Cloud, Office 365 Help Microsoft Beat Wall Street’s Q2 Expectations

Last quarter, Microsoft also announced that its commercial cloud business was on an $8.2 billion annual run rate, up from $8.2 billion in its last financial quarter of 2015. Wall Street analysts were expecting 71 cents per share on revenue of $25.2 billion.

The company’s shares rose more than three percent to $54.08 in after-market trades.

Many of Microsoft’s businesses declined during the quarter, but the important businesses that investors believe will be the key to the company’s future, such as the cloud business, delivered strong growth during the quarter. Microsoft’s Windows OEM Pro revenue declined 6 percent in the latest quarter, according to CNBC.

Microsoft’s GAAP revenues for Q2 fell from $26.4bn past year to $237bn.

Revenue from the company’s increasingly important “Intelligent Cloud” business, which includes products such as Windows Server and platforms such as Azure, rose 5 per cent to US$6.3 billion.

Microsoft claimed that Azure revenue grew by 140 per cent in constant currency, “with revenue from Azure premium services growing by almost three times, year-over-year”.

Since Microsoft reports its Azure revenue within what it calls the Intelligent Cloud division, it’s unclear how much Azure, in particular, raked in; the cloud unit as a whole, however, brought in $6.3 billion, a 5% increase from past year.

Dynamics revenue grew 11 percent with Dynamics CRM Online seat adds more than doubling.

Chief Executive Satya Nadella has focussed on cloud services and mobile applications on slower growth in its traditional software business.

As for the figures, in its first fiscal quarters, which ended on 31 December, the net income that was reported is almost $5 billion, or 62 cents a share, compared with $5.86 billion, or 71 cents a share, during the same period a year earlier.

‘Businesses are also piloting Windows 10, which will drive deployments beyond 200 million active devices’.

Bing search revenue grew 21 percent (but was down sequentially), boosted by Windows 10 adoption according to the company.

The Surface division was one of the highlights of Microsoft’s most recent quarter. Office 365 saw 70% revenue growth and now has 20 million consumer subscribers.