Solid demand for Microsoft’s cloud computing services helped the US software company withstand the effects of a weakening economy and a slump in the PC market in the third quarter, according to figures released Tuesday.
The resilient performance lifted Microsoft’s revenue 11 per cent in the three months to the end of September, to $50.1bn, slightly ahead of Wall Street expectations. The company’s shares slipped more than 2 per cent on the news, despite the fact that its earnings per share of $2.35 were 4 cents ahead of expectations.
Revenue from Microsoft’s Azure cloud computing platform grew 42 per cent in the latest quarter, after stripping out the effects of the stronger dollar. That was lower than the 46 per cent recorded in the preceding quarter and the 43 per cent that analysts had been expecting. However, it still largely confirmed Wall Street’s hopes that Microsoft’s cloud business would make up for a sharp fall-off in the PC market this year.
According to Gartner, PC shipments fell 19.5 per cent in the third quarter, the biggest decline since the research firm began tracking the PC market in the mid-1990s. Revenue from Microsoft’s More Personal Computing division, which includes Windows PC software, rose 3 per cent in constant currencies, to $13.3bn.
By contrast, revenue from the Intelligent Cloud division, which includes Azure, rose 26 per cent to $20.3bn, after stripping out the effects of currency movements. Revenue at the Productivity and Business Processes division, which includes Office, increased 15 per cent, to $16.5bn.
The big jump in the US dollar depressed revenue by $2.3bn in the latest quarter, Microsoft said. The latest results were buoyed by a price increase earlier this year for its Office 365 suite of productivity tools, as well as the completion of its acquisition of Nuance, which had sales of nearly $350mn in the same period last year.