In another sign that the cloud-computing business ranks among the greatest growth markets ever, Microsoft is likely to crack $10 billion in quarterly cloud revenue when it posts its earnings results next week.
A little perspective on that: a cloud vendor with $10 billion in revenue for a full year—let alone the 3-month period in Microsoft’s case—would be the sixth-largest enterprise-cloud company in the world.
Microsoft’s fiscal year runs July 1 through June 30. On April 24 it will release earnings for its fiscal third quarter ended March 31. With its Azure business growing in recent quarters at more than 70%, and its Dynamics 365 business at more than 50%, Microsoft has a very good chance to post another quarter of revenue growth for its entire “commercial cloud” of close to 50%.
Here are the recent revenue figures for that commercial-cloud business, which covers Office 365 Commercial, Azure, Dynamics 365, the commercial portion of LinkedIn, and other cloud segments:
- FY18 Q2: $6.1 billion (3 months ending Dec. 31, 2017)
- FY18 Q3: $6.8 billion (3 months ending March 31, 2018)
- FY18 Q4: $7.9 billion (3 months ending June 30, 2018)
- FY19 Q1: $8.5 billion (3 months ending Sept. 30, 2018)
- FY19 Q2: $9.0 billion (3 months ending Dec. 31, 2018)
Behind Microsoft’s Cloud Revenue Growth: Partnerships
With its current emphasis on helping guide customers through digital transformation, Microsoft has rung up a series of high-profile deals with some huge global corporations. I’ve covered many of them in recent articles:
- Volkswagen’s Remarkable Journey from #1 Car Maker to Software Company via Azure Cloud
- If #1 Microsoft Isn’t “Real” Cloud, Why Are World’s Largest Companies Buying It?
- Microsoft Surge Continues with “Phenomenal Pipeline” of SAP Workloads Moving to Azure
- #1 Microsoft vs. #2 Amazon: Numbers Prove Who Rules the Cloud
- Microsoft Exec on Cloud Market: Not Quite “Limitless” But “Lots of Runway”
To hit the unprecedented level of $10 billion for the 3 months ended March 31, Microsoft’s cloud revenue would have to grow 47% on top of the $6.8 billion it posted in its fiscal Q3 a year ago.
Does 47% seem feasible given Microsoft’s rapidly growing cloud-revenue base?
Well, for the 3 months ended March 31, Microsoft’s commercial-cloud revenue revenue grew 48%.
And given its overall market momentum, plus the rapidly growing appetite among business executives for bigger and broader cloud deployments, I think it is highly likely that Satya Nadella’s company will post its first $10-billion cloud quarter when the numbers come out on Wednesday, April 24.
In fact, I’m going to predict the commercial-cloud business posts revenue of $10.1 billion for the quarter.
Disclosure: at the time of this writing, Microsoft was a client of Evans Strategic Communications LLC.
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