After officially crossing its cloud revenue goal set in 2015 last quarter, Microsoft’s cloud businesses showed strong gains during its second fiscal quarter of the year, although it’s still not ready to break out numbers for Microsoft Azure.
Revenue from the company’s Intelligent Cloud division, which operates Azure and builds products like Windows Server, rose 15 percent compared to the year-ago quarter to $7.8 billion. Operating income for the group was $2.8 billion, up 23 percent from last year, Microsoft said in a press release.
Azure revenue grew 98 percent during the quarter, maintaining the same pace it has for the last several quarters. But unlike Amazon Web Services (which reports earnings tomorrow) we still don’t know how much actual revenue Microsoft’s public infrastructure cloud is contributing to the Intelligent Cloud group.
Revenue from Office 365 commercial rose 41 percent, and revenue from Dynamics 365 rose 67 percent, reflecting the shift of Microsoft and almost all enterprise software companies to the software-as-a-service model. And LinkedIn chipped in $1.5 billion in revenue, as sessions on the career site rose 20 percent during the quarter.
With Microsoft’s goal of hitting $20 billion in annualized commercial cloud revenue — a figure that takes into account both Azure and its SaaS products — officially in the books ahead of schedule last quarter, commercial cloud revenue for the second fiscal quarter was $5.6 billion, up 56 percent compared to last year. Gross margin across those products was 55 percent, up seven percentage points from the year-ago quarter.
Microsoft is scheduled to hold a press conference at 230pm to discuss its results, and CEO Satya Nadella is likely to address the company’s cloud business in some detail.