Microsoft earnings report shows overall revenue is up, but phone and Surface business is still declining
Azure revenue was up by 93%By Rob Thubron 7 comments
Microsoft has posted earnings for the third quarter of its 2017 fiscal year. And while its non-GAAP revenue of $23.6 billion and non-GAAP earnings per share of $0.73 was in line with Wall Street's expectations ($23.6 billion revenue, $0.70 earnings per share) shares fell by 1 - 3 percent in after-hours trading, though they've since jumped back up.
As usual, the Intelligent Cloud Unit, which is made up of the Microsoft Azure cloud and Windows Server businesses, had a successful quarter. It hit $6.8 billion in revenue during 3Q2017, up 11 percent compared to the same period a year earlier. The company expects its cloud business to reach a $20 billion run rate - calculated by multiplying revenue from the last month of the quarter by 12 - by next year.
"Our results this quarter reflect the trust customers are placing in the Microsoft Cloud," said Microsoft CEO Satya Nadella in the earnings announcement. "From large multi-nationals to small and medium businesses to non-profits all over the world, organizations are using Microsoft's cloud platforms to power their digital transformation."
The report also showed how Microsoft's $26 billion acquisition of LinkedIn is contributing to its productivity and business processes segment. Quite well, it turns out. LinkedIn was expected to generate $950 million in revenue during its first full quarter but managed to make even more - $975 million.
Yet again, one area where revenue is heading in the wrong direction is the More Personal Computing segment, which incorporates Windows, devices, gaming and search. Its revenue of $8.8 billion is down from $9.5 billion one year ago. The 7 percent overall decline was mostly due to Microsoft's struggling phone business and lower Surface revenue, which fell by 26 percent.