Microsoft Q2 2018 Earnings Release: Azure up 98%, Dynamics 365 up 67%

Microsoft has announced the following results for the quarter ended December 31, 2017:

• Revenue of $28.9 billion, up 12%
• Operating income $8.7 billion, up 10%
• GAAP net loss $(6.3) billion, with non-GAAP net income $7.5 billion
• GAAP diluted loss per share $(0.82), with non-GAAP diluted earnings per share was $0.96
• GAAP results include a $13.8 billion net charge related to the Tax Cuts and Jobs Act (TCJA); a big "ouch," which is excluded from non-GAAP results.

That revenue narrowly edges analyst expectations. Analysts had expected Microsoft to earn $28.39 in revenue and earnings per share of $0.86.

CEO Satya Nadella credits the results to both "the differentiated value we are delivering to customers across our productivity solutions and as the hybrid cloud provider of choice...Our investments in IoT, data, and AI services across cloud and the edge position us to further accelerate growth."

"We delivered another strong quarter with commercial cloud revenue growing 56% year-over-year to $5.3 billion," said EVP and CFO Amy Hood, crediting "Strong execution from our sales teams and partners is driving growth across our businesses."

Revenue in Productivity and Business Processes was $9.0 billion and increased 25% (up 24% in constant currency), with the following business highlights:

• Dynamics products and cloud services revenue increased 10% (up 9% in constant currency) driven by Dynamics 365 revenue growth of 67% (up 68% in constant currency)
• LinkedIn contributed revenue of $1.3 billion during the quarter with sessions growth of over 20% for the fifth consecutive quarter
• Office commercial products and cloud services revenue increased 10%, driven by Office 365 commercial revenue growth of 41% (same figures in constant currency)

As we reported last week, analysts are bullish on ...