Microsoft has reported better-than-expected earnings and revenue for the quarter ending in December, as its cloud business continues its expansion.
US tech giant Microsoft beat forecasts on its earnings and revenue for the three months, partly due to the continued growth of its cloud business. Chief executive officer (CEO) Satya Nadella said: "We are innovating across every layer of our differentiated technology stack and leading in key secular areas that are critical to our customers' success."
The company reported a 14% increase in sales from the previous year to reach $36.9 billion in the quarter. Its adjusted net income also dramatically surged by 36% to $11.6 billion.
Microsoft's intelligent cloud division outperformed Wall Street analysts' forecasts by reporting a revenue of $11.9 billion during the period, driven by a 62% growth in its key Azure cloud business.
The firm has been placing emphasis on growing its cloud business and competing with industry incumbent Amazon Web Services (AWS). In recent quarters, sales at Azure have been slowing down slightly but less than that of AWS.
Nucleus Research analyst Andrew MacMillen pointed out that this trend should not cause concern as the cloud market becomes more highly penetrated. MacMillen said: "It's now finally getting to a saturation point, where it's less about who can capture more market share than who can create more use cases."
Microsoft's productivity and business processes segment also recorded a 17% growth in the quarter, due to strong growth in Office 365 and Dynamics 365. MacMillen said that expansion may mean that the company is gaining brand recognition in the enterprise services space, where it competes with companies, such as Oracle and Salesforce.
According to MacMillen, Microsoft is "one of the few that can really marry the two: cloud hosting and all this machine learning and artificial intelligence ... with comprehensive and end user-accessible technologies" for business customers, including customer relationship management and supply chain management software.
