Microsoft (MSFT 2.17%) reported the results of its fiscal first quarter (ended Sept. 30), which trounced expectations on the strength of the company's cloud services and continuing swell in gaming activity. Revenue of $37.2 billion grew 12% year over year, easily surpassing analysts' consensus estimates of $35.72 billion, while also surpassing the high end of management's forecast, which topped out at $36.05 billion. Earnings per share of $1.82 increased 32%, eclipsing the $1.54 expected by analysts.
Management cited strong demand for Microsoft's cloud computing services, with CFO Amy Hood noting, "We continue to invest against the significant opportunity ahead of us to drive long-term growth."
Image source: Getty Images.
Azure Cloud continued to grow like gangbusters, up 48% year over year, ticking up slightly from 47% growth in Q4. This pushed the intelligent cloud segment higher, up 20% year over year. Within the segment, commercial cloud produced revenue of $15.2 billion, up 31% year over year, achieving a run rate of more than $60 billion, while generating gross margins of 71%.
The more personal computing segment got a boost, climbing 6%. Gaming continued its outsized growth, growing 22% year over year, providing fuel for the segment. Xbox content and services increased 30%, driven higher by strong third-party titles and subscriptions to Xbox Game Pass, as well as demand from Microsoft's own titles. Surface also held up its end, with revenue that increased 37%.
The productivity and business processes segment did its part with strength across its portfolio, up 11% year over year, as Office commercial products grew 9% driven by Office 365 commercial, which jumped 21%.
Microsoft could get another boost from gaming in the current quarter, as the company is releasing the next generation Xbox console next month, just in time for the holidays. In September, Microsoft revealed that for those not able to spend $499 on a new device, the company would begin offering consoles included in a monthly subscription.
