Cloud revenue pushes Microsoft once again

It’s become a familiar story now. The cloud segment of Microsoft is growing at astronomical rates and is pushing the earnings and profits of Microsoft to new levels. But, what is interesting is that the margin of growth grows with every quarter.

According to the earnings report released by Microsoft, earnings from Azure almost doubled, thereby accounting for a year-on-year growth of 90 percent. Though the company doesn’t break down the revenues of Azure separately, an estimate by the analysis firm Canalys, pegs it at a whopping $2 billion.

Revenue from the intelligent cloud business segment rose 14 percent to $6.92 billion. This was higher than analysts’s expectations, which was $6.7 billion. Surprisingly, Satya Nadella kept a target of $20 billion for the cloud business by 2018 and in this quarter itself, it surpassed the target as the total revenue was $20.4 billion. This goes to show that Microsoft is doing great under the able leadership of Satya Nadella.

Cloud was the lifeline that Microsoft was looking for almost a decade now, and it has made the most of it. At a time, when PC sales were plummeting and the company was looking for some direction, the emergence of cloud and the change of leadership to Satya Nadella, both seemed to have weaved the magic again for Microsoft.

One of the highlights of this quarter was the deal that Costco, an Azure customer. In fact, this came along the heels of a deal with Whole Foods that brought it under the Microsoft umbrella.

While this quarter spells good news for Microsoft, it can’t afford to relax. AWS is growing at a much higher rate. It raked in $4.6 billion this quarter, representing an almost 46 percent year-on-year growth.  Though AWS missed out on Costco this quarter, it still managed to secure deals with a ton of big names such as Hulu and General Electric.

Other than AWS, Google is also fast catching up with Microsoft. It entered deals with retailers like Kohl’s and payment processing companies like PayPal. ALl this means, Microsoft needs to amp up its efforts to stay ahead of competition.

In other results, revenue from Microsoft’s cloud computing division fell by 0.2 percent to $9.38 billion. Nevertheless, it beat the analysts expectations at $8.81 billion. This quarter also saw an increase in revenue from Surface. In fact, after two consecutive quarters of declines, it saw an increase of 12 percent in revenue.

Such positive results was welcomed by its investors and the share market as a whole. The value of Microsoft’s shares increased by 3.1 percent to end at $81.20.

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