Microsoft beats expectations on strong cloud performance
SAN FRANCISCO: Microsoft on Thursday reported strong fourthquarter earnings on the back of its fast-growing cloud computing business, stoking optimism that the once-stagnant company has found a new groove.
The results were the clearest sign yet that the strategy put in place by Chief Executive Satya Na della when he assumed the top job in 2014 is paying off.
He has shifted the company’s focus away from a dying personal computer software business and reinventing it as a provider of cloud computing and subscription-based software.
“Our technology world view of an intelligent cloud and an intelligent edge is resonating with customers everywhere ,” Na della said on the company’s earnings conference call with investors on Thursday.
Most notably, revenue from the cloud unit, which includes the flagship Azure platform and server products, rose about 11 percent to $7.43 billion in the fiscal fourth quarter ended June 30.
Analysts on average had expected cloud revenue of $7.32 billion, according to data and analytics firm FactSet.
Revenue from Azure, which competes directly with Amazon.com’s market-leading AWS division, nearly doubled in the quarter.
Highlighting Azure’s growth were notable increases to Microsoft’s long-term unearned revenue, which rose by more than 61 percent year-over-year.
The metric is used to indicate long-term commitments for services and products, said Kim Forrest, vice-president and senior equity analyst at Fort Pitt Capital Group, a portfolio management firm. In a bid to continue this momentum, Microsoft last week launched Azure Stack, a new service that allows customers to run a local version of the company’s cloud technology.
Michael T uri ts, analyst at Raymond James& Associates, noted that Azure is smaller than Amazon’ s service but that it is growing faster. “I think it is appealing well to existing enterprise customers who might not immediately be drawn to the Amazon platform ,” he said.