Software behemoth Microsoft (MSFT) late Wednesday crushed Wall Street’s targets for its fiscal second quarter. The Microsoft earnings report sent MSFT stock higher in extended trading.

The Redmond, Wash.-based company earned $1.51 a share on sales of $36.91 billion in the quarter ended Dec. 31. Analysts expected Microsoft earnings of $1.32 a share on sales of $35.68 billion. On a year-over-year basis, Microsoft earnings rose 37% while sales increased 14%.

“Strong execution from our sales teams and partners drove Commercial Cloud revenue to $12.5 billion, up 39% year over year,” Chief Financial Officer Amy Hood said in the Microsoft earnings news release. The company’s commercial cloud business includes Azure infrastructure services, Office 365 productivity software, Dynamics business software and other offerings.

Microsoft did not give March-quarter guidance in its news release. Analysts have been modeling Microsoft earnings of $1.24 a share on sales of $34.1 billion in its fiscal third quarter. In the year-earlier quarter, Microsoft earned $1.14 a share on sales of $30.6 billion.

MSFT Stock Pops On December-Quarter Beat

Microsoft stock rose 2.8% in after-hours trading on the stock market today. During the regular session, MSFT stock climbed 1.6% to 168.04. In intraday trading, Microsoft stock hit a record high of 168.74.

MSFT stock currently ranks No. 22 on the IBD 50 list of top-performing growth stocks. Its transition to cloud computing and software-as-a-service has fueled its growth in recent years.

Microsoft Earnings: Company Touts Innovation

“We are innovating across every layer of our differentiated technology stack and leading in key secular areas that are critical to our customers’ success,” Chief Executive Satya Nadella said in a written statement.

Of the company’s three business segments, Intelligent Cloud grew the fastest in the December quarter. Its sales rose 27% to $11.9 billion. Azure was a star performer, with revenue growth of 62%. Azure competes with Amazon.com’s (AMZN) Amazon Web Services.

Microsoft’s Productivity and Business Processes segment was second, with sales up 17% to $11.8 billion. That segment includes the company’s Office, Dynamics and LinkedIn businesses.

The company’s More Personal Computing segment posted sales of $13.2 billion, up 2%. That segment includes Windows software, Surface computers, search advertising and Xbox video games.

Author: Patrick Seitz

Source: Investors: Microsoft Crushes Wall Street’s Targets With Commercial Cloud Growth

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