Microsoft’s third-quarter sales rose 6.5%, in part from gains by its cloud computing business, to beat Wall Street’s expectations. Here are the key points from Thursday’s earnings release.
What you need to know:Microsoft posted quarterly revenue of $21.7 billion, up from $20.4 billion during the same period last year. Those sales figures also beat analyst forecasts of $21.06 billion, according to Thomson Reuters.
The 6.5% sales jump came courtesy of yet another quarter in which Microsoft doubled its commercial cloud revenue while also getting a lift from the mobile phone business it acquired from Nokia in early 2014.
Microsoft also said that quarterly profits dropped 11.9% to $4.9 billion, or 61 cents per share. The company noted in its earnings release that the results include another $190 million in “integration and restructuring expenses” that stem from the massive layoffs Microsoft announced last summer as well as from ongoing costs associated with the integration of the Nokia phone unit.
Microsoft’s shares (MSFT) jumped more than 3% in after-hours trading on news of the company’s better-than-expected sales numbers. The company’s stock has lost more than 6% in value so far this year.
The big number: Improving Microsoft’s standing in the cloud computing market has been a major strategy for CEO Satya Nadella since he took control of the company last year. In Nadella’s fourth quarter as CEO, the company’s commercial cloud sales more than doubled, marking the fourth quarter in a row they have done so year-over-year. That quarterly performance, which Microsoft said extrapolates to $6.3 billion in annual cloud sales, helped to offset the company’s flagging licensing and computing revenue.
“Customers continue to choose Microsoft to transform their business and as a result we saw incredible growth across our cloud services this quarter,” Nadella said in a statement.
Microsoft’s phone sales also helped boost overall revenue, bringing in roughly $1.4 billion in the most recent quarter, as the company sold 8.6 million Lumia units. However, those figures represent a decline from the previous quarter, when Microsoft sold a record number of Lumia units — more than 10.5 million — while the phone segment brought in a total of $2.3 billion.
What you might have missed: Sales of the company’s Surface tablets were up 44%, to $713 million, in the most recent quarter, led mainly by the Surface Pro 3. However, that revenue also represents a decline from the previous quarter, when Microsoft saw more than $1 billion in Surface sales for the first time ever. (By comparison, Apple (AAPL) saw nearly $9 billion in iPad sales in its first quarter of 2015.)
Microsoft also noted that its search advertising revenue grew by 21% in the third quarter, thanks to Bing increasing its share of the U.S. Search market. Bing’s search engine market share grew slightly last month to 20.1% in the U.S., which was second to Google’s (GOOG) 64.4% and ahead of Yahoo’s (YHOO) 12.7%, according to comScore.
For more about Microsoft’s cloud business, watch this Coins2Day video: