The world’s largest payments network operator posted earnings of $0.69 per share on revenues of $3.57 billion, up 5.4% from a year ago.
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The Intelligent Cloud division produced underlying revenue growth of 11%, driven by 10% growth in server and cloud service revenues and 140% revenue growth at Azure, Microsoft’s cloud computing platform for building and deploying applications and services through a global network of Microsoft-managed datacenters.
In all for the period ended December 31, Microsoft reported a profit of $5 billion, or 62 cents a share, down from $5.86 billion, or 71 cents a share, a year earlier.
Phone revenue declined 49 percent.
Chief executive Satya Nadella has been focusing on cloud services and revenue for the division rose 5% to $6.3bn.
Microsoft’s last quarter was the first holiday shopping season where the new Windows 10 operating system was on the market.
Specifically, Microsoft says that its Productivity and Business Processes division lost 2 percent in revenues to settle at $6.7 billion, with Office itself growing 5 percent and Office 365 achieving 20.6 million consumer subscribers.
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.
The second quarter figures reveal how a significant proportion of the company’s revenues now come from cloud, with commercial cloud revenues exceeding $9.4bn.
Microsoft’s aggressive campaign to promote Windows 10 has led to its deployment on more than 200 million devices since its July release. As Reuters reports, the results are better than analyst expectations mainly down to Microsoft’s cloud product success.
The number of people using Xbox Live online service for digital content and video game play climbed 30 percent to a record high of 48 million, Microsoft said.
In terms of devices, Surface sales increased strongly, with revenues up by 29 per cent following the launch of the Surface Pro 4 and Surface Book.
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Meanwhile, revenue from Windows operating system declined but outperformed the overall personal computer market, according to the Redmond, Washington-based company.
