Microsoft exceeded Wall Street’s forecasts for its fiscal 2106 second quarter Thursday, with Azure, Office 365 and Surface products all continuing to see healthy sales growth.
Microsoft says Windows revenue from PC manufacturers is down 5% – beating the overall decline in the shrinking PC market, but still noteworthy.
Surface’s revenue did dip last quarter, but this time it is up over 29% to $1.35 billion, thanks to the Surface Pro 4 and Surface Book.
Microsoft saw its Productivity and Business Processes revenue fell 2% but increased 5% in constant currencies to $6.7 billion as Office and cloud services revenue was driven by growth in Office 365, which saw nearly a 70% constant currency revenue increase. While revenue continues to decline, primarily as a result of the phone segment, Microsoft received positive contributions from Surface, Xbox, and Windows 10 in the holiday quarter. Microsoft and Nokia have sold a total of 110 million Windows Phones compared to 4.5 billion iOS and Android phones in the same period.
Microsoft reported a better-than-expected second quarter the company grew its cloud footprint and delivered solid gains in Office 365 subscriptions and Dynamics CRM Online seats.
“It shows that momentum is building for Microsoft in 2016 rather than slowing, and that’s different from what we’re hearing from other enterprise tech companies”, said FBR Capital Markets analyst Daniel Ives.
Microsoft’s commercial cloud annualized run rate now exceeds $9.4 billion.
Mr Nadella said companies were using its cloud services to drive transformation. The Windows 10 offering earlier this month was running on 200 million computers, doubling September’s figures.
In November, Microsoft released the first major update for Windows 10 with solutions created to address business scenarios: security, manageability and ease of deployment.
Microsoft also returned $6.5 billion to shareholders in the form of share repurchases and dividends. The Intelligent Cloud business grew five per cent thanks to its component successes; server and cloud services, Azure revenue and Enterprise Mobility Services.
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.
