Bing, Surface Generate $2.3 Billion in Q2 For Microsoft

While PC Sales Are Down, Bing, Surface and Cloud Services Are Driving Growth

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Here's an interesting stat: Microsoft's Bing and its Surface lineup contributed more than $2.3 billion of revenue for the company during its second quarter.

That's a lot of money for a search engine not many took seriously when it debuted in 2009 and a product segment that Apple pioneered.

The company reported $25.7 billion in revenue, down 2% year-over-year. Net income in the period declined to $5 billion. Revenue in the More Personal Computing unit, including products like Windows, search, Xbox and devices, fell 4.7% to $12.7 billion, compared with the $12.4 billion estimate of five analysts.

Microsoft continued to see growth with is Surface products, as the segment is up 29% year-over-year. Microsoft has been marketing the device as a better productivity tool toward enterprise businesses.

And search revenue, excluding traffic acquisition costs, grew 21%, which was driven by higher revenue per search and search volume, the company said Thursday.

Bing is the second largest search engine in the world, according to comScore. Microsoft did not release a revenue figure for Bing, but said it expects it to "continue to grow and remain profitable," said Amy Hood, chief financial officer at Microsoft.

During the previous quarter, Ms. Hood revealed that Bing contributed more than $1 billion for the quarter.

The company said it's "all in" on the search engine, which has seen consistent growth for 27 consecutive quarters. The company recently updated Bing's logo and said it plans to grow the search engine through consumer adoption of Windows 10, as Bing powers all searches done through the operating system.

Revenue from Azure -- Microsoft's platform that sells data- center based computing power and services -- more than doubled as customers signed up for pricier offerings that can handle machine learning and process large reams of information. Subscriptions for Office 365 productivity software also lured both businesses and consumers, and even Windows sales came in better than the overall PC market, fueled by the adoption of Windows 10.

Currently, there are 200 million active users of Windows 10, but the company is aiming to have 1 billion users by 2019. Ms. Hood said Thursday that 30% of all search revenue derived from Windows 10 devices, meaning the platform is contributing at least $300 million to Microsoft's search business.

Last year, marketers spent more than $26.5 billion on search advertising. That number is expected to reach more than $40 billion by 2019, according to a January report from eMarketer.

Additionally, the company's offerings with its XBox Live gaming service has now reached 48 million users, a 30% increase when compared to the same time last year. The company charges users $60 for a one year subscription for the service.

Revenue for Windows phones fell 49% year-over-year. Windows Continuum, which allows its mobile phones to be connected to a monitor for a PC experience powered by Windows 10, is one of the features the company is banking on. Microsoft has said in the past that it expects this phone to do well overseas where people don't have both a computer and smartphone.

--Bloomberg News

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