Microsoft Corp. (MSFT) reported better-than-expected earnings for the third quarter amid strong demand for its Azure cloud computing services and Office 365 suite. MSFT shares jumped nearly 2.5 percent in the after-hours trading session on Thursday following the results.
The software maker giant growth was mostly driven by its cloud computing business as enterprises across the globe have started signing-up for cloud-based software to limit expenses.
Revenue at Microsoft’s flagship cloud product Azure climbed 93 percent in the quarter. It mainly competes in the market with Amazon Web Services (AWS).
Research firm Canalys estimated earlier this year that Azure holds 14 percent chunk of the cloud computing market, while AWS is leading with a 32 percent market share.
Overall, the Redmond, Washington-based company posted net earnings of $7.42 billion, or 95 cents a share for the three-month period ended March 31, as compared to $5.49 billion or 70 cents a share in the comparable quarter last year.
Revenue for the quarter came in at $26.82 billion, up 16 percent from the same period, one year ago. Analysts on average were expecting earnings of 85 cents a share on $25.77 billion in revenue.
The company’s productivity and business processes division generated revenue of $9 billion, up 17 percent from last year, and also above analysts’ average forecast of $8.73 billion.
Revenue at More Personal Computing unit jumped 13 percent, while revenue at its Surface business recorded a surge of 32 percent.
Microsoft’s capital expenditures rose to $3.5 billion in the quarter, as it has been spending more to build new cloud data centers to better compete in the market amid rising demand for cloud services. Earlier this year, the company announced that it will open data centers in Dubai and Abu Dhabi. It also plans to build two more in Germany.