Microsoft Q2 Results Helped by Continued Azure Momentum

Continued Azure innovation and business momentum played a key role in the strong results that Microsoft reported Jan. 29 for its second quarter (ended Dec. 31).

Revenue in Microsoft’s overall Intelligent Cloud business grew 27% from a year earlier, to $11.9 billion, the company said. Within that business, server products and cloud services revenue soared 30%, “driven by Azure revenue growth of 62%,” it said in an earnings news release. Meanwhile, enterprise services revenue increased a more modest 6%.

“It was another strong quarter, with double-digit top and bottom-line growth, driven by the strength of our commercial cloud,” Microsoft CEO Satya Nadella said on an earnings call.

“This quarter, we expanded our portfolio of edge appliances,” he said, noting Azure Stack Edge “brings rapid machine learning inferencing closer to where data is generated, and new ruggedized Azure Stack form factors provide cloud capabilities in even the harshest of conditions, like disaster response.”

With Azure Arc, meanwhile, Microsoft is “defining the next generation of hybrid computing,” he said, pointing out Arc is an “industry-first control plane built for a multi-cloud, multi-edge world, helping partners … meet their customers’ complex hybrid needs.”

And Microsoft’s “differentiated approach across the cloud and edge is winning customers,” he told analysts, noting, for one thing, the U.S. Department of Defense selected Azure “to support our men and women in uniform at home, abroad and at the tactical edge.”

Microsoft is also “going beyond conventional computing architecture, ushering in a new era with Azure Quantum – a full-stack, open ecosystem that enables customers like Ford Motor Company to apply the power of quantum computing today,” he said.

Noting that “there will be 175 zettabytes of data by 2025, up from 40 zettabytes today,” he said, “processing this data in real-time will be an operational imperative for every organization.”

Azure Synapse is the company’s new limitless analytics service, he said, noting it “brings together big data analytics and data warehousing with unmatched performance, scale and security.” He added that, “in concert with Power BI, it enables data scientists to generate immediate insights from structured and unstructured data, and build custom” artificial intelligence (AI) models.

In AI overall, Microsoft is “seeing rapid adoption across our comprehensive portfolio of AI tools, infrastructure and services,” he said. There are 6 billion transactions on Azure Cognitive Services each month, while 7 billion documents are processed each day with Azure Cognitive Search, 2 billion predictions are made each month using Azure Machine Learning, and 3,500 new conversational agent bots are created each week using Azure Bot Service, he told analysts.

“Nationwide is using Azure Bot Service to simplify how millions of customers submit claims,” while KPMG is “using Azure Cognitive Services to transcribe and catalog thousands of hours of calls, reducing compliance costs for its clients by as much as 80 percent,” he said.

Cybercrime is going to “cost businesses, governments and individuals $1 trillion this year,” he predicted, adding: “We are the only company that offers integrated, end-to-end identity, security and compliance solutions to protect people and organizations… spanning identity management, devices, cloud apps, data and infrastructure.”

Citing recent CIO surveys that “affirm our leadership and strong structural position,” he said companies are “increasingly turning to us to simplify security integration and speed responses to issues.” On that front, he said, “four months since launch, more than 3,500 customers already rely on Azure Sentinel to detect and mitigate threats,” he said, adding it’s still “early days, and we are accelerating our investments.”

Total Microsoft Q2 revenue grew 14% from a year ago, to $36.9 billion. Profit grew 38% to $11.6 billion, with earnings per share soaring 40% to $1.51.