Microsoft reported another strong quarter of results driven by its cloud business. Revenue for the fiscal third quarter to March rose 14 percent to USD 30.6 billion, and operating profit was up 25 percent to USD 10.3 billion. Net profit increased 19 percent to USD 8.8 billion, and the EPS rose 20 percent to USD 1.14.
Commercial bookings growth strengthened in the quarter, to 30 percent on an annual basis and 34 percent at constant currency rates, due to several long-term Azure contracts, Microsoft said. Its commercial cloud revenue booked in the quarter rose 41 percent year-on-year to USD 9.6 billion.
Free cash flow improved 11 percent year-on-year to USD 11.0 billion, despite increased capital spending (USD 3.4 billion) to support the growth in cloud services. The company paid out a total of USD 7.4 billion to shareholders in the period, divided roughly equally between dividends and share repurchases.
Azure revenues up 73%
At the Intelligent Cloud division, which includes Azure and other enterprise cloud services, revenues rose 22 percent to USD 9.65 billion, and operating profit was up 21 percent to USD 3.21 billion. Azure led the growth with a 73 percent increase in revenues, while other server products rose 7 percent. Microsoft said it also passed 100 million seats for its enterprise mobility products, up 53 percent from a year ago.
In Personal Computing, revenues rose a slower 8 percent to USD 10.68 billion, while operating profit jumped 25 percent to USD 3.15 billion as Microsoft limited the increase in operating expenses to 1 percent. Sales growth was led by improving demand in the business computer market for Windows, as well as a 21 percent increase in Surface revenue. Gaming revenue grew 5 percent as 12 percent growth in Xbox software and services offset lower hardware revenue. Xbox Live users were up 7 percent year-on-year to 63 million, and Microsoft also reported 12 percent higher search advertising revenues.
Finally in the Productivity and Business division, revenue increased 14 percent to USD 10.24 billion, driven by Office365 sales and LinkedIn (+27%). Operating profit was up 28 percent to USD 3.98 billion. Office revenues were up 30 percent in the commercial segment, where 365 passed 180 million monthly users, and Office consumer revenues rose 8 percent, with 34.2 million subscribers to 365.
