Microsoft's Office 365, Cloud Businesses Power Earnings

Apr 28, 2017, 01:03
Microsoft's Office 365, Cloud Businesses Power Earnings

Over the last quarter, Server products and cloud services rose by 15% (16% in constant currency (CC)), while Azure revenue increased by 93% (94% CC).

Net profit rose 28 percent to $4.8 billion while revenues edged up eight percent to $22.1 billion in the quarter ending March 31, Microsoft said. Office commercial products and cloud services revenue increased 7 percent year-over-year, and even Office consumer products and cloud services revenue increased by 15 percent.

Wall Street's cadre of crack analysts expected the company's earnings per share to come in at around $0.70, with revenue hitting about $23.6 billion.

LinkedIn, the professional social network acquired by Microsoft past year for some $26 billion, contributed revenue of $975 million. Microsoft's Personal Computing business isn't doing so well, as it experienced a fall of 7% in revenue.

"Our results this quarter reflect the trust customers are placing in the Microsoft Cloud", CEO Satya Nadella said in a statement.

Windows commercial products and cloud services were up by 6% (6% CC), following similar growth last quarter.

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Microsoft has just reported its earnings for Q3 2017 (fiscal year).

Even as the Windows operating-system franchise continues to generate big profits, the cloud gains are crucial as Microsoft battles Amazon.com Inc. and Alphabet Inc.'s Google for a piece of the so-called cloud-infrastructure market that is expected to reach $71.55 billion in 2020, up from $25.29 billion past year, according to market-research firm Gartner Inc. The company reported non-GAAP revenue of $23.6 billion and non-GAAP earnings per share of $0.73.

Microsoft's continued growth is of course led by its cloud and productivity businesses. There are now 26.2 million consumers subscribed to Office 365. Microsoft isn't saying much about its mobile plans, but its phone revenue dipped $730 million this quarter.

Surface computer revenue dropped 26%.

Search revenue, excluding traffic acquisition costs, also increased by 8% (9% CC), "driven by higher revenue per search and search volume". Gaming, on the other hand, saw a rise of 4% YoY with Xbox Live monthly active users rising by 13%.

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