Microsoft's Cloud Proves It's Worth the Big Price

Jul 21, 2018, 03:12
Microsoft's Cloud Proves It's Worth the Big Price

Microsoft's More Personal Computing business continues to be the main driver for revenues, earning $10.8 billion and up 17% year-over-year.

The software giant's fiscal fourth-quarter results reported late Thursday were just the latest evidence of its success at moving its business beyond the software typically found on PCs.

"Our early investments in the intelligent cloud and intelligent edge are paying off, and we will continue to expand our reach in large and growing markets with differentiated innovation", the chief executive officer, Satya Nadella, said in a statement.

Microsoft Corp. shares rose about 5% to an all-time high on Friday, after investors cheered another blockbuster quarter, backed by growth in its legacy software business and Azure cloud computing services.

Azure has a 16 per cent share of the global cloud infrastructure market, putting it in second place behind Amazon Web Services according to estimates made in April by Canalys. That's on the back of a seven percent increase in Windows OEM revenue and a 23 percent jump in Windows commercial products and cloud services revenue.

LinkedIn revenue increased 37 percent as usage soared, the earnings release indicated. The Surface business is up 25% from this time last year, something Microsoft credits to both a strong hardware lineup this year and a 2017 performance that set the bar lower.

"I'm especially proud that Walmart chose Azure and Microsoft 365 to accelerate its digital transformation for their associates and customers", Nadella said during the earnings call. Notably, this is Microsoft's first earnings report since announcing its intent to acquire code-sharing startup GitHub for $7.5 billion.

Speaking to financial analysts on a conference call, Nadella made a point of praising Azure, noting Microsoft's recently signed mega-deal with Walmart to provide all of the cloud backend for the U.S. big-box behemoth.

Microsoft had "very strong finish to its fiscal year", and "meaningfully" outperformed commercial cloud bookings expectations. Office commercial products and cloud services revenue was up 10 percent with consumer Office up 8 percent.

"The combination of Xbox Live Game Pass subscription and Mixer are driving record levels of growth and engagement".

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