Sales of Lumia handsets nosedive to 4.5m in Q4

Analysts were expecting per-share earnings of 71 cents on revenue of $25.2 billion.

Free cash flow for the quarter rose 25% to $3.6bn and the annualised run rate of commercial cloud revenues rose 70% year on year to $9.4bn.

The company reported a stronger-than-expected adjusted profit, helped by continuing strong sales in its cloud operations.

Office 365 now has 20.6 million consumer subscribers.

Microsoft’s ringing in its fiscal year 2016 quarter 2 earnings with some rather impressive numbers for a company still transitioning away from providing traditional box retail software.

This segment, which includes results from server products and services (including Windows Server and Azure), grew 5 percent to $6.3 billion.

Microsoft has reported a five percent growth in its “Intelligent Cloud” division, which includes sales of its Azure public cloud services. But the big highlight was Azure revenue, which grew 140 percent, including revenue from Azure premium services growing almost 3x year-over-year.

“Businesses everywhere are using the Microsoft Cloud as their digital platform to drive their ambitious transformation agendas”, said Microsoft CEO Satya Nadella in the statement. With more than 110 million active devices running Windows 10, the company claims it is well on track to reach 1 billion Windows 10 active devices. This figure was down two percent on the same period past year, but up three percent in “constant currency” figures when currency fluctuations are taken into account, Microsoft said. Nadella has shifted much of Microsoft’s focus to its cloud business, a decision that appears to be propelling the company forward in spite of declining revenue this past quarter.

The revenue Microsoft gets from PC makers for Windows declined 5 percent in the quarter, excluding foreign currency impacts. Microsoft’s revenue from Surface rose 29%, with the ad segment up 21% and Xbox’s monthly active users growing 30%. The company chose to lay off thousands of people from its phone division previous year and refocus on building a relatively small number of Windows Phone handsets rather than keep making the broad range of phones that Nokia had prior to its acquisition in 2014.