Microsoft Earnings Beat Expectations Thanks to Strong Cloud Performance

Microsoft is, and has always been a veritable giant in the tech industry, but in the past decade or more, has faced tough competition from Apple. But Microsoft’s stock has seen a favourable rise with a great performance this quarter.

As per its usual practice, Microsoft released its quarterly earnings reports on the 20th of July, and announced a non-GAAP (Generally Accepted Accounting Principles) revenue of $24.7 billion. This brought GAAP earnings at $0.83/ share and non-GAAP earnings at $0.98/ share.

Stock Rose More Than Expected

Wall Street had high hopes for Microsoft and speculated that the tech giant would have revenues amounting to $24.3 billion, which was pretty aggressive to say the least as it would have called for a 7% year over year growth. Wall Street also called for the share prices to hit $0.71/ share and as you can see, the mind readers at Wall Street were a little off their game.

After releasing its quarterly earnings, unsurprisingly Microsoft’s stock rose. This amazing growth curve is thanks to Microsoft’s Azure cloud computing platform, which has been the driving force in increasing revenues. Azure’s growth has slowed down in recent times, but with nearly 100% annual growth, we don’t see Azure’s popularity waning any time soon.

Microsoft’s ‘Intelligent Cloud’ business raked in revenues amounting to $6.8 billion just in the last quarter alone. This area bumped up revenues by 11% from last year’s performance, delivering revenues of $7.4 billion.

Satya Nadella, Microsoft’s CEO, has made groundbreaking moves that have propelled Microsoft into being innovative and taking advantage of the market that was leaning towards Apple’s ingenuity in product innovation. “Innovation across our cloud platforms drove strong results this quarter”, said Nadella.

This is a new era of intelligent cloud computing and this feature helps Microsoft customers to accelerate their own digital transformations though Microsoft’s increased product portfolio. The tech giant reported that there was a lot more commitment to commercial cloud.

Even though revenues from Microsoft’s More Personal Computing segment suffered a hit, especially from its phone revenue, which declined $361 million, the fast growing segments like Office 365, other productivity tools as well as the increasing number of Xbox users offset the lower phone revenue. Search revenue also saw an increase due to Bing being integrated into Windows 10.

Shift From Subscription To Cloud Based Model

Many happy customers love the way the entire business model has shifted from subscription based, to focusing on customers and shifting to the cloud has made Microsoft a strong contender against others who also occupy that space.

However, this seems to be just the tip of the iceberg. With huge tech companies as well as many start-ups being on the cloud, there is still massive room to grow. Microsoft plans to step up the game with the Azure stack release being available in September which means hybrid solutions will be able to penetrate high regulation markets and changing the whole cloud computing scenario by taking it to a whole new level. Microsoft seems to be on the right track, if its increased revenues and performance is anything to go by.

About the Author tomas

Hey, it's Tomas here! I'm the founder and chief editor here at BlueGadgetTooth. After spending hours explaining my parents how to hook up their Internet, why it's being so slow etc. I decided to start this blog to help people with their gadgets and questions about technology.