Microsoft delivers better-than-expected Q2, navigates turbulence well

Microsoft delivered enough cloud gains to handily top Wall Street estimates.

Microsoft reported a better-than-expected second quarter the company grew its cloud footprint and delivered solid gains in Office 365 subscriptions and Dynamics CRM Online seats.

The software giant delivered second quarter earnings of $5 billion, or 62 cents a share, on revenue of $23.8 billon. Non-GAAP second quarter earnings of 78 cents a share on revenue of $25.7 billion, down 2 percent from a year ago.

Wall Street was looking for second quarter non-GAAP earnings of 71 cents a share on revenue of $25.26 billion.

Microsoft's quarter broke down like this:

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Microsoft said Windows 10 is gaining business traction, but no one unit in the company stood out. Part of that so-so growth was due to the strong U.S. dollar.

Among the key points:

  • Office commercial products and cloud services revenue grew 5 percent in constant currency, but the productivity and business processes unit saw sales fall 2 percent in the second quarter from a year ago.
  • Commercial Office 365 revenue growth was up 70 percent and the consumer version of the service had 20.6 million subscribers.
  • Server products and cloud services grew 10 percent in constant currency, but the Intelligent Cloud sales were up 5 percent from a year ago.
  • Surface revenue was up 29 percent from a year ago in constant currency.

Here's a look at how Windows and Surface fared.

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But the future of the company really revolves around the cloud. Here's how Microsoft's cloud business and its productivity units did.

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