Microsoft's Office 365, Cloud Businesses Power Earnings

Office commercial products and cloud services revenue increased 7%, while Office consumer products and cloud services revenue increased 15%.

This was the first full quarter in which Microsoft included results from LinkedIn Corp., the professional social network it acquired in December for $27 billion.

Windows OEM revenue is up 5 percent year-over-year, and Windows commercial products and cloud services revenue also increased by 6 percent compared to the same period last year. Server products and cloud services revenue increased 15%, driven by Azure revenue growth of 93%.

Microsoft was expected to report $23.62 billion in revenue by the Wall Street, so Redmond slightly missed out on analysts' expectations.

Even as the Windows operating-system franchise continues to generate big profits, the cloud gains are crucial as Microsoft battles Inc. and Alphabet Inc.'s Google for a piece of the so-called cloud-infrastructure market that is expected to reach $71.55 billion in 2020, up from $25.29 billion previous year, according to market-research firm Gartner Inc. Microsoft expects its cloud-computing business to hit a $20 billion run rate by 2018. Microsoft's Personal Computing business isn't doing so well, as it experienced a fall of 7% in revenue.

Revenue in the three months ended in March rose 6.3%, year over year, to $23.56 billion, yielding EPS of 73 cents. The segment lost $386 million on $975 million in revenue during the quarter.

Surface revenue dipped 26 percent in the quarter.

Under Chief Executive Satya Nadella, who took the helm in 2014, Microsoft has sharpened its focus on the fast-growing cloud computing unit to counter a prolonged slowdown in the PC market, which has weighed on demand for its Windows software. "With Microsoft Azure, we are building on the industry's leading cloud platform in terms of innovation, technology, security and regulatory compliance, which is very important as a Swiss financial institution".

Microsoft's cloud business brought in $6.76 billion in revenue during the quarter. Gaming, on the other hand, saw a rise of 4% YoY with Xbox Live monthly active users rising by 13%.