Office 365 sees revenue growth of almost 70%

Microsoft said it had $20.4 billion (£13.24bn) in revenue for the quarter ending September 30, down 12 per cent from a year earlier. Microsoft shares soared 6 percent to a 15-year high in after-hours trading.

Chief Executive Satya Nadella said the company has been successful in delivering innovation people love and by so doing boosted earnings.

“We’re seeing great traction with businesses who want to bring Microsoft’s cloud, mobile device management technology and data analytics together to improve security and productivity”, said Microsoft COO Kevin Turner. The company reported that its “Intelligent Cloud” unit, which contains most of its business-focused infrastructure business, rose 8% this quarter to log $5.9 billion in revenue. This included Office commercial products and cloud services, which grew by 5% in constant currency and Office 365 revenue posted a growth of 70% in constant currency. Phone revenue tumbled 54% in constant currency, while Windows OEM revenue fell 6%, beating the overall PC market. Office 365 revenue, for example, climbed a staggering 70 percent increase, now reporting 18.2 million subscribers.

Microsoft’s profit grew 2 percent last quarter – nearly all thanks to the cloud. As Reuters notes, this is Microsoft ninth quarter in a row of reporting better than expected adjusted revenue.

Revenue and compute usage for the company’s Azure portfolio also rose by more than double. If the dollar had remained steady, Microsoft said sales would have only fallen 2 percent.

During the quarter, Microsoft announced a 16% increase in its quarterly dividend to $0.36 and returned $6.9 billion to shareholders in the form of share repurchases and dividends.

Productivity & Business Processes (Office/Office 365 and Dynamics apps) revenue fell 3% Y/Y (+4% exc. forex), with sales pressured by the shift from up-front licenses to cloud subscriptions.

Revenue of $21.66 billion non-GAAP versus $21.03 billion estimated. Xbox Live’s monthly users increased 28% YoY to 39 million.DISCLOSURES: Stifel Nicolaus and FBR Capital Markets act as market makers for Microsoft.

Investors don’t care about your father’s Microsoft – they’re very happy Microsoft has a booming cloud business. Microsoft also saw dynamics grow a further 12% with Dynamics CRM Online enterprise installed base growing more than 3 times year-over-year.

Search revenue, excluding traffic acquisition costs, was up 29 percent on a constant currency basis, Microsoft said.