Microsoft’s cloud services strategy paying off, according to Q4 earnings

Microsoft Corp. expanded its partnerships with some key companies in 2019, and Satya Nadella, Microsoft’s chief executive officer, attributed the company’s strong commercial cloud business performance in Q4 to those recent moves.

“Azure is the most open cloud, and in this quarter, we expanded our partnerships with Oracle, Red Hat, and VMware, to make the technologies and tools customers already have first class on Azure,” said Nadella during an earnings call last week. “Our Commercial Cloud business is the largest in the world surpassing $38 billion in revenue for the year with gross margin expanding to 63 per cent. The world’s leading companies trust Azure for their mission-critical workloads, including more than 95 per cent of the Fortune 500. And just yesterday AT&T chose our cloud in one of the largest cloud commitments to date.”

AT&T has for months touted its “public cloud-first” strategy, with the goal of moving the majority of its non-network workloads onto the public cloud by the year 2024.  That goal took its first big step forward last week when AT&T and Microsoft announced a reported $2 billion deal. It’s a big win for both companies – Microsoft gets a major boost in the public cloud war for dominance against Amazon, while AT&T realizes its “public cloud-first” vision that also lays the ground work for future AI, IoT and 5G-related solutions.

Microsoft’s commercial cloud solutions continue to drive a major portion of the company’s business in 2019, totaling almost one third of the company’s total revenue for the quarter; checking in at $11 billion USD of the companies $33.7 billion USD total revenue for Q4.

After breaking $100 billion in yearly revenue for the first time in 2018, that growth did not slow down, as the company reported $125 billion in yearly revenue for 2019.

Canada also received a brief mention during the call, as Nadella cited the Surface’s strong performance the country.

“In Surface, revenue grew 14 per cent and 17 per cent in constant currency driven by strength in our commercial segment, particularly in the U.S., Japan, and Canada,” he said.


Our thanks to investment research platform Seeking Alpha for the transcriptions from Microsoft’s July 18 Q4 earnings call.

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Buckley Smith
Buckley Smith
Staff writer for IT World Canada. Covering the world of technology as it applies to business. Buckley is an avid sports fan who loves travel, food, and music. Can be contacted at [email protected] or 416-290-2000.

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