Redmond-based tech behemoth Microsoft has today posted earnings for its second fiscal quarter of 2017. And the company’s bets on cloud and enterprise solutions seem to be paying off as they helped the company stay afloat. The figures for the said quarter edged past Wall Street estimates, but just minimally.
In the second quarter, Microsoft managed to post revenues of $26.1 billion on the back of earnings of $0.83 per share. These numbers are slightly higher than those from the corresponding quarter a year ago. The company posted revenue of $25.7 billion on the back of earnings of $0.78 per share. The non-GAAP operating income for this quarter amounts to $8.3 billion whereas the net income is $6.5 billion.
The Wall Street analysts predicted that the Microsoft will report revenues of $25.3 billion coupled with earnings of $0.79 per share. The tech behemoth was able to pip the estimates due to the continued growth in its productivity and cloud ecosystems. It is continually trying to work on the improvement of Office 365 and Azure to compete against Amazon Web Servies in the long run.
Speaking about the same, Microsoft CEO Satya Nadella, says,
Our customers are seeing greater value and opportunity as we partner with them through their digital transformation. Accelerating advancements in AI across our platforms and services will provide further opportunity to drive growth in the Microsoft Cloud.
Ever since the appointment of Nadella, the company has been delivering its earnings by breaking it down into three operating groups. The first one being Productivity and Business, which saw an increase of 10 percent in revenue. It contributed a hefty $7.4 billion to the overall figure. This growth was driven by 47 percent revenue growth of Office 365, whereas other contributors — dynamic and consumer Office as well as LinkedIn didn’t amount to much.
The Intelligent Cloud segment also contributed $6.9 billion, which is an eight percent increase from previous quarter. This further includes server products and enterprise cloud services which witnessed decent growth. But one can easily reach the conclusion that Microsoft’s bet on Azure has definitely paid off. It saw a massive 93 percent uptick in revenues, with “compute usage more than doubling year-over-year.”
But there was still a sore spot in the company’s earnings sheet. And as you might’ve already guessed, it’s the More personal computing (MPC) segment. It was the only operating group which saw a 5 percent decline, with revenues amounting to $11.8 billion. Delving further into each contribution — Windows OEM revenue increased 5%, Search advertising revenue increased 10%, gaming revenue decreased 3% (might see an uptick after Beam acquisition is complete).
Amy Hood, executive VP and CFO at Microsoft also shares her thoughts on the said figures:
I am pleased with our results this quarter. We see strong demand for our cloud-based services and are executing well on our long-term growth strategy.
Due to continued growth across segments, Microsoft’s stock prices were trading up 0.93 percent before the market closed. In the after-hour trading session, the graph was a little rocky as compared to regular trading. This could be attributed to the unpleasant figures for the devices segment, which drag down the earnings.