Microsoft reported revenue increase of 14 percent to $33.06 billion in the first quarter of Microsoft’s 2020 fiscal year, which ended on September 30.
The Azure public cloud business delivered 59 percent revenue growth, which is down from the 64 percent growth one quarter earlier. Microsoft doesn’t disclose Azure revenue in dollar figures.
“We do continue to expect Azure, especially on the consumption side, gross margins to improve,” Amy Hood, Microsoft’s chief financial officer, told analysts on a Wednesday conference call.
Microsoft said it is expecting revenue of $35.15 billion to $35.95 billion in fiscal second quarter.
The top business segment in the fiscal first quarter was More Personal Computing, the traditional core of the company. In the previous quarter Microsoft’s Intelligent Cloud business segment, which includes Azure, was larger than any other segment for the first time in more than three years.
More Personal Computing, which includes Windows, Surface, search ads and gaming, came up with $11.13 billion in revenue. Commercial Windows revenue from device makers rose 19 percent ahead of the end of support for Windows 7, which comes in January 2020.
Gartner and IDC earlier this month both pointed to the Windows 10 upgrade cycle when they reported increases in PC shipments in the quarter.
Revenue from Windows commercial products and cloud services surged 26 percent; one year earlier the growth rate was 12 percent. Microsoft attributed the change to more agreements on Microsoft 365, a bundle that includes Windows 10, Office 365 productivity services and mobility and security tools.
Microsoft’s Productivity and Business Processes unit, which contains Office, LinkedIn and Dynamics, delivered $11.08 billion in revenue. Office 365 commercial seat growth slowed to 21 percent on an annualized basis as Microsoft crossed 200 million Office 365 commercial monthly active users. Microsoft reported a 9.5 percent increase in the number of Office 365 consumer subscribers, which is now at 35.6 million.
The Intelligent Cloud segment, which includes Azure along with Windows Server, SQL Server, System Center, GitHub and consulting, contributed $10.85 billion in revenue.
In the fiscal first quarter, Microsoft said LinkedIn would move to Azure, and announced the acquisitions of cloud migration company Movere, data security company BlueTalon and retail advertising company PromoteIQ.