So How's That Cloud Thing Going for Microsoft? Pretty Well, Looks Like

Microsoft puts up a solid earnings report thanks to strength in its cloud offerings.

Apr 26, 2014 at 12:00PM

This story originally written by Matt Rosoff at CITEworld. Sign up for our free newsletter here.

Satya Nadella Hoodie

Microsoft's (NASDAQ:MSFT) belated embrace of the cloud seems to be going pretty well, if the company's latest earnings report is any indication.

For the quarter ended March 31 (Q3 of Microsoft's 2014 fiscal year), Microsoft bragged that Office 365 subscriptions and revenues from commercial customers approximately doubled from last year, and Azure revenue was up 150%. That Azure number could be from a relatively low base, but given that Azure is one of the top cloud providers among enterprises, it's probably pretty significant.

Microsoft also added more than 1 million Office 365 Home subscribers in the last three months, coming in for a total of 4.4 million. Those numbers barely include any possible rush from Office for iPad customers, as that product didn't come out until March 27, right before the quarter ended. Office for iPad apps were among the most popular downloads from the App Store shortly after release, and customers can't get full functionality unless they also sign up for an Office 365 subscription.

Must read: The rise, fall, and rehabilitation of Internet Explorer

Despite a PC sales slump, Microsoft also saw nice growth in volume licenses of Windows, which were up 11% from last year. Those are probably mostly companies buying long-term license agreements in order to get the highest-value (and most expensive) Enterprise edition of Windows, which cannot be purchased solo.

Overall, the company's revenue growth was flat at $20.4 billion and profits were down 7% at $5.7 billion. However, revenue in last year's Q3 was artificially boosted by the effects of a Windows upgrade program which deferred some Windows revenue from earlier quarters. Take away that boost, and revenue was up 8%. Not spectacular, but not bad for a company that's on track to collect more than $80 billion in sales this year.

We'll have more after Microsoft's earnings call, which starts at 2:30 PM PT and will feature new CEO Satya Nadella on the line.

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