Microsoft made 68 cents a share of net income in the fiscal third quarter, beating the street estimate of 63 cents per share, riding strong gains in cloud revenue. Revenue from Azure grew by over 150 percent, while Office 365 revenue grew by over 100 percent as commercial seats nearly doubled, the company announced Thursday.
Q3 2014 revenue was $20.4 billion, and while “commercial” revenue was higher than “devices and consumer” revenue, both sides of the business grew, at 7 percent and 12 percent, respectively.
“This quarter’s results demonstrate the strength of our business, as well as the opportunities we see in a mobile-first, cloud-first world,” Satya Nadella, chief executive officer at Microsoft said. “We are making good progress in our consumer services like Bing and Office 365 Home, and our commercial customers continue to embrace our cloud solutions. Both position us well for long-term growth.”
Chief financial officer Amy Hood told Bloomberg that Microsoft beat profit estimates by saving money on cloud service delivery costs and marketing.
Most of Microsoft’s cloud products fall into the “commercial other” segment of the business. That segment had a gross profit margin on the quarter of $475 million, up nearly 14.5 percent from $415 million in Q2, and nearly 80 percent over Q3 2013.
“Our products and services continue to deliver differentiated business value to our customers, and we continue to win share in areas like cloud services, data platform, and infrastructure management,” Kevin Turner, chief operating officer at Microsoft said. “Our SQL Server business grew double-digits again this quarter, and with the announcements of SQL 2014 and Power BI for Office 365, we offer a unique, comprehensive, end-to-end data and analytics solution.”
While Microsoft’s acquisition of Nokia closed Friday, and is expected to significantly impact future earnings reports, it did not impact Microsoft in the quarter ending March 31.
Earlier this week Microsoft announced the launch of an educational program to help its partners guide SMBs into the cloud, not content to let the growth of its cloud services get buoyed by the general enterprise trend towards cloud adoption.
The results seem to vindicate the choice earlier this year of former cloud and enterprise group leader Nadella as CEO. Opinions on his selection were divided, and Nadella was derided at the time by one media outlet as “the server guy.”