Highlights
- Estimated profit would be 68 cents on revenue of $21.7 billion
- Revenue from Azure cloud services more than doubled
- Pledged to reach annualised revenue of $20 billion in cloud business
Microsoft Corp.'s first-quarter sales and earnings topped analysts' estimates, buoyed by growing demand for cloud-based software and services.
Profit excluding certain items was 76 cents a share on adjusted sales of $22.3 billion (roughly Rs. 1,49,209 crores), the Redmond, Washington-based company said in a statement Thursday. Analysts on average estimated profit in the period ended September 30 would be 68 cents on revenue of $21.7 billion, according to data compiled by Bloomberg. Shares surged to a record in extended trading.
Chief Executive Officer Satya Nadella has been investing in data centers and striking partnerships to bolster sales of Microsoft's main corporate cloud products, Azure and Office 365 - internet-based versions of the popular productivity apps, e-mail and collaboration tools. Revenue from Azure cloud services more than doubled, helping Microsoft outperform even as demand for PCs remained in the doldrums and its mobile-phone efforts collapsed.
"Cloud is growing significantly and Azure represents incremental new revenue," said Mark Moerdler, an analyst at Sanford C. Bernstein & Co., who rates the shares outperform. "Commercial cloud is driving revenue growth, which is somewhat hidden by the fact that Nokia is going to zero."Microsoft shares jumped as much as 6.2 percent in extended trading following the report, after losing less than 1 percent to $57.25 at the close in New York. If the gains hold when US trading opens tomorrow, the stock will top its all-time high - reached in 1999.
"This transition to the cloud represents the single largest addressable market opportunity we've all seen in many, many years," Chief Financial Officer Amy Hood said after the report. "There is such an opportunity to grow our overall revenue and do it profitably."
Hood said half of the earnings-per-share estimate beat was because of strong sales, and half was related to a lower-than-expected tax rate and other income. Net income in the recent period declined to $4.69 billion (roughly Rs. 31,380 crores), or 60 cents a share.
Earlier this month, on a swing through Europe, Nadella said the company has spent $3 billion - $1 billion in the past year alone - on data centers on the Continent to expand cloud services. He promised continued investments there, including new sites in France next year. Hood said in July that gross margins for commercial cloud would "materially improve" in the current year. That's because previous years of investment are starting to pay off as those data centers support more customers. Commercial cloud gross margin in the recent period was 49 percent, 7 points wider than in the prior quarter.
Microsoft has pledged to reach annualised revenue of $20 billion (roughly 1,33,840 crores) in its corporate cloud business by the fiscal year that ends in June 2018. That metric stood at more than $13 billion at the end of the fiscal first quarter. The company has been adding customers and workloads for its Azure services, which let clients run and store applications in Microsoft's data centers.
Elsewhere in the cloud business, paid users for the company's Salesforce.com rival, called Dynamics CRM Online, grew more than 2.5 times. Overall, Dynamics product revenue rose 11 percent. The two companies' rivalry has intensified in recent months after Microsoft beat out Salesforce in bidding for LinkedIn Corp. Since then, Salesforce has asked European regulators to scrutinize the $26.2 billion deal. Hood reiterated on Thursday that Microsoft expects the acquisition to close in the December quarter.
0 comments:
Post a Comment