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Microsoft Corp. reported a net profit in the first quarter of the fiscal year at $8.82 billion, or $1.14 a share, exceeding analysts’ estimates. Microsoft revenue growth driven was by cloud services, underscoring the company’s success in shifting its business toward internet-based computing.
Microsoft said in a statement that sales climbed 19% to $29.1 billion, higher than Bloomberg predictions for $27.9 billion. The revenue from Azure cloud-computing services rose 76% whereas Office 365, the internet-based versions of the company’s productivity applications, saw sales to corporations jump of 36%.
According to the company’s presentation uploaded on its website, Commercial cloud sales rose 47% to $8.5 billion in the quarter under review, meanwhile margins for that business widened by 4 percentage points to 62 per cent.
Amy Hood, Chief Financial Officer, said in an interview that Microsoft is seeing more large and long-term cloud deals and more deals that make use of so-called hybrid cloud, where some applications and data stay in a customer’s facilities and some move to Microsoft’s.
According to Hood, the company is also close to finalizing the acquisition of code-sharing website GitHub Inc. for $7.5 billion in stock, a deal aimed at accelerating moves into the cloud and artificial intelligence. Microsoft has also announced a deal with Volkswagen AG to underpin that company’s efforts in connected cars and cloud services.
Windows commercial product sales climbed 12% in the period, sending revenue in the More Personal Computing division up 15 per cent to $10.7 billion Sales in Microsoft’s Xbox and video-game business rose 44 per cent. Revenue from Microsoft’s Surface hardware gained 14 per cent.
