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(Reuters) – Microsoft Corp (MSFT.O) surpassed Wall Street 's estimates in terms of sales and earnings on Wednesday as more and more companies sign up for Azure cloud services and Office 365 software.
FILE PHOTO: The Microsoft Sign is displayed above the Microsoft Theater in Los Angeles, California, United States, October 19, 1818. REUTERS / Mike Blake / Photo File
The number of Microsoft shares has tripled since Satya Nadella became managing director in 2014 and refocused the company on building software and data center services. The stock, which has risen more than 21% in the last 12 months, rose 3.6% after the results were released.
Much of Microsoft's recent growth has been fueled by its cloud computing business, which has benefited businesses that have been moving their workload to the cloud. For at least two years, Wall Street companies have recommended buying shares on average, as the company has consistently outperformed analysts' profit targets.
Sales cloud revenue, which includes sales of Azure, Office 365, Dynamics 365, and LinkedIn, reached $ 8.5 billion for the quarter, up 47 percent year-over-year .
Amazon.com Inc (AMZN.O) is leading cloud infrastructure services with a market share of more than 30% in the second quarter, according to market research firm Canalys, but Microsoft is approaching from 16% to 16% in the previous quarter.
Alphabet Inc's (GOOGL.O) The Google Cloud platform ranked third with 8% of the market. Expenditures on cloud infrastructure services grew 47 percent to $ 20 billion, stimulating most businesses in the sector.
Azure revenue increased 76 percent in the quarter, down from 89 percent in the prior quarter.
"We recorded 62% of our commercial cloud growth margin, which is up four points year-on-year," Kristin Chester, Microsoft's director of investor relations, said by phone. "So it's substantial growth, driven by a significant improvement in Azure's gross margins."
Blair Hanley Frank, a senior analyst at ISG, an information technology consulting firm, said investors had been alerted to the slowdown in Azure's growth.
"To see this number fall to 76% compared to the 80s and 90s is interesting. We do not know yet what that means, "said Frank. "Clearly, Microsoft's growth rate will decrease as revenues grow."
Mark Sami, vice president of the SPR consulting firm, said Microsoft's "mature hybrid cloud offer" was contributing to growth and leaving rivals like Amazon "catching up".
Microsoft's focus on fast-growing applications and cloud computing platforms help it cope with declining demand for personal computers, which has hurt sales of its Windows operating system widespread.
Revenues from Microsoft's personal computing division, the largest in terms of revenue, grew 14.6 percent to $ 10.75 billion. This figure has exceeded the estimate of $ 10.13 billion consensus analysts. The unit includes Windows software, Xbox game consoles, online search ads and Surface personal computers.
Microsoft's productivity and business process revenue, which includes Office 365, grew 18.6 percent to $ 9.77 billion, exceeding analysts' average expectations of 9 percent. , $ 40 billion, according to Refinitiv data.
Overall, revenue for the software company based in Redmond, Washington, rose from $ 24.54 billion to $ 29.08 billion, an estimate of over $ 27.90 billion. dollars according to analysts, according to Refinitiv data.
Net income reached $ 8.82 billion, or $ 1.14 per share, as of September 30, compared with $ 6.58 billion, or 84 cents a share, a year earlier.
Analysts expected earnings per share of 96 cents.
Reportage of Vibhuti Sharma in Bengaluru; Edited by Bernard Orr and Richard Chang
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