Yahoo Finance Microsoft tops estimates in quarterly results as cloud revenue surges
Microsoft's push into cloud services has continued to pay off, as it crushed Wall Street estimates for its fourth quarter, citing strong take-up of its Azure platform.
Revenue rose 17pc year on year to $30.1bn (£23bn) for the period, beating analyst expectations for $29.2bn, and taking its revenue for the year to more than $100bn, while net income increased to $8.87bn, from $8.31bn a year earlier.
Chief financial officer Amy Hood said there was "double-digit revenue growth across all segments... anchored by commercial cloud revenue growing 53pc year-over-year to $6.9bn". This included an 89pc jump in revenue from its Azure cloud computing platform.
Microsoft has honed in on cloud services over recent years, shifting away from being seen as a consumer brand and towards providing the services which allow other companies to function, such as its Office 365 suite of productivity tools.
Its cloud division lags behind only Amazon's in terms of size, although it has slowly been gaining on the market leader, and in the first quarter, its cloud market share was up at 13pc from 10pc a year earlier, while Amazon's stood at 33pc.
Recent data, from research firm Canalys, showed Microsoft's Azure has since increased its share, to 16pc.
Analysts have, however, suggested that Microsoft may have an advantage looking ahead, as unlike many other big names in the tech sector, it has been keen to undertake collaborations, the most recent being its tie-up earlier this week with Walmart to provide cloud technology to the US supermarket giant.
It has also pursued deals with its fellow Nasdaq-listed companies, such as Amazon and Apple, eschewing the traditional rivalry seen among the FAANG stocks to make sure its apps are available and work across devices.
This strategy of collaboration is likely to see it benefit looking forward, analysts from Piper Jaffray said, enabling it to appear less of a threat and so strike more deals.
"Microsoft is poised to be a big beneficiary of the 'anti-Amazon' philosophy in industries where the company is perceived as a competitive threat," they said.
Raymond James' Michael Turits added that while Azure and Amazon Web Services were "emerging as near duopoloy leaders", Microsoft's service was differentiated by the fact that it also delivers its own software tools via the cloud, such as Word and Excel.
Microsoft, in its results on Thursday, said Office 365 consumer subscribers increased to 31.5 million in the period, and sales of the tools to businesses rose 38pc.
The company said it expected this growth to continue going forward. In its guidance, provided on an analyst call, Microsoft said it anticipates revenue will come in between $27.35bn and $28.05bn for the next quarter, slightly lower than in the recent three-month period due to seasonality, but at the higher end of analyst expectations.
The sunny outlook caused Microsoft shares to jump 4.4pc in after-hours trade.
Shares in Microsoft have been climbing over recent years, as investors become increasingly optimistic over the company's prospects. They are up 41pc in the past year, taking its market capitalisation to $802bn.
