Microsoft quarterly revenues fall 10 percent

Nadella also revealed that Microsoft’s recently released Windows 10 operating software now powers more than 200 million devices in the fastest adoption rate ever seen by the company. Excluding certain items, the company reported income of $6.3 billion, or 78 cents per share, on adjusted revenue of $25.7 billion.

CEO Satya Nadella has focused on cloud services and mobile applications on slower growth in its traditional software business.

Microsoft posted growth in its cloud business, mixed results on the productivity and business processes business, and declines in the unit that includes Windows OEM revenues and devices in its second-quarter results reported Thursday. “Our commercial business executed well, as our sales teams and partners helped customers realise the value of Microsoft’s cloud technologies”.

It has proven a happy New Year for Microsoft, with profits of $6.3bn (up 8 per cent on the year) in its second financial quarter – driven largely by increasing revenues from its cloud business. That division is the home of services like Windows Azure and products for servers and cloud computing.

The company reported a rise in unearned revenue balances of $19.8bn, up 8% in constant currencies, representing services that have been paid for up front, but not yet delivered. During the quarter Microsoft said it returned $6.5 billion to investors via share repurchases and dividends. More than 70 percent of the Fortune 500 companies have at least two different Microsoft cloud offerings-up 13 points.

(For those scoring at home, Microsoft’s sales figures include $1.9 billion revenue that it has deferred for accounting purposes, related to sales of Windows 10 and Halo 5).

Same goes for Office 365, which falls under the umbrella productivity category that drew $6.7 billion in revenue (a 2% decrease). Surface revenue climbed 29% in constant currency on the back of strong launches of the Surface Pro 4 and Surface Book.

Azure revenue skyrocketed 140% in constant currency, with revenue from Azure premium services tripling from one year prior. The company made a decision to lay off thousands of people from its phone division past 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. Xbox Live monthly active users also were up 30 percent year-over-year to a record 48 million.