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Cloud is shining light in Microsoft earnings report

Yesterday Microsoft released their quarterly financial statement and while the numbers weren’t all that great in some segments their cloud offerings are going strong.

Because of restructuring, Nokia write offs and changes in the way Microsoft is reporting taxes it’s a bit difficult to sort through all the numbers but for the most part revenues from consumer products (other than Xbox) were either slightly off or flat but their professional line of products saw substantial gains.

Their newly named Computing and Gaming Hardware segment saw revenue grow 23.4 per cent to $1.44 billion (£0.85bn), surface revenue was $0.41 billion (£0.24bn), Xbox platform revenue was up 14 per cent and the new Phone Hardware division posted revenue of $1.99 billion (£1.17bn). Advertising revenue from Bing grew 40 per cent and Bing’s US market share now stands at 19.2 per cent.

Read more: Is Microsoft set to ramp up agility to boost productivity?

Commercial Licensing revenue was up 5.6 per cent to $11.22 billion , Server product revenue was up 14 per cent and Office revenue was up 4 per cent.

The real star, however, was Microsoft’s cloud offerings that include Office 365 and Azure.

As Peter Bright reported on the ars technica site:

The big success story was the Commercial Other segment. This segment includes both Microsoft's corporate-oriented cloud services (including Azure and Office 365) and its Enterprise Services consultancy and support division. The total segment revenue was up 44 per cent to $2.26 billion (£1.32bn), with gross margin up 105 per cent to $0.691 billion (£0.405bn). Most of this growth came from cloud services: there was triple-digit growth in both Office 365 and Azure, for total cloud services revenue growth of 147 per cent. The annual run rate for the cloud business is now more than $4.4 billion (£2.58bn). Enterprise Services revenue was also up by 11 per cent.

As we reported a few days ago there are a number of experts out there who predicted that Microsoft’s cloud ventures will become more and more important to the company. As Massoud Marzban, VP of Business Development‏ at Burnside Digital said, "A lot is riding on Microsoft's continued push into the cloud space.” And in a follow up he added, “I’m not surprised that the earnings report showed how important the cloud is now, and will continue to be, a strong revenue stream for Microsoft going forward.”

Shake-ups, layoffs, restructuring and all the rest might just be a small bump in the road for Microsoft but it looks like things aren’t quite as dire as some people may have thought.