MSFT: Cloud-computing boosts Microsoft’s third quarterly performance

NEW YORK: Tech giant Microsoft (MSFT) surpassed market expectations with an impressive growth in its third-quarter earnings at the Nasdaq stock market on Thursday.

According to reports, the company’s revenue rose to $61.9 billion, marking a 17 per cent increase from the previous year. The tech giant’s net income also saw a considerable rise. It reached $21.9 billion an increase of almlost 20 per cent.

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Most industry experts point to the tech giant’s cloud-based business model for its unexpected success. Microsoft’s cloud-based business generated almost $35.1 billion in revenue, representing 23 per cent increase year-over-year (YOY). This shows the tech giant’s leading position in cloud computing market due to its ability to capitalise on a growing demand for cloud-based services.

The tech giant performed well across various business sectors. Microsoft’s revenue from its “Productivity and Business Processes” sector reached $19.6 billion, up 12 per cent YOY. Similarity, the “Intelligent Cloud” witnessed stronger growth with revenue generated from this sector peaking at $26.7 billion. This is driven by a 31 per cent increase in consumers using “Azure” and other cloud-based services.

Many industry experts point to the tech giant’s current CEO Satya Nadella for focusing on strategic initiatives and tapping into potential markets its rivals such as “Alphabet” (Google) and Apple failed to capitalise on.

Microsoft’s impressive performance is also attributed to artificial intelligence (AI) besides its cloud-based services.

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Meanwhile, Microsoft repurchased $8.4 billion in shares and paid out dividends to its shareholders during the third quarter. By repurchasing shares, the company will reduce the number of outstanding shares. This will help boost the value of the company’s remaining shares and even potentially increase earnings per share.

Meanwhile, by paying out dividend, Microsoft provides its shareholders with a portion of its profits, as a form of “thank you” for their investment. These actions are common practices for companies looking to grow their shareholder value.