise in unearned revenue balances of $19.8bn, up 8% in constant currencies, representing services that have been paid for up front, but not yet delivered.
Revenue in the business that includes Windows fell 5 percent to $12.7 billion.
Commercial Office 365 revenue growth was up 70 percent and the consumer version of the service had 20.6 million subscribers. Xbox Live monthly active users also were up 30 percent year-over-year to a record 48 million. 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. The fact that companies are moving much of their data onto the cloud proved a bright lucrative. The Intelligent Cloud business grew five per cent thanks to its component successes; server and cloud services, Azure revenue and Enterprise Mobility Services. Surface revenue grew 29% in constant currency terms, led by the recent launch of the Surface Pro 4 and Surface Book.
“Businesses everywhere are using the Microsoft Cloud as their digital platform to drive their ambitious transformation agendas”, said Satya Nadella, chief executive officer at Microsoft, in a statement. Microsoft’s stock rose in value by 7% following its earnings announcement.
Revenues at Microsoft fell by one-tenth in the last quarter of 2015, while profits fell by 15 per cent, both largely as a result of falling PC sales.
“They nailed the cloud”, said Matt Howard, a venture capitalist at Norwest Ventures who monitors Microsoft closely.
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The company said it will provide financial outlook when it holds a conference call with analysts later on Thursday.
