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Azure Revenue Growth Was 76% Last Quarter

The Microsoft Azure platform is still the king for Redmond based technology giant, even as it experienced its biggest slowdown in three years.

Or since the company started posting revenue growth for its cloud platform.

Overall, Microsoft had some really solid numbers to report for what was the first quarter of its fiscal year 2019. Sales climbed 19% to $29.1 billion, in the three months that ended September 30, while profit came in at $8.82 billion.

However, Azure revenue growth slowed to its lowest clip in years.

Although the company does not break actual revenue from Azure, it did reveal figures of 76% as the growth rate of its cloud computing product line.

Now, while that is pretty good for most companies, but represents a deceleration from the 89% growth the business had chalked up in the previous quarter. Matter of fact, this is the slowest growth since Redmond began to report growth rates in 2016.

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Microsoft ascribed this deceleration as the law of large numbers.

But CFO Amy Hood said during the conference call that Azure numbers on their own were less important than the overall hybrid demand for the company’s cloud services, which include its productivity applications and other products.

Analysts still believe it will be the key driver for Redmond and its businesses, as commercial cloud sales rose 47% to $8.5 billion in the quarter and margins widened by 4 percentage points to 62%.

And with cloud demand rising, Microsoft plans to continue to invest in new products and datacenters.

Capital expenditures, the company says, will increase this year, albeit at a slower pace than last year, as Redmond focuses on improving profitability in the division while still adding more customers.

The idea being to secure more large and long-term cloud deals, as well as deals that make use of its hybrid cloud — an implementation where some apps and data stay at customer facilities while others move to the Microsoft cloud platform.

Redmond expects second quarter sales for the cloud unit to come in anywhere between $9.15 to $9.35 billion. At the same time, commercial cloud margins will continue to widen.

So far, so good, eh?

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