Microsoft Corp.’s stock barely moved the needle late Wednesday after the company reported fiscal first-quarter earnings and revenue that beat Wall Street’s expectations, only to come up short with its guidance for the next quarter.

The company reported a profit before certain costs such as stock compensation of $1.38 per share on revenue of $33.06 billion, up 14% from a year ago.

Wall Street had pegged Microsoft’s earnings at just $1.25 per share on revenue of $32.23 billion.

Microsoft’s growth in the quarter was once again powered by a strong performance in its cloud and commercial businesses. That’s not unexpected, since much of the focus of Microsoft Chief Executive Officer Satya Nadella (pictured) over the last five years has been on building up the cloud business, particularly the Azure Cloud infrastructure-as-a-service platform.

“The world’s leading companies are choosing our cloud to build their digital capability,” Nadella said. “We are accelerating our innovation across the entire tech stack to deliver new value for customers and investing in large and growing markets with expansive opportunity.”

In the first quarter, Microsoft’s Intelligent Cloud business unit, which includes Azure along with Windows Server, SQL Server and GitHub, saw revenue jump 27% year-over-year, to $10.8 billion. Revenue from the Productivity and Business Processes division, which includes Office 365, LinkedIn and Dynamics, grew 13%, to $11.1 billion.

Microsoft said that Azure specifically saw its revenue grow by 59% year-over-year, down from 64% growth in the previous quarter. The company doesn’t disclose Azure’s actual revenue in terms of dollars.

Azure’s growth rate has actually been slowing for several quarters now, but Microsoft Chief Financial Officer Amy Hood retained a positive outlook. “We do continue to expect Azure, especially on the consumption side, gross margins to improve,” she told analysts on a conference call.

“Microsoft did with its first quarter what it has done so many times before: It crushed it with cloud and software-as-a-service growth,” said Patrick Moorhead of Moor Insights & Strategy. “I attribute this quite simply to the investments it has made in the cloud and its ability to uniquely serve the needs of multinational corporations.”

Constellation Research Inc. analyst Holger Mueller said Microsoft’s cloud growth was so impressive because the company is still in the “landgrab” phase in what is still a rapidly growing market overall.

“Microsoft now needs to show where its cloud offerings will settle, growth percentage wise, once they mature more,” Mueller said. “Most likely its growth will be more in the 10% range, as we see with its Windows OEM, search advertising and Dynamics and enterprises products. If Microsoft can revitalize any of these franchises while keeping its cloud growth engines in high gear, that will help to drive more organic growth for its large portfolio.”

Microsoft’s most profitable business in the quarter was its traditional cash cow, the More Personal Computing segment, which covers Windows, Surface, search advertising and gaming. It reported revenue of $11.13 billion.

The only real weaknesses in Microsoft’s quarter were its Surface revenues, down 4% in the quarter, and gaming revenues, which dropped by 7%. Surface likely took a hit because Microsoft is preparing to launch two new devices in the coming quarter, the Surface Pro 7 and the Surface Laptop 3, and many buyers were likely holding out for them.

Investors were likely disappointed by the company’s guidance, however. For the second quarter, Hood said the company is expecting revenue of between $35.15 billion and $35.95 billion, below Wall Street’s consensus of $36.02 billion.

Photo: Dixin Yan/Flickr