Microsoft cites ‘layers’ of Azure and cloud depth in more positive financial results
Microsoft’s investor relations team is evidently not frightened about repeating itself when it comes to financial announcements season. “Microsoft Cloud drives record fourth quarter results,” the company proclaimed in July; “Microsoft Cloud strength powers record first quarter results,” it tooted in October; and now, “Microsoft Cloud strength fuels second quarter results.”
Given the figures, there are plenty of reasons for Microsoft to stress the same message. The company’s Q219 report saw total revenues of $32.5 billion (£24.7bn), an increase of 12% on this time last year. Of the key revenue buckets, productivity and business processes – which focuses more on software – broke $10bn at a 12% lift on last year, while intelligent cloud, focused more on infrastructure, hit $9.38bn at a 20% uptick.
Azure itself – for which Microsoft does not disclose specific financials – went up 76% compared with the previous year, exactly the same as the previous quarter’s figure.
In prepared remarks to analysts, CEO Satya Nadella made reference to its recent slew of retail-based customers, saying Azure was ‘front and centre’ at the recent National Retail Federation (NRF) event, where the partnership with Kroger was announced. Regarding general strategy, it was a continuation of the theme the chief executive forged at Ignite back in September around making Microsoft’s customers tech companies in their own right.
“These results speak to us picking the right secular trends in large and growing markets, many of which are still in their infancy, as well as focused innovation and execution,” said Nadella. “Leading companies in every industry are partnering with us to build their own digital capability to compete and grow. This is creating a broad opportunity for everyone, including our ecosystem.”
Nadella also focused specifically on cybersecurity and discussed the importance of a Zero Trust environment – something of which regular readers of this publication will be more than aware. In terms of specific security offerings issued this quarter, the start of this month saw two new products for Microsoft 365, its enterprise-focused suite, launched around identity and threat protection and compliance.
Responding to an analyst question around how the big customer deals break down looking specifically at Azure, Nadella said he internally compared it to relationships with OEM partners in the PC era, noting the mix required between infrastructure for compute, then data on top sprinkled with AI.
“We definitely see that path… where they’re adopting the layers of Azure,” said Nadella. “But it doesn’t stop in Azure. If you take Walgreens Boots Alliance, it was Microsoft 365 as well as Azure. In many cases, it’s Dynamics 365 – any IoT project on Azure leads to a Dynamics field service project in most instances.
“So we’re seeing the breadth and depth of our cloud offering, which is what we are really architected to have real synergies in the context of what our customers want to achieve, and that’s what we are seeing,” Nadella added.
Despite all figures going in the right direction Microsoft’s performance fell just short of Wall Street expectations. Shares fell as much as 4% in the immediate aftermath of the announcement, according to CNBC.
You can read the full financial statement here.
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