Microsoft shares rose as much as 5% in extended trading on Tuesday after the company reported fiscal second-quarter earnings that topped analysts' estimates.
Microsoft's total revenue increased by 2% year over year in the quarter ending Dec. 31, the slowest rate since 2016, according to a statement. Net income fell to $16.43 billion from $18.77 billion in the year-ago quarter. The company took a $1.2 billion charge in the quarter in connection with its decision to cut 10,000 jobs, revise its hardware lineup and consolidate leases.
"We are focused on operational excellence as we continue to invest to drive growth," Amy Hood, Microsoft's finance chief, said in the statement.
Revenue in Microsoft's Intelligent Cloud segment amounted to $21.51 billion, up 18% and slightly above the $21.44 billion consensus among analysts polled by StreetAccount. The unit includes the Azure public cloud, Windows Server, SQL Server, Nuance and Enterprise Services. Revenue from Azure and other cloud services, which Microsoft does not report in dollars, grew by 31%, slightly above the estimate of just under 31% that analysts polled by CNBC and StreetAccount had expected. In the previous quarter, the category grew 35%. Amazon shares rose 3% in after-hours trading following Microsoft's announcement.
The Productivity and Business Processes segment, containing Microsoft 365 — formerly known as Office 365 — productivity software, LinkedIn and Dynamics, delivered $17 billion in revenue, up 7% and more than the StreetAccount consensus of $16.79 billion.