Microsoft Q1 FY18: Azure continues its dream run, revenue grew 90%

Microsoft today released its FY18 Q1 earnings results. Revenue was $24.5 billion and Net income was $6.6 billion. Revenue from its Intelligent Cloud division was $6.9 billion and increased 14% (up 13% in constant currency). Azure revenue grew 90% (up 89% in constant currency) when compared to 97% (up 98% in constant currency) last quarter. Microsoft also achieved their $20 billion commercial cloud annual run rate goal.

“This quarter we exceeded $20 billion in commercial cloud ARR, outpacing the goal we set just over two years ago,” said Satya Nadella, chief executive officer at Microsoft. “Our results reflect accelerating innovation and increased usage and engagement across our businesses as customers continue to choose Microsoft to help them transform.”

Azure’s growth potential remains super strong. Recently, Gartner projected that the worldwide public cloud services market revenue will grow 18.5 percent in 2017 to total $260.2 billion, up from $219.6 billion in 2016. Although public cloud is growing more strongly than initially forecast, Gartner still expects growth even out from 2018 onwards.

Microsoft also reported that Server products and cloud services revenue increased 17% (up 17% in constant currency) driven by Azure growth and the Enterprise Services revenue increased 1% (0% in constant currency) with growth in Premier Support Services offset by declines in custom support agreements. The report also highlighted that Enterprise Mobility is a strong growth area for Microsoft and their installed base increased to 55 million.

“Our strong start to the fiscal year reflects the impact of our continued investment in product innovation and sales capacity to capture expanding market opportunities,” said Amy Hood, executive vice president and chief financial officer at Microsoft.