Revenue from the company’s Azure cloud computing business once again spiked — this time up 76 percent.
Microsoft reported quarterly earnings Wednesday that once again beat analyst expectations, rising on the strength of its growing cloud computing business.
Fiscal first-quarter revenue from the company’s Azure cloud services, which allow other companies to rent computing power from Microsoft’s many data centers, once again spiked — this time up 76 percent. That adds on to several consecutive quarters of Azure revenue gains, though the speed of growth was slower in the three months that ended in September than it has been in recent quarters.
Azure revenue grew 93 percent during the company’s fiscal third quarter and 89 percent during its fourth quarter ended in June. Microsoft does not break out specific revenue dollar figures for Azure.
Microsoft’s commercial cloud business — which combines Azure with subscription cloud-software services Microsoft 365 and Dynamics 365 — also grew at a slightly slower rate than during the previous quarter, but still increased 47 percent to $8.5 billion.
Overall, the company reported that fiscal first-quarter revenue rose 19 percent to $29.1 billion, and profit increased 34 percent to $8.8 billion, or $1.14 a share.
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Analysts were expecting revenue of $27.9 billion on earnings of $7.5 billion and earnings per share of 96 cents.
The Redmond company’s cloud business trails only Amazon Web Services (AWS) in the virtual computing market, which analysts expect to keep growing significantly as more businesses move their operations to the cloud. Microsoft has signed several high-profile cloud customers in recent weeks, including beer conglomerate Anheuser-Busch InBev and growing Singaporean ride-hailing company Grab.
Microsoft is in a good position to keep growing with the cloud market, Wedbush analyst Daniel Ives wrote in reports this week.
“Microsoft just delivered an eye-popping cloud beat and a performance that speaks to a secular cloud story which is still in the early innings of playing out,” he wrote in a report after the earnings were announced, adding that Azure and AWS were in a two-horse race.
The company’s legacy products, including Windows, saw incremental revenue increases during the quarter, though nothing like the cloud growth. Two of Microsoft’s partially hardware businesses also jumped during the quarter, notably its gaming business. Gaming revenue, which includes both Xbox consoles and game software and streaming revenue, increased 44 percent during the quarter.
Microsoft has worked on expanding its own portfolio of video-game titles and now counts 11 game studios under its purview. The company also announced this month a game-streaming technology that lets gamers pick up and play games, whether they are using a tablet, PC, console or other device.
That service, called Project xCloud, is in its early days, and Microsoft plans to test it with some gamers next year.
Sales of Microsoft’s Surface line of devices also increased 14 percent during the first quarter. Earlier this month, the company announced a pair of Surface headphones, as well as new versions of its Surface Pro tablet-and-laptop hybrid and the Surface Laptop.
Microsoft is nearing the completion of its acquisition of coder-community company GitHub, which it announced this summer it would buy for about $7.5 billion. On its earnings conference call with Wall Street analysts Wednesday, Microsoft CEO Satya Nadella again affirmed the company’s commitment to largely leave GitHub independent, hoping to assuage the concern of developers who don’t want to see the open-source community change.
Microsoft, which has been much more open to open-source development under Nadella, will continue working to build relationships with developers and to get them to trust the software giant, Nadella said.
“We are very grounded in the fact that it has to be earned and is not something we will inherit as owners of GitHub,” he said.
Microsoft’s shares climbed 1.8 percent to $104.15 in after-hours trading Wednesday, after slipping 5.4 percent in the regular trading session amid a broad market decline.