Microsoft cloud flagship posts first growth under 50%; bookings growth steady

Wednesday, August 5, 2020

Microsoft Corp's <MSFT.O> flagship cloud computing business Azure reported quarterly sales growth of under 50% for the first time ever on Wednesday, sending the tech giant's shares down 2%.

Revenue in Microsoft's Intelligent Cloud segment rose 17% to $13.4 billion, with 47% growth in the Azure component, which includes essential computing and storage services. Analysts on average had expected cloud revenue of $13.09 billion in the fourth quarter ended June 30, according to IBES data from Refinitiv.

Azure's growth is the most direct measure of performance against top cloud rival Amazon.com Inc's <AMZN.O> Amazon Web Services, as Microsoft does not break out Azure's revenue by dollar amount. AWS posted revenue growth of 33% to $10.2 billion, which analysts believe exceeds Azure's total, for the quarter ended March 31. International Business Machines Corp <IBM.N>, another Microsoft rival, this week beat Wall Street expectations with strong cloud growth.

Beyond Azure, Microsoft's results showed how the novel coronavirus is both helping and hurting Microsoft.