Microsoft celebrates 62% Azure revenue growth

The company continues to make gains on rival Amazon Web Services

Revenue from Microsoft’s Azure cloud offering grew by 62% in the last three months of 2019, according to the company’s most recent earnings report. 

The company’s overarching intelligent cloud service – consisting of Azure and Enterprise Services – garnered $11.9 billion (£9.2 billion) in revenue last quarter, nearly a third of the its total figure of $36.9 billion (£28.3 billion).

Among its three operating groups, Microsoft’s cloud services experienced the most significant growth, with revenue increasing 27%. Revenue in its business and productivity division, which includes LinkedIn, rose 17% to a total of $11.8 billion (£9.1 billion). Personal computing earned $13.2 billion (£10.2 billion) – only a 2% increase from the prior quarter. 

Raymond James investment banking analyst Michael Turits credited Azure’s innovation and software updates for Microsoft’s quarterly success.

“Our Microsoft checks were strong this quarter, with the biggest improvement from resellers that were seeing an uptick in Office 365 E3 to E5 conversions, on increased interest in collaboration and integration of Microsoft Teams, and from security including EMS, Azure Active Directory and Azure Sentinel,” he said in a note to clients, as reported by Seeking Alpha

For years Azure has maintained consistent, upward revenue growth rates: its worst performing fiscal quarter in recent memory occurred between July and September 2019 (the company’s first fiscal quarter of 2020). Within this period however, the cloud service’s revenue still managed to jump 59%.

Although Azure is one of the fastest growing cloud computing services, Amazon Web Services (AWS) dominates the field, controlling roughly a third of the cloud infrastructure market. Last quarter, AWS revenue alone grew 34%, according to Amazon’s most recent quarterly release.

Google Cloud trails far behind both Azure and AWS, although it is growing. In its first-ever public cloud revenue release, Alphabet reported Google Cloud’s revenue increased 53% last quarter, hitting $2.6 billion. 

Even though AWS prevails over both Azure and Google Cloud in terms of market share, it lags in profitability. Its revenue in calendar 2019 was $35 billion (£26.9 billion) in comparison to Microsoft’s $44.7 billion (£34.4 billion) – a 27.7% disparity in favor of Azure.

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