US software and online service leader Microsoft Thursday reported third-quarter earnings in fiscal year 2018 hitting 26.8 billion USA dollars, a robust growth beyond analyst expectations driven by its Microsoft Cloud products.
Our results this quarter reflect the trust people and organizations are placing in the Microsoft Cloud. Azure had posted an over 90% growth for the past 10 quarters. Microsoft's shares have climbed roughly 40 percent in the past year. Revenue growth in the company's Azure platform rose 93% year over year.
Microsoft saw its stock fall as much as 2.5 percent last night despite a positive result. "Apple is still playing catch up to that". Revenues advanced 16 percent from the year before to United States dollars 26.8 billion and the operating profit lifted 23 percent to USD 8.3 billion.
During the quarter, Microsoft's commercial cloud revenue was $6 billion, up 58% from the year-ago quarter.
Total cloud revenue now stands at more than $20 billion on an annual basis, and Brent Bracelin, an analyst at KeyBanc Capital Markets, expects Microsoft to exit next year with double that.
Overall Windows OEM revenue increased 4% (up 4% in constant currency). Microsoft has been boosting spending to build new cloud data centers as Amazon and No. 3 USA cloud provider Google do the same.
"Dynamics products and Cloud services revenue increased 17 per cent, driven by Dynamics 365 revenue growth of 65 per cent", the company said.
But Windows remains the main revenue contributor for Microsoft's More Personal Computing business segment.
Microsoft saw its stock fall on Thursday after the company reported better-than-expected earnings for its fiscal third quarter. Revenues went up 21 percent for Windows commercial products and cloud services, 18 percent at Gaming, and 32 percent at Surface.
"We think folding Windows into the new Experiences and Devices division, which is led by a former Office executive, sends a strong signal of the supporting, and not leading, role Windows will likely take in coming years, and we like the continued emphasis on hybrid cloud and [artificial intelligence]", Stifel analysts led by Brad Reback wrote in a Sunday note.