Microsoft has reported its financial results for the most recent quarter, showing better performance than the markets had been expecting. The software firm attributed this to its cloud services strategy and Windows 10 providing the PC market with a shot in the arm.
The Microsoft Earnings Release FY16 Q1 showed revenue of $21.66bn during the quarter ending 30 September. This is down by at least seven percent on the same period last year, but better than market expectations.
Increasing demand for Microsoft's cloud services, which includes products such as the Office 365 productivity suite and Azure public cloud platform, helped the company to offset falling revenues in other areas.
Chief executive Satya Nadella said in a statement that Microsoft is making strong progress by delivering innovations that customers want.
"Customer excitement for new devices, Windows 10, Office 365 and Azure is increasing as we bring together the best Microsoft experiences to empower people to achieve more," he said.
Revenue in Productivity and Business Processes declined three percent but, within these, Microsoft's Office products and cloud services revenue grew five percent. Office 365 grew by nearly 70 percent as the firm continues its strategy of trying to switch customers to a subscription-based model for Microsoft Office and other products.
Revenue from the Microsoft Dynamics CRM and ERP applications grew by 12 percent, the firm said.
Meanwhile, server products and cloud services showed year-on-year growth of 13 percent, seeing Azure revenue and compute use more than doubling.
On the personal computing side, revenue earned from Windows licensing to hardware vendors declined six percent, but this is better than the overall PC market, according to Microsoft, which claimed that the launch of Windows 10 has spurred innovation and helped to drive hardware sales more towards premium devices.
Revenue from Microsoft's smartphone business declined by an alarming 54 percent, but the firm put some spin on this by claiming it reflects the firm's change in strategy announced earlier this year to produce fewer handset models but focus more on specific markets such as business users.
Microsoft also stated that advertising revenue from the Bing search engine grew by 29 percent, benefiting from the growing number of Windows 10 users out there.
"We're seeing great traction with businesses who want to bring Microsoft's cloud, mobile device management technology and data analytics together to improve security and productivity, resulting in almost 70 percent year-over-year growth in our commercial cloud run rate," said Kevin Turner, Microsoft's chief operating officer.
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