But during the earnings call, Nadella and other Microsoft execs stressed the success of the company’s cloud computing platform, Azure, and productivity software, Office 365-both of which showed significant growth.
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The Intelligent Cloud business improved by 5 percent, Microsoft says, with server products and Azure growing 10 percent and 140 percent, respectively.
Microsoft also fared well with its Office 365 cloud product, a major part of the “intelligent cloud” sector, which saw revenue growth of almost 70% in constant currency.
Microsoft shares were up more than 5 percent in after-hours trading.
Total revenue, however, fell 10.1% to $23.8bn, squeezed by a strong dollar as well as a weak personal computer market that has reduced demand for Microsoft’s Windows operating system.
Global shipments of new PCs declined 8.3 percent during the fourth quarter compared with a year earlier, the research firm Gartner recently reported. Cloud-services revenue rose 5% to $6.3 billion for the period.
Last quarter, Microsoft broke out results for its different business units for the first time and thankfully, the company didn’t make any changes to this process this time around.
Overall, the quarter seemed to be fairly indicative of Microsoft’s future: Look to the cloud to see where the company is going. But it’s likely the company’s cloud business that has investors excited.
Microsoft also benefited from the shift away from PCs to mobile computing devices, with Surface revenue up 29% in constant currency terms, driven by the launch of Surface Pro 4 and Surface Book.
Microsoft made “significant progress” in boosting its gross margins for Azure and Office 365, and its addition of premium-level offerings in Azure and Office 365 have helped on that front, CFO Amy Hood said on the call.
However there was more disappointing news for the Windows Phone, with revenue down 49% over the course of the year.
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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.
