Satya Nadella is going to be a happy man as his “mobile-first” “cloud-first strategy” is gathering momentum. Microsoft’s cloud business has reported a triple-digit YoY growth, the company’s earnings report for Q4 ended June 30, 2014 showed.
Microsoft’s commercial cloud revenue grew 147% with an annualised run rate that exceeds $4.4bn (£2.58bn) even as the company’s overall profit was down 7%.
I’m proud that our aggressive move to the cloud is paying off,” said chief exec Nadella.
Satya Nadella, Microsoft CEO (Photo credit: tecnomovida)
Other cloud highlights of the Azure provider’s results included a 11% revenue growth in its Windows volume licensing sales and similar double-digit revenue growth for server products including Azure, SQL Server, and System Center.
Its Office 365 Home and Personal subscribers totaled more than 5.6 million, adding more than 1 million subscribers again this quarter.
“We are thrilled with the tremendous momentum of our cloud offerings with Office 365 and Azure both growing over 100% again,” said Kevin Turner, chief operating officer at Microsoft.
As Gartner’s research vice president, Merv Adrian told me,
“In what was clearly a well-planned posture of demonstrating his command of the whole portfolio, Nadella delivered a strong, visionary picture of Microsoft’s ‘Digital work and life experiences’ stressing the power of its portfolio in enterprise offerings old and new.”
“There was good news in enterprise business — from SQL Server, from “All-up Dynamics” growth, with CRM nearly doubling, and with a commitment to expand Azure footprint and capacity, launch new services and deliver more hybrid cloud tiering,” Merv thinks.
While cloud offered a ray of sunshine to the company’s earnings, Microsoft blamed Nokia acquisition for the dent in its profits.
Microsoft’s profit for the quarter March to June 2014 was $4.6bn (£2.7bn), compared with $4.97bn for the same period last year. The company said the Nokia division, which it completed acquiring in April, lost $692m.
Last week, Microsoft said it will cut 18,000 jobs – more than 12,000 jobs related to the Nokia phone business division alone. This “restructuring plan to streamline and simplify its operations” is the most severe job cut in the company’s 39-year history.
Microsoft laid claims to impressive cloud revenues even in the first quarter of 2014 with analysts insisting that the software giant is “now pulling away from the pack of operators chasing Amazon”.
AWS was the lone leader in Gartner’s magic quadrant until June this year when Microsoft joined its arch-rival in the Leader quadrant. AWS is beginning to face significant competition from Microsoft in the traditional business market, and from Google in the cloud-native market, noted Gartner analysts Leong, Douglas Toombs, Bob Gill, Gregor Petri, Tiny Haynes.
The biggest takeaway from Microsoft’s earnings announced today is that it is indeed crushing it in the cloud sales and riding on the cloud momentum.