Microsoft Q2 earnings edge higher on Office and cloud services growth

Microsoft reported financials for its fiscal second quarter today, posting earnings of $0.83 per share on $26.1 billion in revenue. Growth was led by its Office and cloud segments, which the company is betting on to fuel future growth.

Microsoft’s results compared with Wall Street’s forecast of $0.79 per share on revenue of $25.3 billion for the quarter. They were also slightly higher than the year-ago quarter, when Microsoft reported earnings of $0.78 per share on revenue of $25.7 billion.

While slightly higher than expected, its financials were met with a tempered reaction from investors.

Microsoft continues to see robust growth in its productivity and business processes segment, which is being led by the adoption of Office 365 by consumers and enterprises alike. That unit grew revenues 10 percent for the quarter to $7.4 billion.

The company is also betting big on cloud, particularly in the enterprise market where it competes with Amazon Web Services. That bet appears to be paying off, as Azure revenue increased 93 percent, with compute usage more than doubling for the quarter. It highlighted an annualized revenue run rate of $14 billion for its cloud business.

In recent quarters Microsoft has been breaking out the impact from different business segments, providing a more granular view of how each is doing. Here are the results from each major unit:

  • Productivity and Business Processes (PBP), which includes Office, consumer Office, Dynamics and now LinkedIn, saw revenue increase 10 percent to $7.4 billion.
  • Intelligent Cloud (IC), which includes service revenue and Enterprise Services, saw revenue increase 8 percent to $6.9 billion.
  • More Personal Computing (MPC), which contains Windows, Devices, Gaming and Search, saw revenue decline 5 percent to $11.8 billion.
Also of note: Microsoft’s $26.2 billion acquisition of LinkedIn closed late in the fiscal second quarter. For the quarter, Microsoft reported that LinkedIn contributed $228 million in revenue and reduced EPS by $0.01.