In the previous quarter, Microsoft said its run rate exceeded $18.9 billion and that Azure revenue growth was 97 percent. (As a whole, Microsoft's revenue was up 12 percent.) Stifel analysts Brad Reback and Adam Borg were expecting Azure - which is larger than Google's cloud and second only to Amazon Web Services - to generate $1.3 billion in revenue, which would have been up 90 percent year over year.
Microsoft returned $4.8 billion to shareholders during its first fiscal quarter through dividends and share buybacks.
Chief Executive Officer Satya Nadella has turned Microsoft into a cloud-computing powerhouse, recently reshuffling the sales force and investing in new products and services.
Microsoft managed to grow both revenue ($24.5 billion, up 12%) and profits ($6.6 billion, up 16%), showing the gains were not simply due to cutting.
Software giant Microsoft Corp. "Our results reflect accelerating innovation and increased usage and engagement across our businesses as customers continue to choose Microsoft to help them transform".
On average, 25 analysts polled by Thomson Reuters expected earnings of $0.72 per share for the quarter. Office 365 subscribers hit 28 million.
Operating income was $7.7 billion and increased 15%. The company has been pushing heavily into cloud services, including Azure and its subscription-based Office 365 product.
Microsoft purchased LinkedIn, the professional social network, in December for $27 billion, in part, to boost the Dynamics business.
For the More Personal Computing segment, Microsoft reported $9.4 billion in revenue... Windows OEM Pro, which derives its revenue from the business PC market, saw its revenues grow 3% in 2Q17. The 12% increase (11% in CC) can be attributed to sales of the Surface Laptop. Credit Suisse analysts Michael Nemeroff, Alexander Hu and Christopher Rochester weighed in with a statement showing expectations of strength in its commercial cloud business. In constant currency terms, this decline was 1%. The company had guided for between $23 billion and $23.7 billion, and in the year-ago quarter.