Microsoft's cloud strategy is paying off

This strategy, called hybrid computing, in which customers run certain software in their own data centers but also use cloud services, has resulted in a 28% increase in Microsoft revenue for server products and cloud services during the first quarter of its financial year.

The cloud computing sector, called Azure, has grown by 76% – still healthy, but the slowest pace of growth since Microsoft began to publish regular percentage gains about three times ago years. Microsoft does not disclose the company's revenue figures, but Stifel Nicolaus & Co. analyst Brad Reback estimated Azure revenue at $ 2.69 billion for the quarter.

The size of Azure makes it difficult to maintain past growth rates, said Amy Hood, chief financial officer, in an interview Wednesday. "It's still a big company and it's still growing very fast," she said.

In comparison, Amazon's leading cloud computing infrastructure industry grew 49 percent in the previous quarter to $ 6.11 billion.

Microsoft's smart cloud segment, which includes Azure and server products, grew 24 percent to $ 8.57 billion, about 300 million more than analysts' expectations. "This absolutely shows the strength of Microsoft's hybrid cloud," said Reback.

In total, revenues increased 19% to $ 29.08 billion.

Net income rose 34% to $ 8.82 billion. Per share, the company posted a profit of 1.14 USD. Analysts expected earnings per share of 96 cents on a $ 27.92 billion business figure.

The Microsoft stock, down 5.4% to $ 102.32 at the close of trading on Wednesday, rose nearly 3% after normal business hours, as earnings and earnings far exceeded Wall Street forecasts. .

One of the most important growth areas comes from Microsoft's gaming business, where revenues jumped 44%. Ms. Hood singled out the massive "Fortnite" hit game to drive this performance. Xbox software and services revenue jumped 36 percent – about half from Fortnite, she said.

Microsoft saw little consequence of long-time partner of chip shortages

Intel
Corp.

disclosed last month when it was struggling to meet PC demand. Intel has been working to keep the chips available for expensive computers that often use the most expensive versions of Windows, which has helped maintain high revenues, said Ms. Hood.

Revenue for the Plus Personal Computing segment, which includes Windows and Xbox, grew 15 percent to $ 10.75 billion. The Productivity and Business Process segment, which includes the Office productivity franchise, grew 19% to $ 9.77 billion.

The performance of Azure and Office helped Microsoft return to the list of the most popular US public companies. Its shares climbed about 19% in 2018 and its market capitalization of $ 785.56 billion does not exceed Apple Corp and Amazon.

Write to Jay Greene at [email protected]