Microsoft has reported a boost in profit for Q4 of its fiscal year, driven by its Azure cloud business.
Overall in Q4, the vendor saw a GAAP net profit of $3.1bn (£2.4bn) for the three months ending 30 June, compared with a $3.2bn loss in the same period last year as a result of an $8.4bn Nokia write-down and restructuring. Q4 revenue came in at $20.6bn, down seven per cent annually.
For the full year, Microsoft saw GAAP revenue drop annually by nine per cent to $85.3bn, while over the same period net profit jumped 38 per cent to $16.8bn.
"This past year was pivotal in both our own transformation and in partnering with our customers who are navigating their own digital transformations," said CEO Satya Nadella. "The Microsoft Cloud is seeing significant customer momentum and we are well positioned to reach new opportunities in the year ahead."
Server products and cloud services revenue grew five per cent annually to $253m, driven by the Azure cloud computing division which saw revenue growth of 102 per cent over the same period.
The strong Azure performance mitigates the hit taken by the hardware side of the business. Revenue from the devices unit dropped 35 per cent in Q4, which Microsoft attributed to a 71 per cent fall in mobile sales. Microsoft has scaled back its mobile business over the past year and recently sold its consumer Nokia brand, intending to put more focus on the enterprise market.
The drop in mobile sales comes after Microsoft announced it would not achieve its goal of having Windows 10 on one billion devices by 2018, again blaming this on mobile woes.
The fall in mobile sales was however buffered by the improved performance of Microsoft's Surface product, which saw a nine per cent annual revenue increase to $76m.
In an earnings call to investors Nadella (pictured) attributed this to a push in the channel.
"Microsoft's family of Surface devices continues to drive category growth, and we are reaching more commercial customers of all sizes with the support of our channel partners," he said.
"We recently announced new Surface enterprise initiatives with IBM and Booz Allen Hamilton to enable more customer segments.
"Also in the past year, we grew our commercial Surface partner channel from over 150 to more than 10,000."
Despite the strong end to the fiscal year, TechMarketView analyst Angela Eager expects more challenges for Microsoft.
"Transitions are rarely linear and Microsoft demonstrates this – Q4 was an upbeat period," she said.
"There will no doubt be trials to come, especially as problems with the smartphone business means it will not make its target of having Windows 10 running on one billion devices by 2018 – the current count is circa 350 million.
"But as Windows 10 moves to payment mode as the free upgrade offer comes to a close, and news of its shift to a subscription base comes through, there are other initiatives for it to play to."
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