Microsoft’s fiscal first quarter earnings beat Wall Street expectation on both the top and bottom lines.
Shares in the company, which reported its results after the closing bell on Thursday, inched up almost 4% to about $81.75 in after-hours trading.
- Adjusted earnings: $0.84 versus $0.72 expected.
- Revenue: $24.5 billion versus $23.56 billion expected.
Investors will likely be pleased by the progress Microsoft showed in its all-important cloud computing business. In the just-completed quarter, that business met and exceeded the company’s goal of $20 billion in annualized revenue.
The company’s Productivity and Business Processes unit, which encompasses its Office business, its Dynamics customer relationship management service, and LinkedIn, saw a year-over-year revenue gain of 28% to $8.2 billion. Bolstering these results were the rapid growth of Microsoft’s cloud services. Revenue from the Office 365 cloud productivity suite was up 42% from the same period a year ago, and revenue from the Dynamics 365 cloud product was up 69%.
Meanwhile, revenues from Intelligent Cloud, the company’s unit that includes its Azure cloud computing service, was up 14% from the year ago-period to $6.9 billion. Azure by itself came within spitting distance of doubling its revenue, growing 90% from the year-ago period. Microsoft doesn’t disclose the actual dollar amount of Azure revenue.
Finally, Microsoft’s More Personal Computing unit, which includes its Windows, Surface PC, and Xbox businesses, was flat from the year-ago period, booking $9.4 billion in revenue. The business of licensing Windows out to PC manufacturers was up 4%. By contrast, the PC industry as a whole is still shrinking.
Surface revenue by itself was up 12% from a year ago, which is good news for Microsoft following a dip in the previous quarter. And the Xbox division was up 1%, with a big boost to Xbox software and services offset by the lower average selling price of the Xbox One console itself.
Despite the growth in those areas, the continued winding down of Microsoft’s smartphone business continued to take its toll, with “immaterial” phone revenue contributing 3% points of decline to the More Personal Computing unit’s numbers.