July 24, 2017

Microsoft’s cloud push sees profits jump in fiscal quarter

Strong Q4 earnings demonstrate a strategic justification for Microsoft’s shift away from traditional software.

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Tech giant Microsoft has reported a healthy increase in earnings during the fourth financial quarter ending in June 2017, with results indicating that the company’s cloud computing business has proven to be a significant source of profitability. Microsoft has recently been implementing a new cloud-focused business model, following the decision to shift away from traditional computer software in the face of a rapidly growing global cloud environment.

The company’s financial performance for the three months ending in June show an overall revenue of USD 23.3 billion, a 13% hike over the same period a year ago. As a result, profits have also doubled for the fourth quarter to USD 6.5 billion, up from the USD 3.2 billion gained during the previous quarter.

As for Microsoft’s cloud ambitions, a 97% increase in Q4 revenue from the Azure cloud platform, accompanied with a 15% rise in revenue from server and cloud related products seems to have justified the company’s change in business direction. Furthermore, the controversial move to lay off thousands of employees last month in order to restructure its sales division to better target the cloud market also appears to have obtained the desired outcome.

Optimism is running high among Microsoft’s top management, with CEO Satya Nadella, who has overseen Microsoft’s new cloud strategy, feeling vindicated in saying:

Innovation across our cloud platforms drove strong results this quarter. Our technology world view of an intelligent cloud and an intelligent edge is resonating with customers everywhere.

With the aim of building on its positive financial results and the increasing popularity of its Azure cloud platform, Microsoft last week launched Azure Stack, a new service that allows customers to run local versions of Microsoft’s cloud software.