Microsoft Corporation (MSFT) Q1 2018 Earnings Top Expectations

Microsoft hits its $20 billion annual run rate goal for commercial cloud in strong Q1

Microsoft easily beats the street as its cloud run rate passes $20B a year early

The company, however, has long said that it wanted Azure to reach an annual run rate of $20 billion by the end of its 2018 fiscal year. Microsoft's Office division brought in a nice 10% YoY growth stat while the company's Dynamic Products and Cloud Services sector saw their own 13% increase for the quarter. Surface revenues fell 2% due to product cycle transitions, and while gaming revenue fell 14% to ~$1.7 billion, Microsoft noted that its "gaming business is now more than $9 billion".

The company reported a total of $24.538 billion in revenue, which is a 12% (11% in constant currency) increase from past year, which was $21.928B. Microsoft reported adjusted per-share earnings of 84 cents. His efforts have helped win over customers like Bank of America Corp. for Azure, No. 2 behind Amazon.com Inc.in the biggest part of the cloud market, and internet-based Office 365 workplace tools.

Microsoft ended the quarter with 28 million Office 365 consumer subscribers, up from 27 million from the previous quarter. In the just-completed quarter, that business met and exceeded the company's goal of $20 billion in annualized revenue.

As for Windows, revenue from companies putting Pro versions of the operating system on devices was up by 4 percent.

Despite the growth in those areas, the continued winding down of Microsoft's smartphone business continued to take its toll, with "immaterial" phone revenue contributing 3% points of decline to the More Personal Computing unit's numbers. Windows OEM revenue was also up 4 percent and search advertising revenue increases 15 percent. Azure by itself came within spitting distance of doubling its revenue, growing 90% from the year-ago period.

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Surface revenue increased by 12 percent driven by sales of the new Surface Laptop.

Surface revenue finally saw some growth, as it had been declining for a while due to the lack of new hardware.

Analysts from KeyBlanc Capital Markets wrote in a research note this week that consumer adoption of the cloud market would be a primary driving factor for Microsoft earnings.

The technology giant's net income rose to US$6.58b in the first quarter, from US$5.67b a year earlier.

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