Microsoft this afternoon posted revenue of $24.7 billion, up 9 percent, and non-GAAP earnings of 98 cents a share, an increase of 42 percent, beating Wall Street’s profit expectations for the quarter ended June 30.
“Innovation across our cloud platforms drove strong results this quarter,” Microsoft CEO Satya Nadella said in a statement. “Customers are looking to Microsoft and our thriving partner ecosystem to accelerate their own digital transformations and to unlock new opportunity in this era of intelligent cloud and intelligent edge.”
Analysts predicted earnings per share of 71 cents a share on revenue of $24.2 billion. The 27-cent beat on EPS — $0.98 compared to $0.71 — was mostly ($0.23) due to tax rates that “reflect a $1.8 billion impact related to the utilization of prior years’ losses from Microsoft’s phone business that were not deductible in the years incurred,” as noted in the earnings press release.
Microsoft stock reached an all-time high on Thursday at $74.22. It’s up more than 3 percent in after-hours trading and up nearly 40 percent in the past year. The company’s market valuation is now $577 billion; that’s up from around $300 billion in early 2014.
Investors are keeping a close eye on Microsoft’s growing cloud business. This quarter, the company’s commercial cloud run rate reached $18.9 billion — an annualized measure that includes Office 365 commercial, Azure, Dynamics 365, and other cloud initiatives from the company. Microsoft reported $7.4 billion in revenue for its “Intelligent Cloud” business, up 11 percent. Azure revenue increased 97 percent year-over-year.
Revenue in the company’s Productivity and Business Processes division was $8.4 billion, an increase of 21 percent, driven by Office 365 commercial and consumer subscriptions. Office 365 commercial revenue grew 43 percent; there are now 27 million Office 365 consumer subscribers, up from 23.1 million in the year-ago quarter.
Microsoft reported revenue of $8.8 billion, down 2 percent, in its More Personal Computing Division, which includes the Windows business in addition to search advertising and gaming revenue. The Surface hardware business fell 2 percent to $948 million in revenue.
LinkedIn posted $1.1 billion in revenue for the quarter.
Microsoft this quarter announced a reorganization of its global sales team, which included thousands of job cuts — reportedly 10 percent of Microsoft’s total salesforce. An internal memo to employees detailed a shift in Microsoft’s consumer and commercial businesses and how it sells cloud services.
In its earnings release, the company noted a $306 million restructuring cost in the quarter.
Microsoft’s fiscal year ended on June 30, and big changes and layoff announcements have traditionally come around this time, tied to the company’s move into a new fiscal year, which started on July 1.
The company has had a few executive shifts over the past quarter, including the departure of CIO Jim DuBois and hiring of former GE tech executive. It also hosted its annual Build developers conference and began offering four weeks paid leave for employees caring for sick family members.