Microsoft just issued its quarterly earnings report, beating analysts’ estimates with $21.7 billion in quarterly revenue, an increase of 9 percent, and earnings of 61 cents per share, a decline of 10 percent, for the quarter ended March 31.
Analysts polled in advance by Thomson Reuters expected Microsoft to post earnings of 51 cents a share, on revenue of $21 billion.
“Customers continue to choose Microsoft to transform their business and as a result we saw incredible growth across our cloud services this quarter,” said Satya Nadella, Microsoft’s CEO, in a news release announcing the results.
Microsoft’s profits for the quarter were $4.99 billion, down from $5.66 billion in the same quarter a year ago.
Microsoft’s results come as its cloud rival Amazon reports financial details for Amazon Web Services for the first time, with CEO Jeff Bezos describing AWS as a $5 billion business. Microsoft offers a broader mix of technologies overall, including Office 365 and software for hosted and on-premises servers, so a direct comparison is difficult, but Microsoft’s Commercial Cloud revenue has reached an annualized run rate of $6.3 billion, according to the company.
Microsoft said Office 365 Consumer subscribers increased to more than 12.4 million, up 35% from the January quarter.
The company said Xbox platform revenue declined 24 percent, caused by a lower unit sales of the console and an increase in the mix of lower-priced Xbox One consoles. However, the company said Xbox Live usage grew by more than 30 percent.
[Related: Xbox One price cuts drive Xbox revenue down 24%]
Revenue from the company’s Surface tablets was $713 million, up 44 percent, which the company credited to strong results for the Surface Pro 3. Here’s a Microsoft chart detailing its hardware business. (Click for larger image.)
Microsoft’s core Windows business relies heavily on sales of new PCs, which were estimated to have dropped by more than 5 percent worldwide in the March quarter, and that was reflected by a decline of 24 percent in revenue in Microsoft’s Devices & Consumer Licensing Division, which includes consumer versions of Windows; and a decline of 3 percent in revenue in Commercial Licensing, which includes Windows Volume Licensing for businesses.
The company says the decline in Windows Consumer revenue was caused in part by lower-priced Windows versions, as well as drawing down of inventory by retailers. On the business side, the comparable results a year ago were boosted by higher PC sales as Windows XP support expired.
Microsoft’s quarterly conference call begins at 2:30 Pacific time.