There was really little doubt that this would be a financial quarter dominated by the success of cloud, but Microsoft Azure continues to see impressive levels of growth.
The company’s second quarter saw Azure revenue grow at 98% year-over-year, with the Intelligent Cloud category of Microsoft’s finances (which includes Azure) bringing in $7.8bn and Commercial Cloud revenue $5.3bn, up 56% year-over-year.
Overall, Microsoft’s Q2 earnings saw it bring in $28.92bn in revenue, up slightly on the Wall Street prediction of $28.4bn.
“This quarter’s results speak to the differentiated value we are delivering to customers across our productivity solutions and as the hybrid cloud provider of choice,” said Satya Nadella, chief executive officer of Microsoft.
“Our investments in IoT, data, and AI services across cloud and the edge position us to further accelerate growth.”
Whilst the cloud continues bring good news for Microsoft, sucking in vast amounts of money and seemingly refusing to slow down, the company did have some bad news to share.
Changes to tax laws will see Microsoft take a $13.8bn charge related to taxes owed on overseas cash. This means that the company actually ended up reporting a loss of $6.3bn after the charges.
“We delivered another strong quarter with commercial cloud revenue growing 56% year-over-year to $5.3 billion,” said Amy Hood, executive vice president and chief financial officer of Microsoft. “Strong execution from our sales teams and partners is driving growth across our businesses.”
One of the most successful parts of Microsoft’s cloud strategy is the ability to switch customers from its on-premises legacy software suites such as Office, to the online subscription version like Office 365. This success was highlighted by the 41% revenue increase seen for Office 365.
Had Microsoft been hit by the tax charge then this would have been yet another successful quarter under Satya Nadella, with second-quarter profits at 96 cents, ahead of analysts average expectation of 86 cents, according to Bloomberg.