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Microsoft's first quarter was strong, with its commercial cloud, which now includes LinkedIn's business sales, continued its momentum and achieved an annual rate of return of $ 34 billion.
Microsoft has announced a net profit of $ 8.8 billion, or $ 1.14 per share, for a business turnover of $ 29.1 billion, up 19% from the previous year. last year.
Wall Street was looking for Microsoft for a profit of 96 cents per share in the first quarter on a $ 27.9 billion business figure.
Microsoft's core business performed well. Revenue from productivity and business processes was $ 9.8 billion, up 19%. The business revenue of the Office's commercial products and cloud services grew by 16%, thanks to Office 365's revenue growth of 36%. Consumer Office 365 closed the quarter with 32.5 million subscribers.
Dynamics Cloud products and services revenues increased by 20% and LinkedIn sales increased by 33% over the previous year.
The Intelligent Cloud business figure is set at $ 8.6 billion, up 24% over last year thanks to server products and services. Azure revenue growth increased 76%. Azure's growth of 76% in the first quarter is down from 89% in the fourth quarter and 93% in the third quarter.
The More Personal Computing unit recorded sales of $ 10.7 billion, up 15%, due to commercial sales, gaming revenue and gains in surface sales of 14%. It is also interesting to note that Microsoft's Windows revenues are doing well on the corporate side, but they are a little different from consumers. Sales of $ 1.18 billion in the first quarter of Surface remained virtually unchanged from the fourth quarter.
By product, Microsoft recorded double-digit revenue growth for most categories.
On the eve of the results, few analysts were expecting real hiccups during the quarter. Wall Street was expecting strong cloud gains and multiple upgrade cycles. Meanwhile, analysts were optimistic about the company's Microsoft 365 effort.
Brad Reback, an analyst at Stifel, said:
We're hoping to find out more about Microsoft 365, a newer benchmark that combines Office 365, Windows 10 and Enterprise Mobility & Security, especially given the Microsoft R & D reorganization announced earlier this year, which combines Windows R & D. and Office in a single organization. Recall at F4Q18, Microsoft revealed that M365 was a multi-billion dollar company.
The cloud horse race
While revenues from Microsoft's commercial cloud reach $ 23 billion a year, some analysts say the company will be able to achieve $ 35 billion in revenue over the next three years. Including LinkedIn's commercial activities, sales in Microsoft's commercial cloud were $ 26.6 billion for fiscal 2018.
LinkedIn's business activities include products such as Professional Subscriptions, LinkedIn Recruiter and Sales Navigator. LinkedIn Launches Talent Insights for Human Resources Analysis and Talent Planning
Top 2018 Cloud Providers: Stacking AWS, Microsoft, Cloud Platform, IBM Cloud, Oracle and Alibaba
While Amazon Web Services remains the undisputed leader in the public cloud, Wedbush analyst Daniel Ives says Microsoft could finally take pole position because of its position in the hybrid cloud market and its appeal to small businesses. companies.
Ives wrote:
While the massive secular switch to the cloud is a "two-horse race" between Amazon (AWS) and MSFT, we're seeing an obvious inflection point in the field, as more and more businesses and government agencies are making this transformational shift to a hybrid cloud architecture with Redmond creating a major SME-driven partner. We believe that the move to the cloud is a major secular trend that greatly benefits Microsoft.
He added that Microsoft can combine Azure with Office 365, Dynamics and other services to create attractive bundles for businesses.
The partner network – more than 70,000 partners in the Microsoft cloud – is an interesting thread as it shows how the software giant has a good ground game that they can use to attract customers. This network of partners has been built over the years thanks to the dominance of Windows and attractive products for small businesses.
AWS addressed the hybrid strategy with its partnership with VMware. In addition, the AWS channel strategy has also evolved, but it is difficult to say that the Microsoft partner network is more developed.
In any case, it's tricky to compare AWS and Microsoft because both companies have unique features. Add Google to the mix and the top three public cloud providers, but do not offer direct comparisons.
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