Microsoft Sees Azure Sales Surge 62 Percent

The digital transformation continues for technology giant Microsoft.

The company said on Wednesday night that its fiscal second-quarter earnings grew on the heels of commercial strength, and especially, its cloud computing businesses.

In terms of headline numbers, fiscal second-quarter earnings were $1.51, beating the consensus of $1.32.

Total revenues were up 14 percent to $36.9 billion, where analysts had expected $35.7 billion.

Drilling down a bit, the Intelligent Cloud business, which houses Azure, saw total sales surge by 27 percent to $11.9 billion, compared to Bloomberg estimates of $11.4 billion.  The company said that Azure sales were up 62 percent, which indicates an accelerating pace from the high 50 percent rate that had been seen in previous quarters, measured year over year. Enterprise services revenues were up six percent.

The company said that in its Productivity and Business Processes operations, revenues of $11.8 billion were up 17 percent, and within that segment, Office 365 Consumer subscribers stood at 37.2 million.

LinkedIn revenues were up 24 percent, while LinkedIn sessions grew by 25 percent.

Microsoft Surface revenues were up 6 percent to $1.9 billion, where last year, that same business was up amid launches of Surface Pro 6, and headphones. The latest tally came in at $1.9 billion. Management expects Surface revenues in the low single-digit percentages moving forward.

Gaming revenues were off by 21 percent on lower revenues related to a “third party” title and said subscribers to its Game Pass service more than doubled year over year.

Supplemental materials from the company showed that within the commercial business, commercial bookings were up by 31 percent, and that overall commercial cloud revenues were up 39 percent to $12.5 billion.

Enterprise Mobility’s installed base grew by 35 percent to over 127 million seats.

On the conference call with analysts, CEO Satya Nadella said that in artificial intelligence (AI) “we are seeing rapid adoption across a comprehensive portfolio of AI tools, infrastructure and services.”  He said that there are  6 billion transactions on Azure Cognitive services each month, 7 billion documents processed daily with Azure cognitive search. There are a further 2 billion predictions a month using Azure machine learning and 3,500 new conversational agents bots created each week with Azure Bot Service.