Microsoft delivers better-than-expected Q2, navigates turbulence well

Revenue of $25.7 billion (Non-GAAP), versus $25.26 billion estimated. Azure was especially strong during the quarter, with revenue growing 140 percent in constant currency compared to last year’s quarter.

The figures beat Wall Street analyst expectations of revenue of $25.26 billion and earnings per share of 71 cents, while also improving upon the results of the corresponding quarter a year ago of $26.5 billion in revenue and earnings per share of 71 cents.

Microsoft’s revenue from personal computing, which includes the Windows business, fell 5% in the quarter to $12.7bn.

The company’s traditional PC sales business continues to lose business, alongside phone revenue, which has similarly fallen with the revenue stream declining 49%.

“The enterprise cloud opportunity is massive”, said Nadella on the earnings call, describing the space as “larger than any market we have ever participated in”.

The cloud growth is a bright spot for the company and is important to watch as the market moves toward greater use of cloud resources for software, infrastructure and application development.

Nadella also shared that Windows 10 was now powering more than 200 million devices, a number that Microsoft hopes will hit $1 billion in the next few years. Microsoft and Nokia have sold a total of 110 million Windows Phones compared to 4.5 billion iOS and Android phones in the same period.

Microsoft’s net income fell to $5 billion, in its second-quarter ended December 31 from $5.86 billion a year earlier.

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.

PC sales remain a drag on the company, with revenue continuing to decline quicker than expected.

Operations Chief Kevin Turner said Microsoft experienced a “strong holiday season”, citing growth at Xbox and Surface, which recently launched the Surface Pro 4 and Surface Book.

This division, which includes Office and Dynamics, generated $6.7 billion, which represents a decline of 2% year over year due to currency fluctuations.

Microsoft Office 365 consumer subscribers increased to 20.6 million.