Microsoft hit a new milestone in its cloud services business this quarter: it's now able to project over $20 billion in annual revenue.
The Redmond, WA-based software giant reported Q1 earnings per share (EPS) of $0.84, which was $0.12 better than the Wall Street consensus estimate of $0.72.
It reported $24.5 billion in overall revenue, which is a 12 percent increase from this time past year.
Productivity and Business Processes rose 28% to $8.2 billion on the back of a 10% increase in Office commercial products and cloud services, which includes a 42% increase in Office 365 commercial revenues.
Revenue was $24.5 billion and increased 12%.
Cloud goal: Microsoft topped its goal of passing $20B in commercial cloud ARR this fiscal year. As usual, cloud services continue to be among the fastest growing parts of Microsoft's business.
Windows Phone is dead, the company's fitness-focused wristband has been axed and its streaming music service is no more, and Microsoft investors couldn't be happier with the company.
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Microsoft's shares had risen almost 27 percent this year through Thursday, eclipsing the 14.4 percent gain in the broader S&P 500 .SPX . Analysts on average had expected US$6.70 billion, according to financial data and analytics firm FactSet.
Operating income was $7.7 billion and increased 15%.
Though those two sources of income are up, revenue from the overall personal computing market remains relatively stagnant.
Microsoft didn't break out specific revenue figures for the devices, but noted that Surface revenue gained 12% in the quarter. Microsoft said earlier this month that Bank of America will use both Azure and Office 365 as it shifts more of its operations to the cloud.
As a reward Microsoft's share price climbed 3.4% in after-hours trading to $81.46, giving the company a market cap of more than $626 billion. This quarter, those numbers turned around as Surface revenue grew 12 percent.
Microsoft beat analyst expectations, which predicted $23.56 billion in revenues. "Reaching $20 billion would imply the commercial cloud mix could cross over 20% of revenue for the first time in the first quarter of fiscal 2018, up from 5% in early 2015".