Strong sales of cloud products to businesses helped lift Microsoft’s revenue by 18% last quarter, though its profits declined.
Revenue for the quarter ended 30 June was $23.4 billion, up from $19.9 billion last year and ahead of the consensus analyst estimate of $23 billion, according to a poll by Thomson Reuters.
The revenue figure includes $2 billion from the Nokia Devices and Services business that Microsoft acquired. That deal closed 25 days after the start of the quarter.
Net income was $4.6 billion, or $0.55 per share, down from $4.9 billion, or $0.59 per share, a year earlier, and 5 cents below the Wall Street analysts’ consensus expectation. On a per-share basis, profit was down 7% year-on-year, including an $0.08 loss from the Nokia business.
“I’m proud of the results we delivered this quarter and across the fiscal year,” CEO Satya Nadella said during a conference call to discuss the earnings report.
Nadella said commercial cloud revenue grew almost 150% year over year to a $4.4 billion annual run rate, driven primarily by sales of Office 365, the Azure Infrastructure- and platform-as-a-service products and Dynamics CRM Online. Microsoft is switching its focus to selling more cloud services and away from on-premises software.
The devices and consumer division grew its revenue 42% to $10 billion, including the $2 billion from Nokia phone hardware.
Meanwhile, the commercial division saw its revenue grow 11% to $13.5 billion.
Impact
The results for the quarter – the fourth of Microsoft’s fiscal year – don’t include any impact from the 18,000 job cuts Microsoft announced last week and which will be carried out over the next 12 months.
In the new fiscal year, which started 1 July, Microsoft expects pre-tax costs from the layoffs in the range of $1.1 billion to $1.6 billion. The layoffs, amounting to about 14% of the company’s staff, are the largest in Microsoft’s history. The majority will come from Microsoft’s recently acquired Nokia business.
The Surface Pro 3 started shipping in late June and sales are outpacing earlier versions. Microsoft positions it as a device that can double as a tablet and a laptop. The Surface Pro 3’s geographic availability will be broadened this summer, according to CFO Amy Hood.
She added that a new form factor that was in the works has been scrapped, likely referring to a smaller tablet that was widely rumoured to be in development.
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