Microsoft reports a big beat on earnings, stock spikes up nearly 4%

Microsoft hits its $20 billion annual run rate goal for commercial cloud in strong Q1

Analysts surveyed by S&P Global Market Intelligence expected the company to report $23.6 billion in revenue and 72 cents in adjusted earnings per share.

Microsoft managed to grow both revenue ($24.5 billion, up 12%) and profits ($6.6 billion, up 16%), showing the gains were not simply due to cutting. For those keeping score at home, Microsoft's commercial cloud rollup includes Azure; Office 365 business services (Exchange Online, SharePoint Online, Skype for Business Online, Microsoft Teams); Dynamics 365; and its Enterprise Mobility + Security Suite (EMS).

"This quarter we exceeded $20 billion in commercial cloud ARR, outpacing the goal we set just over two years ago", said CEO Satya Nadella. "Our results reflect accelerating innovation and increased usage and engagement across our businesses as customers continue to choose Microsoft to help them transform".

As in previous quarters, the numbers most of us pundits are going to focus on revolve around Microsoft's cloud efforts.

Shares in the company, which reported its results after the closing bell on Thursday, inched up nearly 4% to about $81.75 in after-hours trading.

An promotional video plays behind a window reflecting a nearby building at the Microsoft office in Cambridge, Massachusetts, U.S. on May 15, 2017. Azure by itself came within spitting distance of doubling its revenue, growing 90% from the year-ago period. Seems like cloud computing isn't a bad business to be in these days. LinkedIn contributed revenue of $1.1 billion.

Investors will likely be pleased by the progress Microsoft showed in its all-important cloud computing business. This quarter, those numbers turned around as Surface revenue grew 12 percent.

More Personal Computing: This segment, which includes results for Windows licensing and devices (Surface, phones, and Xbox), was flat at $9.4 billion.

Over the last few quarters, Microsoft's Surface line reported declining revenue numbers as the company prepared to launch new products. Windows OEM revenue was up 4 percent while Windows comercial revenue increased 7 percent. And the Xbox division was up 1%, with a big boost to Xbox software and services offset by the lower average selling price of the Xbox One console itself.



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