Microsoft grows quarterly revenues 12% on demand for cloud software

Todd Singleton
October 29, 2017

Worth noting also is that Microsoft Azure sales figures are not disclosed by the company, while its rival Amazon Web Services earnings are public.

The latest Microsoft earnings report for its fiscal first quarter shows its cloud business is flourishing under CEO Satya Nadella. Quarterly commercial cloud revenues reached Dollars 5.0 billion, up from USD 3.2 billion a year ago, and the business generated a gross margin of 57 percent, versus 49 percent a year earlier.

Microsoft said commercial cloud annualized revenue run rate reached $20.4 billion in the quarter.

"They crushed it again", said Stifel Nicolaus & Co. analyst Brad Reback. Productivity revenue, mainly Office software, climbed 28 percent to $8.2 billion. Microsoft doesn't break out revenue for its Windows business.

Amazon also just released its third-quarter earnings report. More precisely, the annual revenue was of $24.5 billion, with a profit of $6.6 billion. Analysts were looking for it to post revenue of $23.56 billion.

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Shares in the company, which reported its results after the closing bell Thursday, inched up by nearly 4% to about $81.75 in after-hours trading. If Microsoft shares stay at these levels when markets open Friday, it would be an all-time high. The changes also have the approval of shareholders, whose optimism has nearly doubled the company's stock price during Nadella's three and a half years as CEO. The firm said its "cloud technologies" now accounts for some $20bn, driven largely by Azure revenues which saw an increase of 90 per cent compared to this time past year. It is a particular strength of Microsoft's given its history of selling software to corporate customers. "We do believe that it resonates with customers". Microsoft is now at the top of the cloud market, but many other companies are rapidly coming from behind. Surface Laptop has put up the business to 1 billion. In the quarter, LinkedIn added $1.14 billion in revenue and posted a $294 million operating loss. Users will see more product integration between LinkedIn and other Microsoft products going forward into 2018, Nadella said.

"T$3 op of mind for every CEO is empowering their own employees for the modern workplace", Nadella said.

To support its growing cloud business, Microsoft is doling out huge sums to build expensive data centers around the world. A year ago, Microsoft recorded $2.3 billion in capital expenses. This recent period was the first full quarter in which stores were stocked with an update to that product - Microsoft's best-selling Surface - and a totally new category, a laptop computer with a clamshell design.

Intel beat analyst expectations in its third-quarter earnings report with revenue up 2% from the same quarter past year.

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