Ride the Cloud.
Microsoft posted a Street-beating bottom line of $8.87 billion in the three months ending in June, the company said following the close of trading Tuesday, with overall revenues rising 17.5% to $30.09 billion. Those gains were powered by a staggering 93% increase in sales for its flagship Azure clouding computing business, and solid growth for its productivity and business processes unit, which includes its Office 365 suite, where sales rose 13.1% to $9.67 billion.
"Our commercial cloud business surpassed more than $23 billion in revenue for the year with gross margin expanding to 57%," CEO Satya Nadella told investors on a conference call late Tuesday. "The strength of our results reflects accelerating innovation and the trust customers are placing in us to power their digital transformation."
"I shared our vision for the intelligent cloud and intelligent edge a little over a year ago, a vision that is now quickly becoming reality and impacting every customer in every industry," Nadella added. "Everything we have accomplished this year has been about accelerating our lead in this new era and the tremendous opportunity ahead."
Action Alerts Plus holding Microsoft shares were marked 3.4% higher at the opening bell, leading gainers on the Dow Jones Industrial Average and changing hands at $108.00 each, a move that extends the stocks's year-to-date advance to 25% and value the Redmond, Wa.-based group at just over $830 billion.
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Germany's SAP SE (AP - Get Report) boosted its full-year and near-term cloud computing sales forecasts as Europe's biggest tech company looks to ride a solid second quarter into a full-blown drive deeper into a $15 billion market dominated by Action Alerts PLUS holding Amazon Inc. (AMZN - Get Report) and Microsoft.
SAP said its second quarter cloud-related sales rose to just over €1.22 billion ($1.42 billion) in the three months ending in June, a 40% increase from the same period last year that topped analysts' forecasts. Although software licensing and support revenue is still the largest portion of SAP's sales, at €3.73 billion, that portion of the business only grew 3% from last year, SAP said.
Still, the solid cloud sales momentum allowed the Waldorf, Germany based group to lift its segment sales growth forecast for the full year to a range of 34% to 38%, ultimately leading to cloud subscription and services revenue of between €8.2 billion and €8.7 billion by 2020.