Microsoft cloud annualized run rate passes $20 billion

Microsoft CEO Satya Nadella at the Geek Wire Summit

Revenue from Azure, Microsoft's cloud computing service, grew 90 percent during the fiscal first quarter.

Microsoft managed to grow both revenue ($24.5 billion, up 12%) and profits ($6.6 billion, up 16%), showing the gains were not simply due to cutting. For those keeping score at home, Microsoft's commercial cloud rollup includes Azure; Office 365 business services (Exchange Online, SharePoint Online, Skype for Business Online, Microsoft Teams); Dynamics 365; and its Enterprise Mobility + Security Suite (EMS).

Microsoft reported a better-than-expected quarterly profit as demand for its cloud computing services for companies rose and personal computer software business stabilised.

"Our strong start to the fiscal year reflects the impact of our continued investment in product innovation and sales capacity to capture expanding market opportunities", said Amy Hood, executive vice president and chief financial officer at Microsoft.

Microsoft predicts that it will bring in 83 cents per share in earnings for its current quarter on an adjusted basis.

Microsoft's stock was up about 2 percent at $80.25 in after-hours trading.

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For the More Personal Computing segment, Microsoft reported $9.4 billion in revenue...

While the software giant doesn't disclose revenue figures for those businesses, it said its commercial-cloud run-rate - the last month of sales of its Azure and Office 365 products, multiplied by 12 - hit $20.4 billion. With no new console on sale, revenue is sure to be hard to come by as the company looks to invigorate its smaller user base into more digital transactions.

Investors will likely be pleased by the progress Microsoft showed in its all-important cloud computing business.

In the Intelligent Cloud unit, made up of Azure and server software deployed in customers' own data centers, sales climbed 14 percent to $6.9 billion, compared with the $6.7 billion average analyst projection.

If you're interested in Microsoft's earnings and want to find out more, tune into the company's earnings call at 2:30pm PT. Search acquisition costs jumped 15 percent.

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