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Microsoft tops estimates in quarterly results as cloud revenue surges

Microsoft tops estimates in quarterly results as cloud revenue surges

All in all, a familiar tale: cloud services are growing (although Microsoft remains reluctant to offer concrete numbers on Azure), and Microsoft seems to be successfully converting customers away from perpetual licenses and over to Office 365. LinkedIn revenue was up 47 percent.

Beat revenue estimates. The company saw revenue figures of $30.09 billion, topping our consensus estimate of $29.21 billion. MS does not specifically break out Azure revenue/profit but given its massive growth, it was easily the biggest driver to the division's 23% overall revenue growth to $9.61 billion for the quarter.

Non-GAAP earnings in the quarter were $1.13 a share. Leaving out that charge, operating income was $35.1bn this year, up 17 per cent on $29bn last year.

Jefferies, on the other hand, one of the two bears with the equivalent of sell ratings tracked by Bloomberg, questioned the ultimate margins of Microsoft's cloud computing service known as Azure.

Intelligent Cloud revenues were $9.6bn, up 20 per cent. Server business revenues were up 24 per cent.

On the consumer side, Office revenue growth has slowed down. And More Personal Computing, which includes Windows, the Xbox, and the Surface hardware business, was up 17%, to $10.8 billion.




Its popular Surface laptop-turned-tablet range earned a 25 per cent increase in revenue, which Microsoft attributed to strong performance by its latest editions against low comparable numbers a year ago.

Microsoft has announced technology partnerships with other major firms in recent months including General Electric, Starbucks, Bayer, Spain's Telefonica and sports organisations such as the National Basketball Association and PGA. The revenue grew 8% (up 6% in CC) and the total Office 365 consumer subscribers have reached 31.4 million.

"We see the benefits from Microsoft's bring your own license program as starting to bear fruit as partners highlight enterprise agreement renewals at higher net expansion levels than in recent years", writes Bellini in a note.

Microsoft had fired several thousand employees a year ago as it announced a huge do-over in its sales strategy.

Other standouts include revenue from LinkedIn, up 37% from the same time past year, and gaming revenue, up 39%, with Xbox software and services up 36%.

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