Microsoft’s enterprise sales are booming, but Surface remains no match for the iPad.

Microsoft handily beat Wall Street estimates Thursday, announcing revenue of $24.52 billion for its second fiscal quarter, which ended Dec. 31. The very best-grossing quarter in company history, Microsoft’s second quarter, was up from $21.5 billion within the same quarter last year. Net income was $6.6 billion, which translated to 78 cents per share.

Analysts had expected net income of $5.8 billion and revenue of $23.7 billion, in step with Thomson Reuters.

If Thursday marked the last earnings report for outgoing CEO Steve Ballmer, he’ll have exited on a high note. Since announcing his retirement plans in August, Ballmer have been a punching bag within the press, with reports not just critiquing his previous leadership but additionally implying that he and Bill Gates are getting impediments to the quest for Ballmer’s successor. But since bottoming out in July, when the corporate took an embarrassing $900 million write-down on unsold Surface inventory, the corporate has exceeded expectations in consecutive quarters.

[Did Microsoft make the suitable move by purchasing Nokia? Read Nokia Smartphone Sales Dip Just before Microsoft Buyout.]

Microsoft’s excellent news includes caveats, though. The corporate made progress in its quest to woo consumers, but don’t let headlines about “doubled Surface revenue” mislead you; Microsoft’s tablets are still losing money. What were the highs and the lows for Microsoft? Listed here are five key takeaways from the company’s strong earnings.

1. Microsoft’s enterprise business is booming
Microsoft’s consumer-oriented efforts grab a considerable number of press, but it’s making its most rapid progress with business customers. Overall commercial revenue grew 10% to $12.67 billion. SQL Server achieved double-digit revenue growth and cloud services revenue greater than doubled, with particularly strong growth in both Office 365 and Windows Azure. Windows revenue from enterprises was also up, propelled partially by companies migrating off of Windows XP.

2. Microsoft made restricted progress among consumers
Some Ballmer critics argue that Microsoft should spin off its consumer businesses and concentrate on lucrative enterprise products. Due to strong Xbox sales, the latest quarter makes this argument rather less tenable. Microsoft sold 7.4 million Xbox consoles inside the second quarter, including 3.9 million units of the brand new Xbox One. Sony’s PlayStation 4 has reportedly edged out the Xbox One in overall sales, but demand for both units was more robust than many commentators had expected.

Microsoft also reported that greater than 3.5 million people have subscribed to Office 365 Home Premium, up from around 2 million last fall. Other consumer-related highlights included a 34% increase in revenue from Bing.

3. Consumers are still indifferent to Windows 8.1
Surface revenue reached $893 million, greater than doubling the $400 million Microsoft earned from its tablets within the first quarter. But in step with the company’s most up-to-date SEC filing, Microsoft remains losing money at the devices — around $40 million in quarter two.

More to the purpose, revenue of $893 million implies Surface sales of fewer than 2 million devices, especially because the company has already said holiday sales were biased toward the discounted Surface RT. For context, analysts expect Apple to announce it sold around 25 million iPads over the vacations.

The Surface wasn’t the sole Windows 8.1 device that earned consumer shrugs; slumping PC sales continued to eat into Microsoft’s final analysis in addition. Windows OEM revenue was down only 3% year-over-year, but that was thanks largely to a 12% boost in revenue from the pro-oriented Windows OEM Pro. With PC shipments off 10% last year, the worst slide on record, Microsoft conceded that Windows revenue from consumers was “soft.”

4. The computer slump is affecting consumer Office sales too
With consumers spending more time on tablets and going longer between PC upgrades, Office revenue from consumers declined $244 million, or 24%. Microsoft said a number of the decline was offset by the aforementioned increase in Office 365 Home Premium subscribers.

5. With out news at the CEO front, Microsoft still faces questions
By any standard, Microsoft’s quarter exceeded expectations. However the company’s next CEO will face tough questions. The company’s enterprise businesses are performing well, but its consumer businesses aren’t generating cash at nearly an analogous rate. Even if devices sell well (and plenty of of Microsoft’s still don’t), they cannot generate an identical margins that software can. That’s one reason Microsoft’s profits were up only 3% despite the fact that revenue was up 14%.

The company undeniably made inroads with consumers in the course of the newest quarter, and with BYOD becoming more mainstream, it is easy to determine why Microsoft feels compelled to pursue the market. But with Microsoft still lacking a sturdy foothold in mobile, and consumer PC sales still declining, time will tell if Ballmer’s replacement sticks with the present strategy.

Michael Endler joined InformationWeek as an associate editor in 2012. He graduated from Stanford in 2005 and previously worked in talent representation, as a contract copywriter and photojournalist, and as a teacher.

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