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Microsoft sees cloud computing business Azure post under 50% quarterly sales growth for first time

For its fourth quarter to June 30, 2020, revenue in Microsoft’s Intelligent Cloud segment rose by 17% to $13.4 billion, with 47% growth in Azure

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Microsoft posted total quarterly revenue of $38.03 billion, up 13% year on year, beating the consensus estimate of $36.5 billion

Microsoft Corp (NASDAQ:MSFT) saw its shares retreat in pre-market trade on Thursday after the software giant revealed that its flagship cloud computing business Azure reported quarterly sales growth of under 50% for the first time ever, after the market close on Wednesday, although overall revenue beat forecasts.

For its fourth quarter to June 30, 2020, revenue in Microsoft’s Intelligent Cloud segment rose by 17% to $13.4 billion, with 47% growth in Azure, which includes essential computing and storage services. Analysts on average had expected cloud revenue of $13.09 billion.

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Azure’s main cloud rival Amazon.com Inc’s Amazon Web Services (AWS) posted quarterly revenue growth of 33% to $10.2 billion, while International Business Machines Corp, another competitor, this week beat expectations with strong cloud growth.

Overall Microsoft’s results showed how the coronavirus pandemic has been both positive and negative for the group.

The company posted total quarterly revenue of $38.03 billion, up 13% year on year, beating the consensus estimate of $36.5 billion. But the group’s net income fell to $11.20 billion, or $1.46 per share, from $13.19 billion, or $1.71 per share, a year earlier.

The revenue growth was powered by its More Personal Computing unit as more people worldwide used its products to work on Windows PCs and play games on Xboxes during lockdowns.

However, the group’s forecast for some versions of its Office software slightly missed expectations because of weak sales to struggling small and mid-sized businesses. And Microsoft said its professional networking site, LinkedIn, was hurt by the weak job market and advertising spending cuts during lockdown.

In pre-market New York trading, Microsoft shares were 1.8% lower at $207.90.

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NASDAQ:MSFT
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