Microsoft Corp.’s flagship cloud computing business Azure reported sales growth of under 50 per cent for the first time ever on Wednesday, sending the tech giant’s shares down 3 per cent.
Microsoft said revenue in its Intelligent Cloud segment rose 17 per cent to US$13.4-billion, with 47-per-cent growth in Azure. Analysts on average had expected revenue of US$13.09-billion, according to IBES data from Refinitiv.
Azure’s growth rate is the best direct measure of competition with rivals like Amazon.com Inc.’s AWS and Alphabet Inc.’s Google Cloud, as Microsoft does not break out revenue from Azure.
Microsoft’s total revenue rose 13 per cent to US$38.03-billion in the fourth quarter ended June 30, beating estimates of US$36.5-billion, according to IBES data from Refinitiv.
The revenue beat was powered by gains in its More Personal Computing unit, as more people globally turned to its products to work and game remotely during coronavirus-induced lockdowns.
Revenue from the unit, the largest by sales, rose 14 per cent to US$12.9-billion, beating analysts’ estimates of US$11.46-billion. The unit includes Windows software, Xbox gaming consoles, online search advertising and Surface personal computers.
Microsoft said its professional networking site, LinkedIn, was hurt by the weak job market and reductions in advertising spending.
The company said its commercial cloud, a closely watched metric by investors, surpassed US$50-billion in annual revenue for the first time this year.
Net income fell to US$11.20-billion, or US$1.46 per share, from US$13.19-billion, or US$1.71 per share, a year earlier.
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