Revenue for Office 365 is up 63 percent in constant currency on the commercial side, while commercial Office products and cloud services revenue is up seven percent. Surface revenue increased 61% in constant currency and topped $1 billion for the second straight quarter for the first time outside of a holiday period, the company said. All told, the More Personal Computing segment saw its revenues climb 1 percent to $9.5 billion. “As these organisations turn to us, we’re seeing momentum across Microsoft’s cloud services and with Windows 10”, said Satya Nadella, chief executive officer at Microsoft.
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Office 365 continues to shine as well and now has over 22 million subscribers, up ~80% YoY from 12.4 million during the same quarter in 2015.
Microsoft Corp. said its earnings declined 25% in the third quarter, as the company reported lower operating profits across several of its business lines. Microsoft follows Amazon in revealing that the cloud has lifted its fortunes beyond that major milestone. These predictions seem to have come true for this quarter and they’re likely to hold in the year ahead.Microsoft’s quarterly profit has missed analysts’ estimates as a continued slump in personal computer sales hurt the company’s core Windows business.
All in all, a pretty good quarter for Microsoft all things considered – but something clearly needs to be done about Windows Phone.
Shares fell 5 per cent in after hours trade to $52.92.
Azure revenue rose 120% and server products and cloud services revenue rose 5%.
One of the big growth engines for Microsoft has been its Office 365.
Microsoft has re-iterated its belief in a mythical annual income of $20bn from cloud despite growth in Azure and its apps-as-a-service business slowing.
Backed by the company’s massive Azure cloud computing infrastructure, the Intelligent Cloud segment grew revenues by 3 percent (8 percent in constant currency) to $6.1 billion. Despite revenue at Azure more than doubling, operating profits at the division shrank 14 percent while revenue grew three per cent.
Windows OEM was also down by 2% though the company said that it still outperformed the PC market.
Search ad revenue grew by 18 percent, thanks to growing Windows 10 usage.
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Moreover, despite the relatively weak performance of the Xbox One compared to Sony’s PlayStation 4, the number of Xbox Live users increased by 26 percent year over year to 46-million. Gaming revenue grew 6 percent in constant currency, with 11 percent increase in game revenue partially offset by reduced revenue from hardware sales.
