Microsoft Continues to Win in the Cloud

February 3, 2019

Microsoft reported its second-quarter results on Jan. 30. The tech giant enjoyed solid gains in revenue and earnings, fueled by strong growth in its cloud-based services.

Microsoft’s intelligent cloud division — which includes its server and cloud computing businesses — remains the company’s strongest growth driver. Revenue in this segment rose 20% to $9.4 billion, due largely to a staggering 76% rise in Azure revenue.

Across all its divisions, Microsoft is enjoying rising demand for its enterprise-focused cloud services. “Our solid execution delivered another strong quarter, with commercial cloud revenue growing 48% year over year to $9.0 billion,” CFO Amy Hood said in a press release. “We continue to make strategic investments to capture expanding market opportunities to drive growth across our businesses.”

Moreover, Microsoft’s cloud business continues to grow more profitable as it expands; commercial cloud gross margin improved 5 percentage points year over year to 62% in the second quarter.

Despite a weak global PC market, revenue in Microsoft’s personal computing division rose 7%, to $13 billion. The gains were fueled by a 13% increase in Windows commercial products and cloud services revenue, a 31% jump in Xbox software and services revenue, and a 39% surge in Surface revenue.

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