Overnight Microsoft posted a smaller-than expected decline in profit in its fiscal third quarter, buoyed by sales strength in its consumer segment and a drop in operating expenses.
Revenue climbed 12% to $8.3 billion with increases for consumers products including Windows software for PCs, the Surface tablet and its Xbox videogame console.
Office 365 revenue more than doubled with retailers like JB Hi Fi now benefitting from selling 12 month licences of which they get a renewal fee every time the licence is renewed.
Microsoft said it sold 2 million Xbox console units during the quarter, including 1.2 million of the Xbox One that launched in November.
An ongoing decline in sales of personal computers has weighed on revenue to the Windows operating system, and for Microsoft Office. Businesses' demand for new PCs recently has improved, however, in part because companies were upgrading older machines before Microsoft stopped tech support earlier this month for a 12-year-old version of Windows.
The earnings scorecard is the first under Satya Nadella, the Microsoft veteran who was named CEO three months ago.
"This quarter's results demonstrate the strength of our business, as well as the opportunities we see in a mobile-first, cloud-first world. We are making good progress in our consumer services like Bing and Office 365 Home, and our commercial customers continue to embrace our cloud solutions. Both position us well for long-term growth," said Satya Nadella, chief executive officer at Microsoft. "We are focused on executing rapidly and delivering bold, innovative products that people love to use."
The Wall Street Journal wrote, hile the Office for iPad decision was made long before Nadella took the helm, he had the fortune of being able to show it to the world at a media gathering and bask in the halo. He is seen as a change agent, and Microsoft's dive into the cloud and any device is perceived as evidence.
Office 365, the subscription based version of the suite, has 4.4 million subscribers. Microsoft said it added a million in just three months.