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The Stack Archive News Article

Cloud remains strong for Microsoft in second quarter earnings

Thu 1 Feb 2018

Microsoft beat analyst expectations in the most recent quarter, with a big rise in its Intelligent Cloud division, though a tax repayment impacted profits.

For the second quarter of the 2018 financial year, the Seattle giant saw a 12% increase in revenue, amounting to a total of $28.9 billion (approx. £20 billion). Operating income increased 10% to $8.7 billion.

After accounting for a repatriation payment under the Tax Cuts and Jobs Act, through which American companies can pay tax on foreign-earned money at a lower rate than usual, net loss was $6.3 billion.

The results are relatively positive for Microsoft, given the revenue increase. CEO Satya Nadella’s continued focus on the importance of cloud also seems to be paying off, with revenue across the Intelligent Cloud division up 15% to $7.8 billion.

Within this division, there were some disparities. Azure revenue grew by 98%, as it continues to chase market leader Amazon Web Services. In comparison, Enterprise Services revenue increased by only 5%. The division also contains products such as Windows for corporate data centre servers, which is shrinking.

Nadella spoke of the company’s aims to position itself as the cloud leader. “This quarter’s results speak to the differentiated value we are delivering to customers across our productivity solutions and as the hybrid cloud provider of choice,” he said. “Our investments in IoT, data, and AI services across cloud and the edge position us to further accelerate growth.”

Other highlights for Microsoft include a 25% revenue increase in its productivity and business processes division, with Office 365 commercial revenue growing by 41% and the Dynamics 365 suite growing by 67%. LinkedIn also added $1.3 billion in revenue.

Amy Hood, executive vice president and Microsoft’s CFO, said: “We delivered another strong quarter with commercial cloud revenue growing 56% year-over-year to $5.3 billion. Strong execution from our sales teams and partners is driving growth across our businesses.”

On the Microsoft blog, the company once again spoke of the importance of developing its cloud offerings, and listed a number of major case studies and success stories for Azure and Dynamics 365, such as communications and advertising firm Publicis Groupe, which is building an AI-powered platform on Azure.

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