Cloud fuels Microsoft revenue to grow 12.3% to $32.47 bn

Microsoft said its revenue rose 12.3 percent to $32.47 billion though Azure cloud computing sales grew more slowly than a year earlier.
Microsoft Cloud for digital transformationAzure, Microsoft’s flagship cloud product, has achieved revenue growth of 76 percent in the fiscal second quarter ended Dec. 31, down from a 98 percent surge a year earlier. Azure sales increased 76 percent in the September quarter as well.

Revenue from Microsoft’s productivity software unit grew 13 percent to $10.1 billion, powered by double-digit revenue growth for LinkedIn and Office 365.

Microsoft’s personal computing division, home to Windows software and still its largest by revenue, generated revenue growth of 7 percent to $13 billion. The unit also includes Xbox gaming consoles, the Bing online search service and Surface laptops.

Microsoft reported a profit of $8.42 billion.

Microsoft has shifted its focus to the fledgling cloud market where it is battling for dominance, Reuters reported.

The company is picking up business from the retail industry in particular, which is aiming to keep pace with the e-commerce business of Amazon. This month alone, Microsoft announced deals with Walgreens Boots Alliance and Kroger Co, on top of a five-year agreement with Walmart it unveiled this summer.

“Our strong commercial cloud results reflect our deep and growing partnerships with leading companies in every industry including retail, financial services, and healthcare,” Microsoft CEO Satya Nadella said in a statement.

Microsoft forecast revenue of between $29.4 billion and $30.1 billion in the current quarter. The US-based company also said a stronger U.S. dollar would hit growth of its intelligent cloud business segment, which includes Azure and other products, by 2 percentage points.

Microsoft has a 17 percent share of the global cloud market, research firm Canalys previously said. Amazon has 32 percent.

Microsoft’s research and development expenses rose to $4.1 billion in the quarter from $3.5 billion a year earlier.