Last Thursday Microsoft (NASDAQ: MSFT) reported results for its first quarter of the fiscal year 2017, ended September 30, 2016. The company reported net income of $4.7 billion GAAP, operating income of $5.2 billion GAAP, revenue of $20.5 billion GAAP, and diluted earnings per share of $0.60 GAAP. Microsoft CEO Satya Nadella said the company’s first quarter 2017 results reflect continued demand for cloud-based services.

“We are helping to lead a profound digital transformation for customers, infusing intelligence across all of our platforms and experiences. We continue to innovate, grow engagement, and build our total addressable market,” Nadella said. “Our first quarter results showed continued demand for our cloud-based services. We continue to invest, position ourselves for long-term growth, and executive well across our businesses.”

Other first quarter results for fiscal year 2017 include:

• Productivity and Business Processes Revenue of $6.7 billion, a 6 percent increase
• 5 percent increase in Office commercial products and cloud services revenue, driven by Office 365 commercial growth of 51 percent
• 8 percent increase in Office consumer products and cloud services
• Office 365 consumer subscribers grew to 24.0 million from 23.1 million the prior period.
• Revenue in Intelligent Cloud of $6.4 billion, an 8 percent increase
• Server products and cloud services revenue increased 11 percent.
• Azure revenue grew 116% with Azure compute usage more than doubling year-over-year.
• Enterprise Services revenue increased 1 percent with growth in Premier Support Services.
• Revenue in More Personal Computing decreased 2 percent.
• Windows OEM revenue and Windows commercial products and cloud services revenue were flat.
• Phone revenue declined 72 percent.
• Gaming revenue declined 5 percent driven by lower Xbox console revenue which was, in turn, offset by higher Xbox software and services revenue.
• Search advertising revenue grew 9 percent due to increased revenue per search and search volume.

In a press release announcing the financials, Microsoft noted that it expects to close the acquisition of LinkedIn by the end of second quarter, in spite of the antitrust concerns competitor Salesforce has voiced to the European Union. Microsoft also hopes to complete the sale of its entry-level feature phone business in Q2 of fiscal year 2017.

Investors reacted favorably to Microsoft’s most recent financial report, closing at $59.66 on Friday, October 21. While it closed at just under $60 per share Friday, that morning Microsoft opened at $60.28 per share, an all-time high for Microsoft.

What drove the stock price up to record levels? CNN Money believes it is due, in large part, to Microsoft’s investment in Azure, its cloud-computing platform which competes directly with Amazon Web Services. With Azure leading the charge, overall cloud revenue grew by 8 percent which offset other revenue declines. In addition, the profit margin on Microsoft’s cloud operations improved by 7 percent over the previous period.

Insider Take:

Microsoft is showing its success in the cloud-based services arena at the business and enterprise level, and it is also making a name for itself as it transitions away from licensing and software sales to subscription sales.The company’s success with subscriptions is evidenced by its continued growth in Office 365 adoption, and Xbox, which lost money on devices but made money on subscription services. Adding LinkedIn to its list of assets, which has several subscription revenue components of its own, will continue to add to Microsoft’s growing bank of recurring revenue.