Menu
Microsoft cloud growth continues through strong financials

Microsoft cloud growth continues through strong financials

Shares of the world's largest software company rose nearly four per cent to US$81.90 in trading after the bell

Satya Nadella - CEO, Microsoft

Satya Nadella - CEO, Microsoft

Microsoft reported a better-than-expected quarterly profit as demand for its cloud computing services for companies rose and its personal computer software business stabilised.

Shares of the world's largest software company rose nearly four per cent to US$81.90 in trading after the bell.

Microsoft's focus on fast-growing cloud applications and platforms is helping it beat slowing demand for personal computers that has hurt sales of Windows - the software that powered the company to the top in the 1990s.

Under CEO Satya Nadella, Microsoft's cloud business - which includes products such as Office 365, Dynamic 365 and the flagship Azure computing platform - has emerged as a major source of growth.

Revenue from Microsoft's intelligent cloud business rose nearly 14 per cent to US$6.92 billion in Microsoft's fiscal first quarter, ended 30 September. Analysts on average had expected US$6.70 billion, according to financial data and analytics firm FactSet.

Revenue from Azure, which competes with Amazon.com Inc's Amazon Web Services and offerings from Alphabet Inc's Google, IBM and Oracle, grew 90 per cent compared to a 97 per cent growth rate in the preceding quarter.

Azure's strong performance helped lift the gross margin at Microsoft’s cloud business to 57 per cent, said Stephanie Rodriguez, director of investor relations for Microsoft.

Microsoft said its commercial cloud annualised revenue run rate reached US$20.4 billion in the quarter. In 2015, Nadella set a target of US$20 billion in cloud revenue by 2018.

Revenue from Microsoft's personal computing division, its largest by revenue, fell 0.2 per cent to US$9.38 billion but handily beat analysts' estimate of US$8.81 billion.

The unit includes Windows software, Xbox gaming consoles, online search advertising and Surface personal computers.

"Microsoft is set for an acceleration of growth and bookings with margin concerns that were overblown heading into 2018," said Daniel Ives at research firm GBH Insights.

"A slowly improving PC environment is also a modest tailwind for Microsoft with cloud remaining the Trojan horse growth driver for Redmond over the coming years."

The technology company, based in Redmond, Washington, reported net income of US$6.58 billion, or 84 cents per share, up from US$5.67 billion, or 72 cents per share, a year earlier.

Revenue rose 12 per cent to US$24.54 billion.

Microsoft's shares had risen nearly 27 per cent this year through Thursday, eclipsing the 14.4 per cent gain in the broader S&P 500.

(Reporting by Salvador Rodriguez in San Francisco and Pushkala A in Bengaluru; Editing by Arun Koyyur and Bill Rigby)


Follow Us

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags Microsoft

Featured

Slideshows

The Kiwi channel gathers for the 2020 Reseller News Women in ICT Awards

The Kiwi channel gathers for the 2020 Reseller News Women in ICT Awards

Hundreds of leaders from the New Zealand IT industry gathered at the Hilton in Auckland on 17 November to celebrate the finest female talent in the Kiwi channel and recognise the winners of the Reseller News Women in ICT Awards (WIICTA) 2020.

The Kiwi channel gathers for the 2020 Reseller News Women in ICT Awards
Leading female front runners honoured at the 2020 Reseller News Women in ICT Awards

Leading female front runners honoured at the 2020 Reseller News Women in ICT Awards

The leading female front runners of the New Zealand ICT industry joined together for the annual Reseller News Women in ICT Awards event at the Hilton in Auckland, during which hundreds of guests celebrated 13 outstanding individuals who won awards, chosen from more than 50 finalists representing over 30 organisations.

Leading female front runners honoured at the 2020 Reseller News Women in ICT Awards
Channel gathers to celebrate the Reseller News Innovation Awards 2020 winners

Channel gathers to celebrate the Reseller News Innovation Awards 2020 winners

More than 500 channel leaders gathered in Auckland on 21 October at the ​Reseller News Innovation Awards ​2020 to celebrate the achievements of the New Zealand technology industry's top partners, start-ups, vendors, distributors and individuals.

Channel gathers to celebrate the Reseller News Innovation Awards 2020 winners
Show Comments