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Microsoft Q2 revenue beat expectations on strong cloud segment performance

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Microsoft reported revenues of $26.1 billion for the second quarter of fiscal year 2017, beating what most analysts had projected.

Revenue in the firm’s productivity and business processes segment, which consists of products and services in its portfolio of productivity, communication, and information services, rose 10% to $7.4 billion.

Revenue generated by the company’s intelligent cloud segment rose 8% to $6.9 billion.

Usage of Microsoft’s Azure cloud service more than doubled year-over-year and revenue from the enterprise-grade cloud computing platform increased 93%.

Microsoft

Revenue in more personal computing was $11.8 billion, a 5% decline, driven primarily by lower phone revenue.

“Our customers are seeing greater value and opportunity as we partner with them through their digital transformation.
Accelerating advancements in AI across our platforms and services will provide further opportunity to drive growth in the Microsoft Cloud,” said Satya Nadella, Chief Executive Officer at Microsoft.

 Segment revenue and operating income

Microsoft Corp

Three Months Ended

December 31,

Six Months Ended

December 31,

In millions, unaudited

2016

2015

2016

2015

Revenue

Productivity and Business Processes

 $7,382

 $6,690

 $14,040

 $12,996

Intelligent Cloud

6,861

6,343

13,243

12,235

More Personal Computing

11,823

12,473

21,117

21,935

Corporate and Other

(1,976)

(1,710)

(3,857)

(2,991)

Total revenue

 $24,090

 $23,796

 $44,543

 $44,175

Operating income (loss)

Productivity and Business Processes

 $3,256

 $3,292

 $6,376

 $6,448

Intelligent Cloud

2,398

2,568

4,456

4,959

More Personal Computing

2,499

1,876

4,427

3,403

Corporate and Other

(1,976)

(1,710)

(3,857)

(2,991)

Total operating income

 $6,177

 $6,026

 $11,402

 $11,819

Source: Microsoft

The strong performance of Microsoft’s cloud segment represents the ongoing shift from using corporate data centers to cloud infrastructure as a means of running data and applications.

Microsoft Executive Vice President Judson Althoff, told CIO Journal in October, “Cloud is becoming more than just a tool IT would implement. It is more something that business leaders would implement to drive outcomes. It is now driven by business decision makers as a way to truly transform business, digitally.”