This has been happening every quarter for more than a year, which means it’s not just a matter of Microsoft having an easy year to compare numbers with.
For the first quarter, Azure revenues were up 116 percent, while Intelligent Cloud, the division that includes Azure, grew 8 percent to $6.4 billion.
The growth is partly an effect of Azure and other public clouds being used increasingly for production workloads, rather than just for test and development. But the more exciting trend, according to CEO Satya Nadella, is the migration of “normal” enterprises — the kind that were customers of Microsoft’s throughout the client-server era — into the cloud.
“It’s not just the Silicon Valley startups any more. It’s the core enterprise that’s becoming a digital company,” he said on today’s earnings call with analysts.
He describes it as part of a long-term vision that’s only now playing out. Azure was created for a future that would rely on distributed computing and a hyperscale architecture. And Windows was steered in that direction as well, with Windows Server 2016, which is due to reach general availability this month, groomed as the server edge for that architecture, he said.
It’s worth noting, though, that Azure remains a distant second place to Amazon Web Services (AWS) in market share by revenues.
AWS recently announced a partnership with VMware, creating a hybrid cloud service that could rival the cloud-plus-server combination Nadella was talking about. “We’ll take that as a validation of something we thought of a long time ago,” he said during the call.
Running the Numbers
Overall, Microsoft reported revenues of $20.5 billion, compared with $20.4 billion for the same quarter a year ago.
First-quarter net income was $4.7 billion, or 60 cents per share, compared with $4.9 billion, or 61 cents per share, a year ago.
Like many companies, Microsoft is quick to point out that the strong dollar has colored its results. When adjusted for currency fluctuations, first-quarter revenues would have been $22.3 billion, the company claims.
Non-GAAP earnings per share of 76 cents outdid the analyst estimate of 68 cents tallied by Thomson Reuters.
For the second quarter, Microsoft is forecasting revenues of $21.05 billion to $21.25 billion. That would be down from the year-ago figure of $23.8 billion.
Investors seemed pleased with the results. In after-hours trading, Microsoft shares were up 5.5 percent at $60.40 at press time.