Microsoft’s Azure revenue growth slows in December quarter, shares fall


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FILE PHOTO: A general view shows a building, which houses the office of Microsoft company, in Moscow, Russia January 15, 2018. REUTERS/Sergei Karpukhin/File Photo

(Reuters) – Microsoft Corp’s Azure cloud computing platform grew at a slower pace in the December quarter compared with a year earlier, sending shares of the software giant nearly 3 percent lower in after-hours trade on Wednesday.

Azure, Microsoft’s flagship cloud product, had revenue growth of 76 percent in the final quarter of 2018, down from a 98 percent surge a year earlier.

Microsoft’s cloud services, led by products like Azure and Office 365, have been growing in double digits as more businesses eliminate the costs of maintaining their own servers by moving their technical operations to the cloud. Azure’s chief rival is Amazon Web Services, which dominates the industry with a 32 percent market share, according to Canalys. Microsoft has 18 percent.

Microsoft’s total revenue climbed 12.3 percent to $32.47 billion. Wall Street analysts on average had expected revenue of $32.51 billion, according to IBES data from Refinitiv.

Revenue from Microsoft’s productivity software unit climbed 13 percent to $10.1 billion, powered by double-digit revenue growth for LinkedIn and Office 365. Wall Street analysts on average had expected revenue of $10.09 billion, according to IBES data from Refinitiv.

Meanwhile, its personal computing division, home to Windows software and still its largest by revenue, showed revenue growth of 7 percent to $13 billion, while analysts had expected $13.07 billion. The unit also includes Xbox gaming consoles, the Bing online search service and Surface laptops.

Microsoft reported a profit of $8.42 billion or $1.08 per share in the quarter ended Dec. 31, compared with a loss of $6.30 billion or 82 cents per share a year earlier.

Excluding one-time items, Microsoft earned $1.10 per share, edging past analysts’ estimates of $1.09 per share.

Reporting by Vibhuti Sharma in Bengaluru; Editing by Sai Sachin Ravikumar

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