Cloud computing gains drive up profit for Microsoft

Microsoft Q1 2020 Earnings: Surface Revenue Declines As Cloud Continues to Grow

Microsoft's cloud shines again as it easily tops earnings and revenue targets

In total, Microsoft reported revenue of $33.1bn, which was up by 14 percent compared to the same period past year, earnings of $1.38 per share beating Wall Street's estimate of $1.24 per share and a profit of $10.7bn that was up from the $8.82bn during Q1 2019.

Meanwhile, revenue from career-centric social network LinkedIn was up 25 percent, Microsoft reported.

The growth in revenue is fueled nearly equally by all three of Microsoft's core businesses.

Revenue from cloud services sold to businesses was up more than a third in the quarter to $11.6 billion, according to chief financial officer Amy Hood. That's slightly less than the $1,350 millions from last quarter, but the decline is mainly caused by the product lifecycle.

Windows commercial products and cloud services revenue was up 26% in the first quarter. The unit includes Windows software, Xbox gaming consoles, online search advertising and Surface personal computers.

Microsoft Azure revenue grew by 59 percent though the company does not report any revenue figures that are specific to Azure.

Overall, there's been good growth across the board in Microsoft's Intelligent Cloud business, as expected. Microsoft says this does not fully reflect the consumer PC market, as buyers continue to purchase cheaper entry-level PCs which generate less revenue for Microsoft.

Revenue from Office Commercial products and cloud services grew 13%.

Office 365 Commercial seat growth was 21%. With three devices launching between October and November, it's likely we'll see Surface revenues move up next quarter.

One of the contributors to the increased profit is the "redeployment of engineering resources", suggesting Microsoft is moving its engineers from Windows to other parts of the business.

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