Microsoft sales and profit rates on cloud growth

(Reuters) – Microsoft Corp (MSFT.OAzure cloud computing services and Office 365 software.

Microsoft shares have tripled since Satya Nadella became chief executive in 2014 and refocused the company on building data center software and services. The stock, which has risen more than 21 percent over the past 12 months, gained 1.9 percent in after-hours trading following the earnings report.

Much of Microsoft's recent growth by companies moving to the cloud from on-premise data centers, helping it to beat analysts' profit targets for more than two years.

Commercial cloud revenue, which includes Azure sales, hit $ 8.5 billion, up 47 percent from the year ago. The growth margin for that business rose to 62 percent from 58 percent in the year-ago quarter and 59 percent in the prior quarter.

Amazon.com Inc (AMZN.OLeads in cloud infrastructure services with a second-quarter market share of 30 percent, according to market research firm Canalys, Microsoft's share rose to 18 percent from 16 percent in the previous quarter.

Azure revenue rose 76 percent over the year, slower than the 89 percent rise in the previous quarter.

Blair Hanley Frank, Senior Analyst at Technology Research and Advisory Firm ISG, said investors have been alerted to Azure's slower growth.

"Seeing that number declined to 76 percent where it was in the 80s and 90s is interesting. It's not yet clear what that means, "Frank said. "Obviously Microsoft is going to see you fall in growth rate as the income grows."

Mark Sami, SPR vice president at consultancy firm, said Microsoft's "mature hybrid cloud offering" helps to fuel growth and leaves Amazon rivals "playing catch up."

Microsoft's focus on fast-growing cloud applications and platforms is helping you to get started with Windows operating system.

Revenue from Microsoft's personal computing division, its largest by revenue, rose 14.6 percent to $ 10.75 billion. That figure beat the consensus analyst estimate of $ 10.13 billion. The unit includes Windows software, Xbox gaming consoles, online search advertising and Surface personal computers, gaming is the growth driver with revenue up 44 percent from a year ago.

Microsoft's forecast for this division, from $ 12.8 billion to $ 13.2 billion.

"Xbox has the key and monetization capability," Nadella said.

Office 365, rose 18.6 percent to $ 9.77 billion, topping analysts' average expectation of $ 9.40 billion, according to Refinitiv data. Microsoft estimated revenue of $ 9.95 billion to $ 10.15 billion for the current quarter.

Overall, the Redmond, Washington-based software company's revenue rose to $ 29.08 billion from $ 24.54 billion, above analysts' average estimate of $ 27.90 billion, according to Refinitiv data.

Net income rose to $ 8.82 trillion, or $ 1.14 per share, in the quarter ended Sept. 30 from $ 6.58 trillion, or 84 cents per share, a year earlier.

Analysts had expected earnings of 96 cents per share.