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Microsoft results beat estimates on strong cloud growth

Microsoft results beat estimates on strong cloud growth
FILE PHOTO: The Microsoft logo is shown on the Microsoft Theatre at the E3 2017 Electronic Entertainment Expo in Los Angeles, California, U.S. June 13, 2017. REUTERS/ Mike Blake   -   Copyright  MIKE BLAKE(Reuters)
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(Reuters) – Microsoft Corp beat Wall Street estimates for revenue and profit in its first quarter on Wednesday, as more businesses signed up for its Azure cloud computing services and Office 365 software.

Microsoft shares, up more than 21 percent over the past 12 months, rose 2.5 percent in after-hours trading.

Much of Microsoft’s recent growth has been fuelled by its cloud computing business, which has benefited from companies rushing to shift their workloads to the cloud to cut data storage and software costs.

Azure has a 18 percent share of the global cloud infrastructure market, making it the second-biggest provider of cloud services after Inc’s Amazon Web Services, according to April estimates by research firm Canalys.

However, the company’s flagship cloud product recorded slower growth from the previous quarter. Revenue growth in the first quarter ended September was 76 percent, down from 89 percent growth in the fourth quarter.

Microsoft’s focus on fast-growing cloud applications and platforms is helping it beat slowing demand for personal computers that has hurt sales of its popular Windows operating system.

Revenue from Microsoft’s personal computing division, its largest by revenue, rose 14.6 percent to $10.75 billion (£8.4 billion). That figure beat the analyst estimate of $10.13 billion (£7.9 billion). The unit includes Windows software, Xbox gaming consoles, online search advertising and Surface personal computers.

Revenue at Microsoft’s productivity and business processes unit, which includes Office 365, rose 18.6 percent to $9.77 billion, topping analysts’ average expectation of $9.40 billion, according to Refinitiv data.

Overall, the Redmond, Washington-based software company’s revenue rose to $29.08 billion from $24.54 billion, above analysts’ average estimate of $27.90 billion, according to Refinitiv data.

Net income rose to $8.82 billion, or $1.14 per share, in the quarter ended Sept. 30 from $6.58 billion, or 84 cents per share, a year earlier. (

Analysts had expected earnings of 96 cents per share.

(Reporting by Vibhuti Sharma in Bengaluru; Editing by Bernard Orr)

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