But operating profit at Microsoft’s biggest division, More Personal Computing, which includes its Windows operating system, the Surface computer and its Xbox gaming system, rose 57 per cent from the prior-year quarter to $1.65 billion. According to said expectations, the company should’ve touted adjusted earnings of 64 cents per share and $22.09 billion in revenue.
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Meanwhile, “the intelligent cloud” was one of the key focus areas of Microsoft executives during the company’s quarterly earnings calls.
But revenue from business software and Internet-based services, known as cloud computing, didn’t grow as much as analysts expected. Those figures included a deferral of more than $1.5 billion in revenues related mostly to the July release of the new Windows 10 operating system, which represents a new model for how the company will distribute and update its flagship software.
Microsoft shares fell 3.8 percent, to $53.70 in after-hour trading.
While the company’s cloud services and Office 365 revenues grew at a decent rate, the revenue from Intelligent Cloud, which houses the Azure cloud, only grew revenue by 3%, up 8% in constant currency, to $6.1bn.
Accounting for deferred revenue that accounts for how Microsoft sells Windows and some other items, Microsoft’s profit would have been 47 cents a share.
Revenue at the software giant fell to $20.53bn from $21.73bn, lower than the $22.09bn analysts had expected. Azure revenue grew 120% in constant currency, Microsoft said, with Azure SQL usage more than doubling. On the consumer side, there are 22.2 million Office 365 subscriptions, up 6%. Dynamics, including licenses and cloud services revenue, went up 9% in constant currency and CRM Online seat adds more than doubled. The overall segment grew by 3% with revenue reaching $6.1 billion.
Phone revenue declined 46 percent. Surface Pro 4 and Surface Book revenue increased by 61 percent and search advertising by 18 percent.
The company did reveal some growth on the Xbox side of things, recording a 26% year-on-year rise in Xbox Live users, to 46 million.
“We believe enterprise deployments will continue to drive up the over 270 million monthly active devices running Windows 10”.
Microsoft’s cloud platform Azure is one of the mainstays in CEO Satya Nadella’s growth strategy, where the cloud platform is fighting fiercely with rivals Google and Amazon Web Services (AWS).
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But fear not, while Windows Phones are seemingly in a freefall into oblivion, the earnings report showed that many other parts of Microsoft’s business have remained profitable, and impressively so.
