Microsoft and SAP report positive quarterly earnings: Azure up 102 per cent, licences strong

Cloud boosts Microsoft's numbers while SAP's licencing revenues surprise analysts

Microsoft's revenues for the quarter ending June 30 were $22.6bn, a year-on-year rise of 2 per cent. This figure beat Wall Street's expectations of $22.1bn and drove the company's stocks 4 per cent higher yesterday.

Much of this increase was down to the popularity of its public cloud platform Azure, which the company said has enjoyed a growth rate of 102 per cent. Microsoft declines to give actual revenue figures for Azure, instead bundling its cloud platform in with its server software to form its "intelligent cloud" business. Intelligent cloud recorded a revenue rise of 7 per cent to $6.7bn.

"This past year was pivotal in both our own transformation and in partnering with our customers who are navigating their own digital transformations," said CEO Satya Nadella. "The Microsoft cloud is seeing significant customer momentum and we're well positioned to reach new opportunities in the year ahead."

The productivity and business process section of Microsoft grew by 5 per cent to $7bn. This section includes cloud-based Office 365 which saw very small increases in subscription revenues, as well other Office software and Dynamics CRM.

Personal computing was down 4 per cent year-on-year, hit by poor sales of Windows smartphones, revenues from which fell 71 per cent.

Microsoft recently admitted that its ambitious target to get Windows 10 running on one billion devices by 2018 is likely to be missed because of the failure of its smartphone business.

Weakness in phones was offset somewhat by sales of the Surface Pro (for which Microsoft does not give figures) and increases in advertising revenues from search of 16 per cent.

SAP surprises analysts

German enterprise software giant SAP also reported better-than-expected figures for the quarter. In this case the increases were seen in traditional licences rather than in cloud.

"SAP reported a second quarter with very strong operating profit and margin way above expectations," a Frankfurt-based trader told Reuters. "Revenues were in line as cloud revenues hit estimates while licenses surprised positively."

Software licenses were up by 10 per cent to €1.04bn, excluding the effect of foreign exchange rates. This greatly exceeded analysts' forecasts of a 1.8 per cent rise. SAP's second-quarter operating profit, excluding special items, was up 9 per cent to €1.52bn.