Microsoft Q1 solid amid cloud, Azure traction

Microsoft delivered a solid fiscal first quarter as it continued to gain traction with its Azure services, as the company said its commercial cloud revenue run rate tops $13 billion.

Commercial cloud revenue rolls up all of Microsoft's enterprise services such as Dynamics, Azure, and Office 365.

The enterprise software giant reported first quarter earnings of $4.7 billion, or 60 cents a share, on revenue of $20.5 billion. Non-GAAP results were 76 cents a share on revenue of $22.3 billion for the first quarter.

Microsoft was expected to report first quarter earnings of 68 cents a share on revenue of $21.71 billion, according to Wall Street estimates. The company added that it expects its LinkedIn purchase to close in its fiscal second quarter and it will reside in the productivity and business process unit.

The results for the quarter were driven by intelligent cloud revenue, which was up 8 percent from a year ago. That division counts server products as well as cloud services revenue.

Among the key items on cloud:

• Server products and cloud services revenue was up 11 percent from a year ago.
• Azure revenue was up 116 percent, with compute usage doubling.
• Enterprise mobility customers topped 37,000 in the quarter.
• On the productivity and business process front (think Office 365), Microsoft also fared well. To wit:
• Office 365 consumer subscribers ended at 24 million.
• Office 365 commercial seat growth was up 40 percent in the first quarter, which has decelerated sequentially each quarter for the last year.
• Dynamics products and cloud services revenue revenue growth was up 11 percent in the first quarter.

On the Windows 10 front, there were a few interesting developments. Consider:

• Windows OEM Pro revenue growth for the first quarter was 1 percent and non-Pro sales were down 1 percent.
• Surface revenue was $926 million, up from $672 million a year ago, but down sequentially for the last three quarters.