Riding on the success of Cloud, Office and Surface tablets, Microsoft reported revenue of $20.5 billion and net income of $4.7 billion in the first quarter of its 2017 fiscal earnings – a news that took its shares to an all-time high on Thursday.
While Office commercial products and cloud services revenue grew 5 per cent, Office consumer products and cloud services revenue grew 8 per cent. Office 365 consumer subscribers has now increased to 24 million. Dynamics products and cloud services revenue grew 11 per cent driven by Dynamics online revenue growth while revenue in Intelligent Cloud grew 8 per cent to $6.4 billion.
Microsoft Azure Cloud revenue grew 116 per cent, with Azure compute usage more than doubling year-over-year, the company said in a statement. “We are helping to lead a profound digital transformation for customers, infusing intelligence across all of our platforms and experiences. We continue to innovate, grow engagement, and build our total addressable market,” said Microsoft’s Chief Executive Officer Satya Nadella.
The news led Microsoft shares jump nearly 6 per cent, adding over $26 billion to its market value.
Surface notebooks (Surface Pro 4 and Surface Book) revenue recorded $926 million in the quarter – up 38 per cent from the $672 million 2015. Server products and cloud services revenue increased 11 per cent while Enterprise Services revenue increased one per cent.
“Our first quarter results showed continued demand for our Cloud-based services,” added Microsoft’s executive vice president and Chief Financial Officer Amy Hood. “We continue to invest, position ourselves for long-term growth, and execute well across our businesses,” Hood added.
Windows revenue was flat year-over-year, slightly ahead of the PC market, while Windows commercial products and cloud services revenue also remained flat year-over-year.
Phone revenue declined a massive 72 per cent. Since Microsoft has given up on smartphone hardware, this has not come as a surprise. Gaming revenue went down by 5 per cent, driven by lower Xbox console revenue.
“Search advertising revenue excluding traffic acquisition costs grew 9 per cent driven by increased revenue per search and search volume,” Microsoft said.
Microsoft recently acquired LinkedIn for $26.2 billion and now plans to incorporate this enterprising social networking platform into the productivity and business segments of its earnings results, media reports said.