Microsoft sees growth of Azure slow down in fourth quarter

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Microsoft has had a very strong fourth quarter of its fiscal year 2019. The company even saw its market value exceed a trillion dollars (1ooo billion) again. However, we can see that growth in a significant part of the company is stagnating.

Several departments of Microsoft again saw strong growth in this quarter, but that growth appears to be less than in previous years, writes ZDNet. For example, the company’s Azure Division is not growing as well: the growth rate is 64 percent compared to the previous year, which is a smaller increase than in previous quarters.

However, the cloud department of the company does not only consist of Azure. These figures also include Office 365, Dynamics 365 and part of the commercial affairs of LinkedIn. The entire department was able to convert 11 billion dollars this quarter, but experts say that the lion’s share of that came from Office 365.

Office 365’s revenue grew by 31 percent as a result of more users and higher average revenue per user.

Law of large numbers

Azure’s growth is now less robust than in previous quarters. Mike Spencer, General Manager of Investor Relations at the Company, states that this is due to the law of large numbers. In other words, the larger a company becomes, the slower its growth is likely to be when looking at percentages. In addition, Spencer says that the Enterprise Mobility + Security service at Azure is growing more moderately, which makes its trajectory more similar to that of Office 365. In terms of margins, however, there has been considerable growth, as a result of the larger and multi-year contracts that Microsoft has recently signed.

Windows

In the meantime, Windows also had a strong quarter, with turnover increasing by 7 percent compared to the previous year. This is due to strong growth in Windows OEM and Commercial. OEM Pro’s turnover increased by 17 percent, which is partly due to the fact that support for Windows 7 will cease on January 14, 2020. Microsoft’s total turnover this quarter was 33.7 billion dollars. The company had an operating income of $12.4 billion.

This news article was automatically translated from Dutch to give Techzine.eu a head start. All news articles after September 1, 2019 are written in native English and NOT translated. All our background stories are written in native English as well. For more information read our launch article.