Microsoft's cloud unit stays on track while Windows posts surprising growth

Microsoft's cloud unit stays on track while Windows posts surprising growth

Microsoft's cloud unit stays on track while Windows posts surprising growth

Azure revenue increased 73 percent, according to Microsoft, but the actual numbers that would allow analysts to make better estimates of its performance against Amazon Web Services remain elusive.

On the LinkedIn side of things, revenue grew by 27% as the business charted record levels of engagement over the past three months that include job postings, comments, and content sharing.

For its third quarter of the fiscal year 2019, Microsoft brought in total revenues of $30.6 billion, a 14 percent increase over the same period last year.

As for where Microsoft looking beyond this rather impressive quarter, the company expects "intense competition in all of our markets that may lead to lower revenue or operating margins", but is pushing forward with an increased focus still on cloud-based services while also experimenting with some investments in new products and services, acquisitions, joint ventures and strategic alliances.

Shares rose by 3pc in after-hours trading, putting Microsoft's market capitalisation above Apple's.

With the company set to report third quarter fiscal 2019 earnings results after the closing bell Wednesday, investors will be eager to learn the extent to which Microsoft's growth momentum, which has been driven by popular products both for consumers and the enterprise, can continue. "I can't name another company of that scale growing at these rates". The Xbox team notes that Xbox software and services offset the low demand for hardware as their revenue grew 12% and was driven by subscriptions services and 3rd part titles implementing shared in-app purchase revenue. Net income was up 19 percent, surging to $8.8 billion.

Commercial cloud revenue was $9.6 billion in the third quarter, up 41 percent from a year ago.

Microsoft's so-called "intelligent cloud" unit, which contains its Azure services, posted revenue of $9.65 billion, above Wall Street estimates of $9.28 billion, according to IBES data from Refinitiv. Microsoft's Hood said that unit could reach $11.05 billion in revenue in the fiscal fourth quarter. Analysts were predicting cloud revenue of $9.30 billion.

Meanwhile, the Productivity and Business Process division, which includes Office software and cloud platforms, trousered $10.2bn, up 14 per cent from previous year. Windows OEM Pro revenue grew by 15 percent, which Microsoft is attributing to a mix of pent-up demand from the previous quarter finally being fulfilled due to greater availability of Intel processors and higher-than-expected demand for commercial systems.

Microsoft said revenue for the Surface line of devices rose 21 per cent from a year earlier to US$1.3 billion.

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