Microsoft today announced that it earned net income of $8.4 billion on revenues of $32.5 billion in the quarter ending December 31. The results were in line with analyst expectations.
“Our strong commercial cloud results reflect our deep and growing partnerships with leading companies in every industry including retail, financial services, and healthcare,” Microsoft CEO Satya Nadella is credited with saying in a canned statement. “We are delivering differentiated value across the cloud and edge as we work to earn customer trust every day.”
“Commercial cloud,” of course, is not a real Microsoft business. Instead, it is a cherry-picked collection of well-performing products and services that span Microsoft’s actual businesses. But it is widely thought to be made up largely of Azure, Office 365, and related offerings. And Microsoft uses it to compare its successes with those of rivals like Amazon.
Microsoft’s cloud businesses are certainly surging for the most part. The Intelligent Cloud business saw revenue growth of 24 percent overall, with Azure revenue growth hitting 76 percent. But with $9.4 billion in revenues, Microsoft’s Intelligent Cloud business unit was only the firm’s third largest: More Personal Computing—Windows, Xbox, Surface—hit $13 billion in revenues while Productivity and Business Processes—Office 365, Dynamics—delivered 10.1 billion in revenues.
From a growth perspective, Surface was one of Microsoft’s strongest performers: Its revenues surged by 39 percent in the quarter, thanks to strong sales across both consumer and commercial. Office also grew strongly in the quarter, especially on the commercial side, where Office 365 experienced growth of 34 percent.
That said, Office 365—like Windows—was hurt by what Microsoft called a “weaker than expected consumer market.” The Office 365 consumer subscriber base hit 33.3 million users in the quarter. But Windows 10 revenues from PC makers dove 11 percent for consumers and 2 percent for Pro/commercial.
Gaming was a bit mixed, given the holiday quarter: Overall revenue grew 8 percent, and Xbox software and services jumped 39 percent. But Xbox hardware revenues actually fell 19 percent, which Microsoft blamed on a high prior year because of the Xbox One X launch.