Microsoft Trumps Earnings Estimates With Azure’s 51% Growth Rate

Microsoft Trumps Earnings Estimates With Azure’s 51% Growth Rate

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Microsoft has once again bested the Wall Street analysts’ estimates about its second-quarter earnings of 2021. The Windows OS manufacturer has reported a revenue of USD 46.2 billion and a net income of USD16.5 billion in the second quarter. The Californian giant’s revenue has grown by 21%, and net income has experienced a 47% jump on a year-on-year basis.

The software giant was propelled to profitability by Azure, Microsoft’s flagship cloud technology. The cloud experienced y-o-y revenue growth of 51% in Q221. This is Azure’s best performance yet, as Microsoft reported a 50% jump in cloud revenue for the previous two quarters. The cloud business has become an integral part of Microsoft as it was Azure’s robust performance that propelled the software manufacturer to the 2 trillion dollar club.

Speaking at Microsoft’s earnings call, CEO Satya Nadella said, “Our commercial cloud surpassed USD 69 billion in annual revenue, up 34%. We’re seeing revenue growth across industries, customer segments, and geographies, with over 50% of sales coming from outside the United States.”

The quarterly commercial revenue of Azure stood at USD 19.5 billion. Compared to the same quarter from the past year, the revenue experienced a growth of 36%. The intelligent cloud division, which houses the Azure public cloud segment, among many other services, generated USD 17.4 billion in revenue.

Overall, the intelligent cloud unit growth was revived from the comatose state it slipped into during the previous two quarters. The growth can be partially attributed to the expansion of Azure’s data centers. Microsoft positioned new Azure data servers in 15 countries in 2020. The geographical positioning has boosted Azure’s decentralized computing approach, which thereby expanded the clientele.

“We exceeded expectations across our consumption and per-user Azure business, as well as in our on-premises server products business. Overall, server products and cloud services revenue increased 34%,” CFO Amy Hood said

Azure’s future

Azure’s Future

CEO Nadella is firing on all cylinders when it comes to Azure. He has emphasized that Microsoft will be doubling down on its efforts to keep Azure competent on all fronts. Azure will sport computational capabilities coupled with 5G network.

“And now we’re taking cloud compute to the edge with 5G deployments. Our new Azure edge services help operators and enterprises deliver ultra-low latency compute fabric. And we’re also helping operators run their networks in the cloud,” the CEO said.

Also, Azure has clinched telecom giant AT&T as its customer. Not stopping there, Microsoft acquired AT&T’s Network Cloud technology, and the giants chalked out a plan which would see the telecom giant move its 5G workloads to Azure.

Taking cognizance of AT&T’s 5G migration to Azure, Nadella stated, “AT&T chose Azure to power its 5G core network, making it the first tier-one operator to move its existing customer traffic to the public cloud.”

The CEO also remarked that Azure will be boasting better Edge capabilities and that it is an expanding area of focus. The new capabilities will be fortified with better security. Microsoft is going the extra mile on the security front. “It’s never been clearer that every organization will need to deploy and maintain a zero-trust security architecture.

This is driving accelerated demand for our integrated end-to-end solution spanning identity security compliance and device management across all clouds and all platforms,” he said. Thanks to Azure, with the 21% revenue increase on a year-on-year basis, Microsoft has achieved yet another profitable quarter.

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