An increasing demand for Microsoft’s cloud services and Office software resulted in a better than expected quarterly showing for the Redmond software firm.
Microsoft, on Thursday night, posted a second quarter revenue of $23.8 billion, a net income of $5 billion and earnings of 62 cents per share.
Although net income was down from the $5.8 billion recorded in the year-ago quarter, the increase in earnings for Office software and cloud services pleased investors, resulting in shares rising more than six per cent in after-market trading.
“Businesses everywhere are using the Microsoft Cloud as their digital platform to drive their ambitious transformation agendas,” Microsoft CEO Satya Nadella said in a statement. “Businesses are also piloting Windows 10, which will drive deployments beyond 200 million active devices.”
Microsoft’s Office 365 consumer subscriber base increased to 20.6 million and Office commercial products and cloud services revenue rose five percent driven by Office 365 revenue growth of nearly 70 percent. Dynamics revenue was up 11 percent.
Revenue in Intelligent Cloud rose five percent to $6.3 billion due to Azure revenue increasing 140 percent in constant currency with revenue from premium services increasing nearly three times year-over-year.
“Our enterprise customers continued to choose, adopt and use our hybrid cloud platform offerings which resulted in server product and services growth, revenue growth of 10 percent in constant currency,” chief financial officer Amy Hood said in a conference call with investors.
“Customer adoption and usage of our cloud services continues to accelerate globally, and we are investing capital into our data centers and servers to respond to this demand,” she added. “This quarter, we invested $2 billion, up sequentially from the $1.5 billion invested last quarter.”
Another encouraging figure for the company is that more than one-third of the Fortune 500 companies use Microsoft’s Enterprise Mobility solutions.
During the holiday season, Xbox and Microsft’s Surface tablets were the big sellers. Surface revenue was up 30 percent while Xbox Live monthly active users jumped 30 percent year-over-year to a record 48 million.
Microsoft’s Smartphone revenue, however, plunged 49 percent.
The conference call webcast can be accessed here.