Revenues were down about six percent over the year-earlier quarter, but not as much as has been the case in the first and second quarters, when sales fell 12 percent and 10 percent respectively.
The operating income reported by Microsoft for the January-March quarter stood at $5.3 billion, which underscores a year-on-year plunge of 20 percent.
Net income in the recent period declined to $3.76 billion, or 47 cents a share. Earnings per share were $0.62, which was flat year over year.
Microsoft put the blame on a strong dollar and higher-than-expected taxes, which the company said drove the decline in earnings by 4 percent. The company's share price is down about 1 percent over the a year ago, as software maker Microsoft's stock rose about 30 percent. On the consumer side, there are 22.2 million Office 365 subscriptions, up 6%. That is an increase in seats of 79% year-over-year, which is extremely good. Microsoft's embrace of open-source solutions, coupled with continued investment in solutions around security, mobility, and artificial intelligence, should make Azure a rich development platform.
More than four out of five Microsoft enterprise customers are piloting Windows 10, Microsoft CEO Satya Nadella said as he claimed adoption of the operating system is double that of Window 7 at the same point. For future growth, Microsoft has looked to its cloud technology and services, focused more on helping customer's with their digital transformations rather than personal computing. The company's Intelligent Cloud segment (which holds Azure and Windows Server) was up marginally by 3% YoY. A key part of the trend is Azure revenue, which grew 110 percent year over year.
The cloud growth, along with the 7% quarterly growth of Office commercial and cloud services, thanks to Office 365, has helped the company navigate the declining PC market.
But just one quarter earlier, the same segment grew 5%, or 11% in constant currency, and Azure was up 140%. This is therefore a great time to try and define what Microsoft cloud really means. Sales of Azure premium services like Active Directory in the cloud grew by triple digits for the seventh consecutive quarter. They still have a long way to go to catch AWS, but they continue to show this is a strength going forward.
Microsoft's acquisition of Nokia is proving to be quite the albatross around the company's neck.
Revenue from productivity software rose 1% to $6.52 billion. Meanwhile, rumors that it is developing a Surface phone to launch later this year continue to circulate, although hardware doesn't appear to be the company's biggest problem in mobile. Gross margin was 2% higher, once again due to search and Surface, and operating expenses fell 14% with the lower spending on phone.
Along with Microsoft Graph application programming interfaces (APIs) he said Microsoft had also opened up Skype to developers, "generating developer momentum".
Microsoft said revenue from Windows software licenses declined 2 percent during the quarter, after adjusting for currency fluctuations. Windows volume licensing grew 6% CC.
Source: Microsoft earnings: Surface sales up, Windows Phone sales down
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