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Cloud uptake drives third-quarter sales for Microsoft

Demand for Microsoft’s cloud offerings spiked again during the firm’s third quarter, reports Redmond

Microsoft’s commercial cloud revenues jumped 41% year on year, hitting $9.6bn (£7.65bn) in the firm’s third quarter – which closed on 31 March 2019 – reflecting strong demand for its cloud offerings from around the business world, in what is now becoming a well-established trend.

The jump means that cloud now accounts for just under one-third of Microsoft’s total sales during the quarter, which clocked in at $30.6bn, up 14% on the year-ago quarter. Net profit, meanwhile, was up 19% to $8.8bn.

“Leading organisations of every size in every industry trust the Microsoft cloud,” said Microsoft CEO Satya Nadella on an analyst conference call transcribed by Seeking Alpha. “We are accelerating our innovation across the cloud and edge, so our customers can build the digital capability increasingly required to compete and grow.

“From the outset, we took a differentiated approach to the cloud to meet the real- world needs of customers. Our architectural advantage is a clear reason for our success. Azure is the only true hybrid hyperscale cloud that extends to the edge.

“Operational sovereignty is increasingly critical to customers, and Azure uniquely provides consistency across development environments, operating models and technology stacks, whether connected or disconnected to the public cloud. And we’re accelerating our innovation.”

Nadella added: “More than 95% of the Fortune 500 run their workloads on our cloud…. We are building Azure as the world’s computer, with more global datacentre regions and now two in South Africa and more compliance certifications than any other cloud provider.

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“And just last week, we announced two new Azure government regions to meet the stringent requirements for maintaining the security and integrity of classified US government workloads.”

Among key highlights for Microsoft in the first three months of 2019 were jumps of 73% in Azure revenues, 30% in Office 365 Commercial revenues, 43% in Dynamics 365 revenues, and record levels of engagement at LinkedIn.

Microsoft’s consumer-oriented businesses turned in more muted, but still steady, growth, with notable spikes in Surface revenues, up 21%, and Xbox software and services revenues, up 12%.

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