Microsoft Corp on Thursday posted quarterly profit and revenue that beat analysts’ estimates, as more businesses signed up for its Azure cloud computing services and Office 365 productivity suite.
The company’s flagship Azure cloud product recorded revenue growth of 89% in the fourth quarter ended June 30.
Much of Microsoft’s recent growth has been fuelled by its cloud computing business, which has benefited from companies rushing to shift their workloads to the cloud to cut data storage and software costs.
“The combination of the cloud, which is a megatrend that’s going to last for years to come, and the execution, this is company that knows how to sell and be innovative — it’s hard to argue with anything here,” said Tom Taulli, InvestorPlace.com analyst.
Microsoft shares have risen 180% since Satya Nadella took over as chief executive in 2014, refocusing the company on cloud computing rather than PC software.
Its market cap edged above $800bn for the first time earlier this month.
Azure has a 16% share of the global cloud infrastructure market, making it the second-biggest provider of cloud services after Amazon.com Inc’s Amazon Web Services, according to April estimates by research firm Canalys.
Revenue at Microsoft’s productivity and business processes unit, which includes Office 365, rose 13.1% to $9.67bn, topping analysts’ average expectation of $9.65bn, according to Thomson Reuters I/B/E/S.
Revenue for the company’s LinkedIn business and job network grew 37% from the year-ago quarter, while its Dynamics 365 online business application suite posted a 61% increase.
Net income rose to $8.87bn, or $1.14 per share, from $8.07bn, or $1.03 per share, in the year-ago fourth quarter.
Kansas City Southern
Kansas City Southern, a regional US railroad operator with extensive operations in Mexico, topped Wall Street estimates for quarterly profit yesterday, as it moved higher volumes of petroleum, cars and chemicals.
However, the company’s quarterly operating ratio, which measures operating costs as a percentage of revenue, marginally increased to 64% from a year earlier.
A lower operating ratio means more efficiency and higher profitability.
“As we move into the second half of 2018 and 2019, we expect volume growth to accelerate,” chief executive officer Patrick Ottensmeyer said in a statement.
Overall volume increased 1% in the second quarter, while fuel expenses jumped 8.4%. Net income available to shareholders rose to $148.2mn, or $1.45 per share, in the quarter ended June 30, from $134.4mn, or $1.27 per share, a year earlier.
On an adjusted basis, the company earned $1.54 per share, beating analysts’ estimate of $1.51, according to Thomson Reuters I/B/E/S. Revenue rose 4% to $682.4mn, but came in below estimate of $686mn.
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