Demand surges for cloud services in latest Microsoft earnings report

27 Oct 2017

Microsoft research centre. Image: hafakot/Shutterstock

Microsoft’s focus on leveraging cloud services looks like it is paying off.

The latest Microsoft earnings report for this quarter shows that its cloud business is flourishing under CEO Satya Nadella.

Office 365, Dynamic 365 and Azure have all emerged as serious growth sources for the company, particularly as demand for PCs slows.

Overall revenue increased by 12pc to $24.5bn and operating income was $7.7bn.

Cloud sales boost Microsoft’s figures

In October 2015, Nadella predicted that Microsoft’s annual cloud sales would reach $20bn by 2018. In fact, it has already beaten this target with its cloud unit revenue run rate sitting at $20.4bn.

Nadella said: “Our results reflect accelerating innovation and increased usage and engagement across our businesses as customers continue to choose Microsoft to help them transform.”

Investors will likely be happy with the boost in Microsoft’s cloud business, which it has been pitching as the future trajectory for the company.

According to Fortune, the $20.4bn cited by the company is merely “an annual projection based on one month’s performance”.

Worth noting also is that Microsoft Azure sales figures are not disclosed by the company, while its rival Amazon Web Services’ earnings are public. Taking the Azure figures alone, the cloud computing service’s revenue almost doubled, growing 90pc from the same period last year. Nadella informed analysts in a call that Costco Wholesale had recently chosen Azure as its hybrid cloud platform.

Office 365 was also up 69pc from this time last year.

Revenue from Microsoft’s personal computing division fell 0.2pc to $9.38bn but still surpassed initial estimates of $8.81bn. This unit includes Windows products, Surface computers and the Xbox product range.

The release of the new Surface in May helped to achieve a 12pc year-on-year increase in revenue for tablets and laptops. Its enterprise and sales software business also saw a year-on-year increase of 13pc, with its main competitor being Salesforce.

Microsoft research centre. Image: hafakot/Shutterstock

Ellen Tannam was a journalist with Silicon Republic, covering all manner of business and tech subjects