As Microsoft transforms itself from a traditional Windows company, to one that hosts service and software, the cloud is growing stronger within the company. On Thursday, Microsoft’s cloud businesses helped it to one of the strongest 3rd quarters in its history, as it posted earnings to its investors and analysts.
Thursday marked the release of Microsoft’s 3rd Quarter results, and the company posted $21.7 billion in revenue, with $14.6 billion in gross margins, $6.6 billion in operating income, last $0.61 diluted earnings per share. This included a $190 million charge, and impressed analysts after the bell.
In its 3rd quarter results, the consumer sector grew for the company. It saw Office 365 consumer subscribers increase to over 12.4 million, a 35% increase. Windows OEM Pro revenue did go down 19%, but this shows the Windows culture changing. Windows OEM non-Pro revenue dropped 26% due to channel inventory constraints.
Search advertising revenue grew 21%, as Bing hit 20.1% market share in the US. Xbox Live usage grew over 30%, which was highlighted by the Xbox One. Surface revenue reported at $713 million, up 44% with the Surface Pro 3 sales. Lastly, phone hardware revenue grew to $1.4 billion, with 8.6 million Lumia units sold. It posted a $9.0 billion revenue, up 8% for consumers.
Commercial Revenue Up 5% To $12.8 Billion
While the consumer sector grew and decreased in areas, the commercial cloud revenue soared for Microsoft. It saw revenue for the cloud grow 106 percent, which was strengthened by Azure, Office 365, and Dynamics CRM. It is scheduled to grow to an annual run rate of $6.3 billion, which is amazing.
Server products and revenue streams grew 12 percent, bolstered by premium versions of its services. Minimal decreases were seen by its Office Commercial products which went down 2 percent, and Windows Volume license revenue decreased 2 percent. Both of these were due to the commercial buying and replacement schedules.
The 3rd quarter was huge for Microsoft. At $6 billion, the cloud is a big part of Microsoft, and Azure is the key to its success.