Azure revenue doubles as Microsoft reports healthy Q2 earnings

There's still a long way to go before Azure catches up with AWS, but Nadella believes that Microsoft's cloud platform is winning the battle of intelligence

Microsoft reported its fourth quarter earnings today, comfortably beating expectations on Wall Street.

The technology giant, which wound up its Worldwide Partner Conference last week, posted earnings of 69 cents share on revenues of $22.64bn, compared to 62 cents a share and revenue of $22.18bn in the year ago period.

Analysts expected earnings of 58 cents per share on revenue of $22.15bn, according to a Thomson Reuters estimate.

Adjusted net income stood at $3.1bn. But the real news came from its IaaS outfit, Azure, which saw revenue grow 102% year-over-year.

"The Microsoft Cloud is seeing significant customer momentum and we're well-positioned to reach new opportunities in the year ahead," CEO Satya Nadella said in a statement.

Microsoft currently bundles Azure in within its ‘Intelligent Cloud’ segment, meaning that its nearly tough to extract the monetary figure for the public cloud platform alone.

The overall Intelligent Cloud segment saw revenue up 7% to $6.7bn, representing nearly 28% of total sales for the organisation. CEO Satya Nadella told analysts on the conference call that Microsoft’s focus on bringing intelligent services to the cloud was differentiating Azure from AWS.

“Last quarter, I reflected on how we are now one of the two leaders in the space,” Nadella said. “At the same time, we are the only one in this market providing SaaS, PaaS, IaaS and hybrid cloud at scale. We are growing in each of these areas simultaneously. Our unique approach is resonating. Our cloud architecture reflects real world distributed cloud computing needs and services that enable businesses to convert data into intelligence and drive business transformation.”

The Productivity and Business Processes segment, which includes the likes of Office 365 and Dynamics CRM, saw revenues of $7bn, and increase of 5%. However, operating income fell by 5% to $3bn.

More Personal Computing, which includes Windows, Surface tablets, Xbox wing and Bing, had sales of $8.9bn for the quarter, down 4% year-over-year. Operating income was $964m, a 59% increase year-over-year.

“I've had the opportunity to meet with customers from all over the globe and observe the effects of the macroeconomic trends impacting business today,” Nadella told analysts, perhaps reflecting on the fallout of Brexit. “Of course, any macroeconomic uncertainty will create pressures for our business. But increasingly I think it also creates opportunity for us. Every organisation is looking for ways to gain efficiencies, insights and ultimately transform. This is at the heart of our mission. I believe Microsoft is uniquely positioned to empower them to find new growth areas, while finding new growth for ourselves.”


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