Microsoft releases FY17 Q1 earnings: Digital transformations a key driver

Microsoft Corp. has released its earnings for the quarter ended September 30, 2016, and among key highlights:

• Revenue was $20.5 billion GAAP, and $22.3 billion non-GAAP
• Operating income was $5.2 billion GAAP, and $7.1 billion non-GAAP
• Net income was $4.7 billion GAAP, and $6.0 billion non-GAAP
• Diluted earnings per share was $0.60 GAAP, and $0.76 non-GAAP

Those figures are rather tepid compared to the same quarter in 2015, using GAAP figures. Revenue is unchanged, operating income is down 10% and net income down 4%. Switch to non-GAAP constant currency figures, and revenue is up 5%, operating income 4%, with net income up a substantial 10%.

Either way, Microsoft CEO Satya Nadella is bullish, describing the "profound digital transformation" the company is helping customers to effect, while "infusing intelligence across all of our platforms and experiences."

That digital transformation is of course a cloud transformation, and the highest highlights were all cloud, across all business units.

Revenue in Productivity and Business Processes grew 6% (up 8% in constant currency) to $6.7 billion, with these highlights. Here, Dynamics products and cloud services revenue grew 11% (up 13% in constant currency), which Microsoft attributes to Dynamics' online revenue growth. Dynamics CRM Online paid seats grew "more than 2.5x." And more than 70% of Dynamics ERP and CRM customer adds chose online, the company reported.

Office commercial products and cloud services revenue grew 5% (up 8% in constant currency), owed largely to Office 365 commercial revenue growth of 51% (up 54% in constant currency)

Revenue in Intelligent Cloud grew 8% (up 10% in constant currency) to $6.4 billion. Here, Azure revenue grew 116% (up 121% in constant currency) with Azure compute usage more than doubling year-over-year. Enterprise Services revenue increased 1% (up 2% in constant currency) with growth in Premier Support Services and consulting offset by declines ...