Microsoft’s Azure revenue growth slows

Microsoft’s Azure revenue growth slows

Microsoft Corp’s Azure cloud computing platform grew at a slower pace in the December quarter compared with a year earlier, sending shares of the software giant nearly 3 per cent lower in after-hours trade on Wednesday.

Azure, Microsoft’s flagship cloud product, had revenue growth of 76 per cent in the final quarter of 2018, down from a 98 per cent surge a year earlier.

Microsoft’s cloud services, led by products like Azure and Office 365, have been growing in double digits as more businesses eliminate the costs of maintaining their own servers by moving their technical operations to the cloud.

Azure’s chief rival is Amazon Web Services, which dominates the industry with a 32 per cent market share, according to Canalys. Microsoft has 18 per cent.

Microsoft’s total revenue climbed 12.3 per cent to US$32.47 billion. Wall Street analysts on average had expected revenue of US$32.51 billion, according to IBES data from Refinitiv.

Revenue from Microsoft’s productivity software unit climbed 13 per cent to US$10.1 billion, powered by double-digit revenue growth for LinkedIn and Office 365. Wall Street analysts on average had expected revenue of US$10.09 billion, according to IBES data from Refinitiv.

Meanwhile, its personal computing division, home to Windows software and still its largest by revenue, showed revenue growth of 7 per cent to US$13 billion, while analysts had expected US$13.07 billion. The unit also includes Xbox gaming consoles, the Bing online search service and Surface laptops.

Microsoft reported a profit of US$8.42 billion or $1.08 per share in the quarter ended Dec. 31, compared with a loss of US$6.30 billion or 82 cents per share a year earlier.

Excluding one-time items, Microsoft earned $1.10 per share, edging past analysts’ estimates of $1.09 per share.

© Thomson Reuters 2019

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