The US technology giant Microsoft reported better-than-expected earnings and profit for the first quarter after more companies have begun to use Azure cloud services and Office 365 software.
Microsoft’s stock has tripled since Satya Nadella became Chief Executive Officer in 2014 and focused the company’s focus on building data center and service center software. The company’s shares, which grew by more than 21% in the past 12 months, rose by 1.9% after the release of the report.
Much of Microsoft’s recent growth is linked to companies that are moving from old data centers to cloud services, helping to outperform profits for more than two years.
The cloud revenue, including those from Azure, reached 8.5 billion USD in the quarter, representing an increase of 47% yoy. The margins of this business have risen from 58% to 62% in the same quarter last year and 59% in the previous quarter.
Amazon.com is a leader in cloud infrastructure services. In the second quarter, its market share was more than 30%, but Microsoft’s share has risen to 18% from 16% in the past quarter.
Microsoft’s focus on fast cloud and platform applications helps to compensate the slowdown in demand for PCs, which has affected the sales of the popular Windows operating system.
Revenue from the PC unit rose by 14.6% to 10.75 billion USD, surpassing the analysts’ consensus forecast of 10.13 billion USD. The division includes Windows software, Xbox game consoles, online advertising and Surface PCs, but gaming is the real growth driver, with 44% growth. Microsoft predicts strong earnings for this unit for the quarter, including holidays. The company expects the amount to reach between 12.8 billion USD and 13.2 billion USD.
Business revenues with productivity and business processes, including Office 365, rose by 18.6% to 9.77 billion USD, surpassing analysts’ average forecast of 9.40 billion USD.
Overall, the company’s revenue rose to 29.08 billion USD from 24.54 billion USD, which is above analysts’ average forecast of 27.90 billion USD.
The net profit also increased to 8.82 billion USD, or 1.14 USD per share, in the quarter ending September 30, from 6.58 billion USD, or 0.84 USD per share an year earlier.