Microsoft’s revenue falls, but cloud remains a bright spot

Office 365 now has 20.6 million subscribers. The company pulled in revenue of $25.7 billion in constant currency, and $0.78 earnings per share.

Microsoft’s share price rose 6% in after-hours trading despite the company announcing fourth-quarter financials on 29 January 2016, showing a 15% year-on-year fall in profits and a 10.1% drop in revenue for the past three months of 2015.

Analysts on average had expected revenue of $25.26 billion.

However, Nadella said businesses are piloting Windows 10, which he expects will drive deployments beyond 200 million active devices.

The U.S. dollar’s rise against other currencies hit Microsoft hard, just as it drove down revenues for other tech titans like Apple and IBM.

Revenue from the company’s increasingly important “Intelligent Cloud” business, which includes products such as servers and platforms such as Azure cloud infrastructure and services, rose 5 percent to $6.3 billion.

The headline figure here is the phone revenue, which saw a decline of 49 percent in constant currency. With its cloud business, Microsoft is hosting companies’ content, websites and apps on its own massive data centers.

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. The More Personal Computing division was also down 5% from last quarter.

Chief Executive Satya Nadella has focussed on cloud services and mobile applications on slower growth in its traditional software business. That was a 22 percent increase from one year ago, with Microsoft citing the launch of the Surface Book and Surface Pro 4 as the main reasons for the increase.

Amazon made $2.4bn (£1.7bn) from Amazon Web Services in its last quarter, so you’d think Microsoft is blowing Amazon out of the water with its $6.3bn earnings, but Microsoft isn’t actually so transparent when it comes to reporting on its cloud.

There was also good news for the company’s hugely popular games console, Xbox, with membership of its online platform Xbox Live rising by 30% to more than 48 million. OEM revenue fell 5% but still came out ahead of a struggling PC market.

Microsoft broke with tradition previous year by releasing Windows 10 as a free upgrade for older PCs, with no charge for future updates.