- Microsoft posted a strong set of cloud-centric results in its Q1 FY21 earnings report.
- Its Azure revenue growth rate accelerated on a sequential basis, coming in significantly higher than industry leader AWS’.
- Readers and investors may want to remain invested in the software giant.
It seems like Microsoft’s (MSFT) stellar growth trajectory in the cloud vertical, is far from fizzling out. The company reported a strong set of Q1 FY21 results — revenues from the Azure platform grew faster than industry peers and its cloud-centric revenues rose once again, in spite of the currently uncertain macroeconomic conditions across the globe. More to the point, the software giant’s cyclicality in its Intelligent Cloud revenue reduced further. This should reassure investors that Microsoft’s growth momentum is still intact and that it still has ample room to grow in the near future. Let’s take a closer look.
The Data
We’ll be largely discussing Microsoft’s Intelligent Cloud segment in this article. The software giant has other business verticals as well but its Intelligent Cloud segment is by far its largest in terms of revenue generation, accounting for about 35% of the company’s overall revenue in Q1 FY21. In this article, I’ll attempt to have an in-depth discussion on this one segment alone, along with Microsoft’s Azure, in a bid to apprise readers about the latest sales data and what we can expect from the company in the near future.
For the uninitiated, Microsoft’s Intelligent Cloud segment is comprised of services such as Azure, GitHub, SQL server amongst others. Its revenues grew at the fastest pace compared to the company’s two other reporting segments, namely More Personal Computing and Productivity and Business Processes.
(Source: BusinessQuant.com)
Like any business, Microsoft’s Intelligent Cloud revenue also has an element of cyclicality, with peaks and troughs forming in Q4’s and their subsequent Q1’s, respectively. The segment’s sequential revenue growth in past Q1’s has declined between 5% and 12% in recent years but the figure dropped only 3% this time around, indicating that Microsoft is making notable progress towards reducing its cyclicality and accelerating the segment’s overall growth.
