About three years now The Chief Executive Officer of Microsoft Satya Nadella made a bold decision concerning the then commercial cloud business that it will hit ($20) Twenty billion dollars in the annual revenue at the close of its financial year in 2018.
At the mentioned time, the expectation seemed highly unlikely because the Microsoft’s commercial cloud business was bringing in only about six point three billion dollars from its sales on an annualized basis which was defined by it as the total revenue the business can receive if carried on at the rate set from the previous month of the most recent quarter.
Eventually on Thursday, Microsoft lived the manifestation of the desire of it’s Chief Executive Officer; Satya Nadella. Through the company’s fiscal first Quarter earnings report Microsoft made known that it has come to and gone beyond it’s Twenty billion dollar target in a less time of three quarters.
In the most time of the company’s quarter, the commercial cloud businesses of Microsoft hit a mark of Five billion dollars of revenue, at a fifty seven percent (57%) gross profit margin. Gross profit margin which is best defined as the portion of a business unit’s revenues that are left after you remove its direct costs of making or providing its goods or services.
Moving on, Microsoft will plans to no longer reveal it’s annualized revenue figure on its commercial cloud business but it will rather just reveal its recorded revenue.
Microsoft’s commercial cloud business has been on something of a tear. Already last quarter, the business’ annualized revenue was at ninety four point five percent of it’s twenty billion dollar target.
The software Global giant’s commercial cloud business is banked on by Azure which is it’s cloud computing service, and by the Office 365 productivity suite, both of which are growing and increasing rapidly in the like of wildfire. Azure revenue spiked by a whooping Ninety percent (90%) in the company’s fiscal first quarter, in comparison with the same period a year earlier. And revenue from the business-targeted version of Office 365 grew by forty two percent (42%) in the same time period.
Concerning the case of Microsoft’s cloud tear; two quarters earlier, Microsoft said for the first time that the revenue generated by the company through the sale of subscriptions to the cloud version of its productivity suite was higher than the revenue it brought in from the sale of licenses to the regular versions of Office and this pattern has continued.
Although in addition of all of Microsoft’s cloud business success, they still fall behind Amazon which is an online commerce company and their Web services unit are on track to close in eighteen billion dollars worth of revenue this 2017 which also has to be nominally, that’s less than Microsoft commercial cloud revenue. Amazon Web Services competes directly with just Azure mean while the revenue from Azure is just one component of Microsoft’s total commercial cloud sales.
Microsoft is committed to bridging the gap so what remains is if its core cloud computing business will ever unseat Amazon remains expected and watched out for. But it definitely looks like the battle won’t be quieting down anytime soon.