Microsoft profits jump despite cloud growth slowdown

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"We're excited to help our customers build the digital capability they need to thrive and grow, with a business model that is fundamentally aligned to their success". The gross margin percentage increased because of material improvements in Azure gross margin offset by an increased mix of cloud offerings.

Microsoft's shares were up 3.4 percent to $105.84 in after-hours trading Wednesday, after slipping 5.4 percent in the regular trading session amid a broad sharp market decline. For FY19 Q1, Microsoft's Intelligent Cloud saw a 75% revenue hike for its Azure cloud, and the company's Server products/cloud services also grew by about 28%.

The software giant has now beaten analysts' revenue estimates 20 of its last 21 quarters.

It appeared that spending by companies on cloud is accelerating, with Microsoft and Amazon in a "two horse race" as leading platforms, according to Wedbush.

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Microsoft (MSFT) announced its Q1 2019 earnings on Wednesday, beating analysts' projections.

Overall, Microsoft's "more personal computing" segment grew 15 percent overall to $10.7 billion in revenue - the biggest of Microsoft's main three categories it tracks.

Microsoft now has three reporting segments: Productivity and Business Processes (covering Office, Exchange, SharePoint, Skype, Dynamics, and LinkedIn), Intelligent Cloud (including Azure, Windows Server, SQL Server, Visual Studio, and Enterprise Services), and More Personal Computing (covering Windows, hardware, and Xbox, as well as search and advertising).

Nadella said a keenly-anticipated "X Cloud" video game streaming service is in "early days" but he is excited by the prospect of a service that will let players access console-quality titles on all kinds of internet-linked devices.

"I am most excited about the core (Xbox) community and content we have; I think that is what even gives us permission to think about streaming". It also returned $6.1 billion to shareholders in dividends and share repurchases during the quarter, up 27% from a year ago.