Cloud Growth Propels Microsoft to Revenue Gains

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Income was a whopping $7.4 billion and diluted earnings per share were 95 cents versus analyst expectations of 85 cents per share, according to FactSet.

Microsoft's Productivity and Business Processes unit, which includes its Office, Dynamics and LinkedIn businesses, saw revenue increase 17% to $9 billion in the quarter. Microsoft's own revenue forecast had been $25.25 billion to $25.95 billion.

Microsoft's commercial cloud business revenue rose by 58% to $6 billion; the margins improved as well to 57%. "We are innovating across key growth categories of infrastructure, AI, productivity and business applications".

Microsoft's Other Personal Computing, its largest division, saw sales grow 13% to $9.9 billion. While this may seem like no growth, this is likely a good thing as the previous quarter was a holiday season which means there was not a dramatic post-holiday decline in active users.

Microsoft said revenue in its Azure cloud computing service grew 93 percent during the quarter, a trend that has marked the company's momentum in the growing market for the last several quarters.

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With consistent investment and strong sales execution, this quarter we achieved better than expected performance across all segments. Office 365 commercial products and cloud services revenue grew 12% with Office 365 commercial revenue up 40%.

The stock is slightly lower in after-hours trading.

LinkedIn revenue rose 37% year over year and gaming revenue rose 18% driven by Xbox software and services revenue growth of 24%, primarily on the strength of third-party titles.

In the fiscal third quarter Microsoft acquired data storage company Avere and gaming start-up PlayFab, and it announced a major reorganization that included the departure of Windows and Devices chief Terry Myerson from the company.

Microsoft's stock closed up more than 2 percent to $94.26 in Thursday's regular session.

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