During yesterday’s earnings call, CEO Satya Nadella (pictured above) said that Microsoft had a “solid quarter” in the most recent reporting period, with the commercial cloud business halfway to its fiscal year 2018 revenue goal of $20 billion.
Advertisement
Revenues in Microsoft’s Intelligent Cloud Group, which includes Server products, Azure and Enterprise Mobility, grew 8pc to $6.1bn. Surface revenue, however, proved to be a bright spot, increasing 56 percent on the back of the Surface Pro 4 and Surface Book release in the second fiscal quarter. Cloud revenue is expected to be in the range of $6.5 to $6.7 billion.
What’s more, the company’s phone revenue also dipped by 46 per, on top of last quarter’s similar 49 per cent fall.
Microsoft said that its Intelligent Cloud segment, which includes its lineup of Azure public cloud services, posted a revenue increase of 3% to $6.1 billion.
The company played down the loss of the “other bets” division: “We’re thoughtfully pursuing big bets and building exciting new technologies, in Google and our Other Bets, that position us well for long-term growth”, Said Ruth Porat, Alphabet CFO.
Azure is Microsoft’s cloud business, which competes with Amazon Web Services. Azure revenues, while not broken out explicitly, grew 120%.
There certainly was an air of hope when Microsoft purchased Nokia’s struggling phone business two years ago. Microsoft said it was able to outperform the PC market because of a “higher consumer premium device mix”. On the consumer side, there are 22.2 million Office 365 subscriptions, up 6%. 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. “As these organizations turn to us, we’re seeing momentum across Microsoft’s cloud services and with Windows 10”, said Nadella in a statement. Largely driven by offerings like Office 365 and Dynamics CRM and ERP, the company’s Productivity and Business Processes segment generated $6.5 billion in sales, a 1 percent year-over-year increase, or 6 percent using constant currency calculations that account for currency fluctuations.
Search revenue was up significantly, growing by 18 percent in constant currency, thanks to both higher revenue per search and higher search volume.
In the wake of an earnings miss, the Microsoft stock price today slumped as much as 9%.
Advertisement
A pattern which was repeated this quarter as well was the performance of Microsoft phones as phone revenue declined by 46%.
