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Microsoft Sees Commercial Cloud Strength in Challenging Q2 2016 Results

by Jason Gumpert
Editor, MSDynamicsWorld.com

Microsoft reported $23.8 billion in revenue and $6 billion in operating income today in its Q2 2016. Revenue fell 10% year over year in GAAP terms, but operating income grew 13% and net income was up 20% in non-GAAP constant currency terms.

Among the quarter's highlights, the company reported that the Commercial cloud annual run rate now exceeds $9.4 billion

Many of the highlights were framed in constant currency (CC) terms to address negative foreign currency changes. Within the Productivity and Business Processes segment, Office 365 revenue climbed, the Dynamics AX installed base grew, and CRM Online seat adds more than doubled year over year as the Dynamics product line saw 11% CC revenue growth

Microsoft Dynamics revenue grew 11% in constant currency terms, 3% GAAP. And Dynamics CRM Online seat adds more than doubling year-over-year for the fifth consecutive quarter. And the Dynamics AX installed base grew nearly 20% sequentially over the prior quarter.

Office commercial revenue was up 5% in constant currency, with Office 365 commercial revenue up 70% CC and Office commercial products revenue down 8%

Azure revenue grew 140% in constant currency terms and Azure "premium services" nearly tripled. The company also celebrated passing 200 million devices now running Windows 10.

The Intelligent Cloud segment of server products, cloud services, and enterprise services grew revenue by 5%.

"It was a strong holiday season for Microsoft highlighted by Surface and Xbox," said Kevin Turner, chief operating officer at Microsoft. "Our commercial business executed well as our sales teams and partners helped customers realize the value of Microsoft's cloud technologies across Azure, Office 365 and CRM Online."

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About Jason Gumpert

As the editor of MSDynamicsWorld.com, Jason oversees all editorial content on the site and at our events, as well as providing site management and strategy. He can be reached at jgumpert@msdynamicsworld.com.

Prior to co-founding MSDynamicsWorld.com, Jason was a Principal Software Consultant at Parametric Technology Corporation (PTC), where he implemented solutions, trained customers, managed software development, and spent some time in the pre-sales engineering organization. He has also held consulting positions at CSC Consulting and Monitor Group.

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