How Important Are Intelligent Cloud & Azure to Microsoft?
Shares of Microsoft MSFT have climbed 41% over the last year as it impresses investors with strong top and bottom line growth and a keen eye for the future. Microsoft reported its Q4 financial results after the closing bell Thursday. So let’s see how the company performed and how vital its much talked about Intelligent Cloud and Azure businesses are.
Microsoft posted adjusted quarterly earnings of $1.13 per share up from $0.98 per share in the year-ago period, which also beat our Zacks Consensus Estimate of $1.07 per share. The historic tech giant’s top line expanded by roughly 17% to reach $30.09 billion, topping our $29.21 billion estimate.
One of the biggest reasons for the uptick was the continued growth of Microsoft’s cloud computing segment, which will likely prove key as it takes on Amazon AMZN, Oracle ORCL, Google GOOGL, and others in this growing market. “Our early investments in the intelligent cloud and intelligent edge are paying off, and we will continue to expand our reach in large and growing markets with differentiated innovation,” CEO Satya Nadella said in a company statement.
Microsoft’s Intelligent Cloud unit contains its server and enterprise products. The company’s enterprise services unit saw its revenues pop by 8%. Meanwhile, Microsoft’s server products and cloud services revenue surged 26%, with its Azure business up 89%.
Overall, the firm’s Intelligent Cloud revenues jumped 23%—the biggest of its three key business units—from $7.82 billion in the year-prior period to hit $9.61 billion. Investors should note that this topped our exclusive non-financial metrics consensus estimate of $9.08 billion. In the previous quarter, Azure revenues soared 93%, with Intelligent Cloud revenues up 17% to $7.89 billion.
For the year, cloud revenues climbed from $27.41 billion to $32.22 billion. Intelligent Cloud revenues accounted for over 29% of Microsoft’s total fiscal 2018 revenues of $110.36 billion, up from 28% in fiscal 2017. Microsoft boasts that the 54 regions Azure is available in around the world are more than any other cloud provider. Furthermore, the company claims that 90% of all Fortune 500 companies use Microsoft could.
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