Microsoft financials raise doubts over the future of Windows Phone

Including revenue deferred to future quarters, however, the company’s earnings would have been 78 cents a share. Azure was especially strong during the quarter, with revenue growing 140 percent in constant currency compared to last year’s quarter.

Revenue from Office 365, which increased almost 70% year over year, accounted for the constant-currency revenue growth in this division. Microsoft’s PC revenue drop was 5% from a year ago, generating $12.7 billion, with the decline in revenue clearly slowing down from Q1 when it was down 17% year over year. Conversely Windows Phone revenue dived dramatically, it was cut in half in constant currency, apparently following Microsoft’s cunning plans and “reflecting our strategy change announced in July 2015”.

Here’s an interesting stat: Microsoft’s Bing and its Surface lineup contributed more than $2.3 billion of revenue for the company during its second quarter.

Sales of productivity and business “processes” products were down 2%, but would have been up 5% if not for the dollar, at $6.7 billion.

Dynamics was a high point with 11 percent revenue growth in constant currency and a year-over-year doubling of Dynamics CRM Online seat adds.

Microsoft is betting on reinventing itself as a cloud company, and the financial results it released Thursday show that its push is paying off despite an overall decline in revenue.

“Businesses everywhere are using the Microsoft Cloud as their digital platform to drive their ambitious transformation agendas”, said Microsoft chief executive Satya Nadella.

‘Our commercial business executed well as our sales teams and partners helped customers realize the value of Microsoft’s cloud technologies’. The Redmond, Wash., software giant, meanwhile, is inching closer to its goal of attaining a $20 billion annual run rate for its commercial cloud business in the company’s 2018 fiscal year. While it’s still far from the company’s largest business, revenue from Surface devices grew 29 percent year on year to $1.35 billion on the back of good Surface Pro 4 and Surface Book sales.

Q2 earnings were primarily driven by growth in cloud and Office 365, though it was also a strong quarter for the Surface lineup.