Microsoft's Cloud Boosts First-Quarter Earnings
The company's commercial cloud annual run rate passes $8.2 billion as business demand grows for the company's Azure-backed software and services.Microsoft announced today that it posted revenue of $21.66 billion during the company's fiscal year 2016 first quarter ending Sept. 30, a 7 percent year-over-year decline. Net income was $5.38 billion, or 67 cents per share, beating Wall Street estimates of 59 cents per share, a 3 percent improvement. In what is now a familiar theme, increased demand for Microsoft's enterprise cloud services is helping the company improve its financial fortunes. "We're seeing great traction with businesses who want to bring Microsoft's cloud, mobile device management technology and data analytics together to improve security and productivity resulting in almost 70 percent year-over-year growth in our commercial cloud run rate," said Microsoft COO Kevin Turner in an Oct. 22 statement. According to the company's figures, Microsoft's annual commercial cloud run rate now exceeds $8.2 billion. Server and cloud services sales grew 13 percent year over year, using Microsoft's constant-currency calculations that account for foreign currency fluctuations. Revenue from the company's enterprise support services grew by 16 percent. Azure compute demand and revenue more than doubled. All told, the segments contributed $5.89 billion to Microsoft's revenue last quarter.
Forrester analyst Frank Gillett told eWEEK that while Microsoft's "cloud strategy is clearly producing benefits for them," the company's momentum has yet to pull Microsoft ahead of the pack. Nonetheless, the company's progress is commendable given its "fundamental shift from products to [cloud] services."