Editor’s note: All things lead back to cloud for Microsoft, and that’s not a bad thing, says Technology Business Research Analyst Kelsey Mason after reviewing the tech giant’s latest earnings report which was disclosed Thursday.
HAMPTON, N.H. – The cloud stands out within Microsoft’s corporate performance
Microsoft’s corporate revenue growth reached double digits for the first time since 2014. While LinkedIn was a large contributor to this growth, organic growth was also strong, driven by an increasing mix of cloud revenue.
[“Innovation across our cloud platforms drove strong results this quarter,” said Satya Nadella, chief executive officer at Microsoft, in a statement. “Customers are looking to Microsoft and our thriving partner ecosystem to accelerate their own digital transformations and to unlock new opportunity in this era of intelligent cloud and intelligent edge.”]
Microsoft’s “as a Service” revenue reached $15 billion in 2Q17, putting the company on its way to far surpass its “as a Service” revenue run rate goal of $20 billion by 2020.
Growth in Office 365 and Azure premium services, adoption of new workloads around IoT and artificial intelligence (AI) and a growing mix of Dynamics 365 revenue drove this momentum. Concurrent improvements in cloud “as a Service” gross margins show Microsoft’s understanding and mastery of the cloud business model.
Complementing “as a Service” gains is Microsoft’s ever-agnostic approach to enabling and supporting hybrid environments, which allows on-premises server software growth to piggyback on cloud momentum.
Recent changes to sales and leadership teams reinforce Microsoft’s priorities (cloud, emerging technology and industries) heading into its new fiscal year, and will help the company better address customers’ digital transformation initiatives.
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