Microsoft Intelligent cloud business has become the company’s most profitable business segment outpacing the traditional office and computing arms.
Last week, Microsoft came out with its quarterly earnings report for the fourth quarter of its 2019 fiscal year. The company earned $33.7 billion in revenue for 12% growth (14% constant currency). Operating income was $12.4 billion for 20% growth (24% CC), and net income was $13.2 billion ($10.6 billion non-GAAP), for 49% growth. Diluted earnings per share was $1.71, for 50% growth.
There is a big takeaway for company in terms of its cloud business, which is the primary reason behind the strong growth. This time, the Intelligent Cloud or Azure segment generated $11.4 billion in revenue, showing 19% growth (21% CC) year-over-year. More Personal Computing brought in $11.3 billion, a 4% increase (6% CC), and Productivity and Business Processes brought in $11 billion for 14% growth (17% CC).
Clearly, the intelligent cloud has become the company’s most profitable business segment.
Azure is clearly the winner for Microsoft
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Azure, also called as “intelligent cloud” segment, now brings in more revenue than the former Microsoft Windows monopoly, or the old Microsoft Office. It grew 64% in Microsoft’s 2019 fiscal year.
Azure is getting crucial deals for Microsoft and one of them was $2 billion contract with AT&T. There are more coming soon, as the US Government is almost certain to make Microsoft the favorite over Amazon on the $10 billion JEDI contract to create a Pentagon Cloud. Remember, Microsoft Azure is the clear number two player in the competitive cloud market behind incumbent leader Amazon Web Services.
Introducing newer concepts, Microsoft is selling the concept of “citizen developers” for its Power Platform, which includes data visualization, workflow automation, and app creation tools.
The company’s stock surged in the days following the earnings report, hitting an all-time high of $139.20. With more companies looking towards cloud, the future surely has more bright spots as far Microsoft Azure is concerned.