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Microsoft’s Cloud Business Continues to Drive Growth

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Microsoft generated $30.6 billion in revenue

Software giant Microsoft (MSFT) reported its quarterly earnings for the third quarter of fiscal 2019 (quarter ended March 2019) on Wednesday, April 24, after the closing bell. The stock rose 3.5% in after-hours trading on Wednesday.

The company generated revenue of $30.6 billion, an increase of 14% from the same quarter last year. It handily beat Wall Street estimates of $29.84 billion. The company posted a net profit of $8.81 billion during the quarter, a 19% rise YoY. On a diluted earnings per share basis, the company made $1.14 per share, much higher than analysts’ estimates of $1.

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Microsoft’s cloud business now represents nearly a third of its revenue

The company’s Intelligent Cloud division, which includes Azure and other cloud-based businesses, surged 22% YoY to $9.7 billion. This segment is accounting for more and more of Microsoft’s revenue. In the third quarter, the segment represented 31.7% of the company’s overall revenue. In the second quarter, it accounted for only 28.9% of Microsoft’s total revenue.

Microsoft’s productivity applications, which include its Office 365 products, grew 14% to $10.2 billion. Within this segment, revenue from LinkedIn grew a robust 27% YoY, the company noted.

Revenue from Microsoft’s More Personal Computing segment, which consists of Windows, Xbox, Surface devices, and Bing, grew by only 8% YoY during the quarter to $10.7 billion. The revenue from selling Windows to PC vendors climbed 9% YoY in the quarter, an improvement from a 5% YoY decline in the previous quarter.

The bottom line here is that Microsoft’s focus on cloud is continuing to pay off. There is more room for its cloud business to grow, which bodes well for the company.

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