Microsoft cloud services revenue continues to grow

Microsoft cloud services revenue continues to grow

Last quarter, Microsoft saw its turnover grow by 12 percent to 32.5 billion dollars. Revenues from the Microsoft Azure cloud service grew by 76 percent. But contrary to expectations, the overall growth of cloud services and PCs declined. This is shown by the quarterly figures that Microsoft announced yesterday.

Microsoft declares to Bloomberg that both turnover and profit figures meet expectations. For example, on December 31, 2018, the software giant achieved a profit of $8.58 billion, accounting for $1.10 per share. Earlier, Bloomberg analysts estimated the value of a share at 1.09 dollars.

Market value Microsoft

According to Bloomberg, Microsoft’s market value rose last quarter above its competitors. However, investors would consider Microsoft’s cloud and enterprise software operations to be more stable than other parts of the technology market. For example, cloud commercial sales are reported to have risen by 48 percent to $9 billion in the quarter, while margins, which are a measure of profitability, increased by 5 percent to over 62 percent.

Microsoft has gone through a period of hypergrowth. They are still seeing growth, but the comparable numbers have become more difficult. The company went from a massive advance to a more subdued quarter. It wasn’t the hit that some were hoping for, says Daniel Ives, analyst at Wedbush Securities.

Expected revenue growth Intelligent Cloud

Amy Hood, Microsoft’s Financial Officer, agrees that demand for cloud services has declined in the past quarter. The company says it will continue to invest in expanding its cloud offering. Thoughts from chip manufacturers that cloud providers may have built up sufficient capacity, which would delay spending on data centers and equipment, is something that Hoof does not share. Microsoft continues to invest in cloud data centres.

Hood expects Intelligent Cloud sales to increase by about 17 percent this quarter, says Bloomberg. This would include a 2 percent decrease due to the impact of a strong US dollar.

Global decline in PC growth

Despite the fact that cloud services are increasingly at the heart of Microsoft’s business, the software giant still generates a large part of the revenues and profits from its PC branch. However, the growth of the latter is increasingly declining. At the end of 2018, there was a short period of stability with regard to the sale of PCs, but the decline continued as soon as possible.

The latest quarterly figures show a worldwide decrease of 4.3 percent on PC shipments. According to Gartner, the demand for PCs is partly due to political and economic uncertainties. Desktop software is their old legacy company and we know the PC market stinks. That is a risk for Microsoft, says Daniel Morgan, fund manager at Synovus Trust Company, in a statement to Bloomberg.

Related: Microsoft passes its own partners with direct sales Azure licenses

This news article was automatically translated from Dutch to give 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.