Driven in part by the coronavirus pandemic, Microsoft's cloud sectors continued their torrid streak in the first quarter. Revenue growth for Azure, the company’s flagship cloud computing business, grew 48% year-over-year, easily exceeding Wall Street estimates of 43.45%.
Microsoft posted a 61% increase in the same quarter a year ago and 47% year-over-year increase in the preceding fourth quarter.
Microsoft's "commercial cloud" revenue, which combines Azure, Office 365, Dynamics 365, and other cloud services, was up 31% from a year ago to $15.2 billion.
RELATED: While SMB sector struggles, Microsoft's cloud business drives 13% revenue increase in Q4
The Covid-19 pandemic has accelerated businesses' digital transformations, which includes moving more applications and data to the cloud. Microsoft, Alphabet's Google and Amazon Web Services have seen spikes in their cloud businesses as a result. Following on the heels of Microsoft, Alphabet and Amazon Web Services will host their earnings calls on Thursday.
"We’re building Azure as the world’s computer with more data center regions than any other provider, now 66, including new regions in Austria, Brazil, Greece, and Taiwan," said Microsoft CEO Satya Nadella, according to the Seeking Alpha transcript. "We’re expanding our hybrid capabilities, so that organizations can seamlessly build, manage and deploy their applications anywhere."
Also on the earnings call, Microsoft Chief Financial Officer Amy Hood said she expected “continued strong growth” for Azure while Nadella said he didn't foresee any cloud-related supply chain issues going forward as some European countries revert to shelter-in-place policies.
While Microsoft doesn't break out Azure's revenues, Azure public cloud, Windows Server, SQL Server, GitHub and enterprise services, which make up its "intelligent cloud' business segment, posted $13 billion in revenue. Wall Street analysts had projected revenue of $12.7 billion..
Microsoft's revenue rose 12% to $37.2 billion in the quarter ended Sept. 30, beating analysts’ estimates of $35.72 billion. Net income rose to $13.89 billion, or $1.82 per share, from $10.68 billion, or $1.38 per share, a year earlier. Analysts had expected a profit of $1.54 per share. For the second quarter, Microsoft projected revenue to be in the $39.5 billion to $40.4 billon range.