Microsoft Sales Top Estimates, Fueled by Strong Cloud Demand

Microsoft exceeded analysts’ projections for fiscal third-quarter sales and profit, lifted by strong corporate demand for cloud-computing services, according to Bloomberg.

Profit in the period ended March 31 rose to $7.42 billion, or 95 cents a share, topping the 85-cent average estimate of analysts. Sales climbed 16 percent to $26.8 billion, Microsoft said in a statement, better than predictions for $25.8 billion.

Azure revenue in the recent period grew 93 percent. Still, excluding currency fluctuations, that gain was 89 percent, a slight decrease from the previous quarter’s 98 percent growth on that basis. Microsoft’s commercial cloud sales rose 58 percent to $6 billion, the company said in slides posted on its website. Gross margin for that business widened 6 points to 57 percent. Capital expenditures were $3.5 billion in the quarter.

Microsoft Chief Financial Officer Amy Hood said the company will continue to increase spending as long as customer demand for cloud services rises. "As long as we see the demand signals globally grow, we will continue to see that number grow," she said in an interview.

Total revenue in the company’s More Personal Computing division, which includes the Windows operating system, rose to $9.92 billion, beating the $9.26 billion average analysts prediction. That was especially notable given that global PC shipments fell 1.4 percent in the March period, according to market-research firm Gartner, the 14th straight quarter of declines.

Revenue from Surface hardware rose 32 percent from a year ago, and gaming revenue rose 18 percent, fueled by sales of Xbox software and third-party games. Productivity sales, mainly Office software, climbed 17 percent to $9.01 billion. Analysts had estimated $8.73 billion. Revenue in the Intelligent Cloud division, which consists of Azure and server software, also jumped 17 percent to $7.9 billion, above the $7.72 billion average projection.