Microsoft CEO Satya Nadella said the company had introduced 100 new capabilities to its Azure cloud offering this quarter alone – denying suggestions that cloud was “defying gravity” with its sustained growth.
The comments in a conference call with analysts came as Microsoft said a 76 percent increase in Azure revenues helped drive Microsoft to a record quarter, with net income hitting a healthy $8.8 billion, up 34 percent year-on-year.
Commercial cloud revenues topped $8.5 billion, an increase of 47 percent on the same quarter last year, Microsoft said, reporting strong growth across its portfolio, with cloud and gaming particularly strong segments for the company.
— Microsoft (@Microsoft) October 24, 2018
Microsoft Azure Tools: Hybrid Cloud Expertise USP for Microsoft
Responding to a question from Goldman Sachs analyst Heather Bellini, Nadella said the company was uniquely position to take advantage of the rise of “hybrid” cloud, in which users run some applications in the public cloud and some from on-prem facilities.
He said: “There are two major advantages we have. One is an architectural technology advantage around hybrid. We don’t think of hybrid as some stopgap as a move to the cloud. We think about it’s the coming together of distributed computing where the cloud and the edge work together for not just the old workloads, but most importantly for new workloads. And that’s where we are seeing some very significant good feedback loops and shaping even our future road map.”
He added: “We have a business model advantage. The Azure benefits are things both for Windows Server as well as for SQL which I think are very, very unique to us. The combination of the technology advantage and the business model advantage is what I see in the results, whether it’s the standalone Azure growth, which is what we expected and it’s very strong and the server KPI is even stronger.”
Gaming was another strong spot for the company, with gaming revenue increasing 44 percent, on Xbox software and services revenue growth of 36 percent; mainly from third-party title strength.
LinkedIn also showed impressive growth, with revenue increasing 33 percent (up 33% in constant currency) to $382 million, with record levels of engagement highlighted by LinkedIn sessions growth of 34 percent.
“Our record results for Q1 reflect our commitment to long-term strategic investments and consistent execution to drive revenue growth and operating margin expansion,” said Amy Hood, Microsoft’s CFO.
She added: “We see continued demand for our cloud offerings, reflected in our commercial cloud revenue of $8.5 billion, up 47% year over year.”