Microsoft's commercial cloud revenue hits $38.4 billion run rate in Q3

Microsoft's commercial cloud revenue hits $38.4 billion run rate in Q3

The tech company's Azure cloud software helped deliver third-quarter results that topped analyst estimates, boosting its stock price and pushing its value past the trillion-dollar mark. Microsoft's shares rose 3.7 percent in afternoon trading following the company's better-than-expected earnings report. The deals reflect Chief Executive Officer Satya Nadella's efforts to draw some customers away from cloud market leader Amazon.com Inc. and ink more significant clients. Lowe anticipated Commercial Cloud revenue growth of 39% on the back of 66% growth in Azure and 26% revenue growth in Office 365 Commercial.

"All this innovation is driving growth: Office 365 commercial now has 180 million users".

Azure cloud-services revenue rose 73%, slower than the 76% Microsoft posted in the fiscal second quarter. Mike Spencer, Microsoft's head of investor relations, said the decline was roughly in line with the company's estimate.

"The Azure growth blew away Street expectations", said Dan Ives, an analyst at Wedbush Securities. A growing proportion of Microsoft's software sales are billed as recurring subscription purchases, which are more reliable than one-time purchases. Meanwhile, Apple and Amazon's shares have recovered enough from last winter's drubbing to make another run at a $1 trillion valuation.

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For the quarter that ended March, the Redmond, Wash. -based tech giant is expected to earn $1.00 per share on revenue of $29.84 billion.

Microsoft's commercial cloud business, which includes Azure, grew by 41 per cent to $9.6 billion, while group revenue was up 14 per cent at $30.6 billion.

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 unit rose 8 per cent to US$10.7 billion in the fiscal third quarter.

Microsoft's latest results contained two weak spots. The company is preparing to launch its first diskless console next month as it braces for increasing competition from new forms of gaming, such as a Google's console-free game streaming service due out later this year.

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