Microsoft cloud growth beats expectations

Ruben Fields
July 21, 2019

But in the "commercial cloud" as defined by Microsoft, the company said Thursday that cloud business sales accounted for 30 per cent of Microsoft's Dollars 125.8 billion in total revenue over the past year, up from 24 per cent the previous year.

For its entire fiscal year 2019, Microsoft reported revenue of $125.8 billion which increased 14 per cent and $39.2 billion net income - setting a new record fiscal year for the company.

On Thursday it said that growth at Azure, its cloud unit, had risen 68pc year-on-year in the three months to the end of June, a slower rate of growth than investors have become accustomed to.

Revenue in Microsoft's overall Intelligent Cloud business grew 19% from a year earlier, to $11.4 billion, the company said July 18. The revenue of the company's productivity and business division - which includes Office - increased by 14% in Q4 to $11 bn.

Microsoft on Thursday posted quarterly earnings that trounced expectations, citing growth in partnerships with companies on technology and cloud computing services. But, it's just not Azure, the company's other cloud-based merchandise like Office 365 commercial and Dynamics 365 are also expanding at a steady pace.

Money taken in at LinkedIn jumped 25 percent with the service seeing record levels of engagement, Microsoft said. Azure cloud sales rose 64 per cent, compared with 73 per cent growth in the previous quarter and 76 per cent in the one before that. Nadella says Microsoft is seeing larger, multi-year commercial cloud agreements and "growing momentum across every layer of our technology stack".

The unit known as More Personal Computing, including Windows software, Surface hardware and Xbox gaming products, saw revenue climb 4 per cent to US$11.3 billion in the recent period.

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Overall, it was a strong quarter for Microsoft and their earnings growth has pushed their stock higher.

The news comes as Chief Executive, Satya Nadella, further moves the company away from Windows, and towards Microsoft managed cloud services (and associated products).

While all areas of Microsoft's business were up this quarter, the main question leading up to the release was how well its cloud division would perform.

The global scale of Microsoft's Azure cloud and AT&T's 5G capabilities hope to provide unique solutions for the companies' mutual customers, for example in voice, collaboration and conferencing, intelligent edge and networking, the internet of things, public safety and cyber security.

There's still significant untapped opportunity in the cloud market.

The Personal Computing business segment, which consists of Windows, Surface, Xbox and search, ended the quarter with revenues of $11.28 billion. Microsoft benefits from being able to bundle Teams as part of a software package that includes email and other products.

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