As Microsoft transitions from traditional software, Cloud continues to be the one of the hottest growth verticals within the tech giant. Second year CEO Satya Nadella seems to have morphed Microsoft into a Cloud First company over his short tenure. This fact is highlighted on the balance sheets that Microsoft has released for its Q3 report.
Microsoft’s fiscal 3rd quarter ended on March 31st. Investing analysts said that they expected Microsoft to earn 53 cents a share, however Microsoft exceeded expectations by reporting 62 cents a share, according to Bloomberg. It’s important to note that Bloomberg says that Microsoft’s 62 cents per share figure excluded costs relating to restructuring and integration.
Microsoft is undoubtedly the world’s largest software firm. In Q3, Microsoft reports that it’s cloud revenues rose over 100%. Financial experts say that a stronger dollar helped Microsoft on international sales, as the company reports that its overall quarterly revenue rose by 6%. Microsoft reports that its Q3 2015 revenue totaled $21.7B. Financial analysts were expecting Microsoft to report $21.1B in revenue.
Although Microsoft’s most recent quarterly report shows that the company has exceeded revenue expectations, the actual profit margin of cloud products has some at Microsoft concerned. A report by Ruchi Gupta mentions, “Lower profit margins in Microsoft’s cloud and hardware businesses pushed operating profits down 5% and net income plunged 9% in the latest quarter.”
On the positive side, Microsoft says that over 50% of those who have adapted Azure were new customers who had never bought a server from Microsoft in the past. Microsoft’s quarterly report hints at Azure and Office 365 being the top cloud products in Microsoft’s cloud portfolio.
Microsoft CFO Amy Hood is quoted as saying, “As our products have improved and you add value at the high end, customers move to the high end.”