Microsoft profit, revenue beat estimates on cloud growth

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Microsoft profit, revenue beat estimates on cloud growth

FILE PHOTO: The Microsoft sign is shown on top of the Microsoft Theatre in Los Angeles, California, U.S. October 19,2018. REUTERS/Mike Blake

(Reuters) – Microsoft Corp beat Wall Street estimates for quarterly profit and revenue on Wednesday, powered by adoption of its Azure cloud computing service and the subscription version of its Office software.

Shares rose 3 percent after the bell, adding to the about 23 percent gain so far this year. The shares touched a record high of $125.85 during regular trading hours.

Under Chief Executive Satya Nadella, the company has spent the past five years shifting from reliance on its once-dominant Windows operating system to selling cloud-based services.

Azure, Microsoft’s flagship cloud product, competes with market leader Amazon.com’s Amazon Web Services (AWS) to provide computing power to businesses.

But growth in the unit dipped to 73 percent in the latest reported quarter. Azure reported revenue growth of 76 percent in the company’s fiscal second quarter.

Microsoft’s so-called “intelligent cloud” unit, which contains its Azure services, posted revenue of $9.65 billion, above Wall Street estimates of $9.28 billion, according to IBES data from Refinitiv.

Total revenue rose 14 percent to $30.57 billion in the third quarter ended March 31, beating analysts’ average estimate of $29.84 billion, according to IBES data from Refinitiv.

Earnings per share were $1.14 versus expectations of $1.

Net income rose to $8.81 billion, or $1.15 per share, from $7.42 billion, or 96 cents per share, a year earlier.

Reporting by Sayanti Chakraborty in Bengaluru; Editing by Sriraj Kalluvila