Microsoft's commercial cloud continues to hum with Azure sales up 48% in Q1

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Microsoft's first quarter sales fell short of expectations, but earnings were well ahead. Commercial cloud revenue was $15.2 billion, up 31% from a year ago.

Commercial cloud revenue for Microsoft is now approaching a $61 billion annual revenue run rate. Azure sales were up 48% in the quarter. 

The company reported fiscal first quarter earnings of $13.9 billion, or $1.82 a share, on revenue of $37.2 billion, up 12% from a year ago. 

Wall Street was expecting Microsoft to report first quarter earnings of $1.54 a share on revenue  of $35.7 billion.

CFO Amy Hood said that demand for cloud offerings was strong.

Overall, Microsoft delivered strong results across the board.

The productivity and business processes unit delivered revenue of $12.3 billion, up 11%. Commercial Office products and cloud services revenue was up 9% driven by sales growth of 21% for Office 365 Commercial.

Dynamics products and cloud services revenue was up 19%.

The Intelligent Cloud unit delivered revenue of $13 billion, up 20%.

Microsoft's More Personal Computing unit had revenue of $11.8 billion, up 6%. Windows OEM revenue fell 5%, but Surface revenue was up 37%. Search revenue excluding traffic acquisition costs were down 10% in the quarter.

Key items:

• LinkedIn revenue was up 16% driven by growth in marketing tools.
• Microsoft Office 365 ended the quarter with 45.3 million subscribers, up 27% from a year ago.
• Surface revenue was $1.55 billion.