Microsoft Q2 strong amid commercial cloud revenue surge to $36 billion annual run rate

Microsoft delivered strong second quarter results as its commercial cloud and Azure revenue fared well.
Written by Larry Dignan, Contributor

Microsoft's second quarter earnings were better than expected with in line revenue as its commercial cloud business delivered $9 billion in sales for a $36 billion annual run rate.

The software giant reported second quarter net income of $8.4 billion, or $1.08 a share, on revenue of $32.5 billion, up 12 percent from a year ago. Non-GAAP earnings were $1.10 a share.

Wall Street was looking for second quarter non-GAAP earnings of $1.09 a share on revenue of $32.5 billion.

By division for the second quarter, Microsoft reported productivity and business processes revenue of $10.1 billion, up 13 percent from the second quarter a year ago. Intelligent Cloud revenue was $9.4 billion, up 20 percent from the second quarter a year ago. And More Personal Computing sales were $13 billion, up 7 percent.

Based on Thomson Reuters detailed estimates, analysts were looking for Intelligent Cloud revenue of $9.28 billion, More Personal Computing sales of $13.07 billion and Productivity and Business Processes sales of $10.09 billion.

CEO Satya Nadella said its cloud business is benefiting from business in industries such as retail, financial services and healthcare.


By the numbers:

  • Office commercial products and cloud services revenue was up 11 percent driven by Office 365 Commercial sales, up 34 percent from a year ago.
  • Office consumer products and cloud services revenue was up 1 percent. Microsoft had 33.3 million Office 365 Subscribers.
  • Dynamics revenue was up 17 percent with Dynamics 365, which is cloud based, driving sales gains of 51 percent.
  • Azure revenue growth was up 76 percent in the second quarter compared to a year ago.
  • Surface revenue was up 39 percent from a year ago. Surface revenue for the second quarter was $1.86 billion, well ahead of the $1.33 billion a year ago.

Based on operating income Microsoft's Productivity and Business Processes unit continues to carry the day, but Intelligent Cloud is making gains. Here's the operating income breakdown.



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