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Microsoft Reports Record Quarterly Revenue Thanks to Booming Cloud-Computing Business

Microsoft’s quarterly sales and profit topped estimates on the strength of the company’s cloud-computing business, which racked up clients for Azure web services and Office productivity software.

Profit before certain items in the fourth quarter, which ended June 30, rose to $1.37 a share, compared with the $1.22 average forecast of analysts polled by Bloomberg. Revenue rose 12% to $33.7 billion, the Redmond, Wash.-based company said Thursday in a statement, compared with the $32.8 billion projection. Azure cloud sales rose 64%, compared with 73% growth in the previous quarter and 76% in the one before that.

Chief Executive Officer Satya Nadella is working to keep up a steady flow of cloud deals, seeking to center Microsoft’s strategy on web services and narrow the gap with market leader Amazon. As more companies move to the cloud and upgrade aging software, they’re signing up for Azure and newer products like Microsoft 365—a package of Office 365 cloud software, Windows 10 and security programs.

“Everything has been going well for them,” said Sid Parakh, a portfolio manager at Becker Capital Management, which counts Microsoft as its biggest holding. “It’s the structural winner right now—as more and more companies move to the cloud, it’s largely Amazon and Microsoft in the running for those deals.”

Net income in the quarter was $13.2 billion, or $1.71 a share.

The company’s shares rose 1.6% in extended trading following the report. Microsoft shares rose 15% in the quarter, compared with a 3.8% gain in the S&P 500 Index. The company’s stock has jumped on optimism about the company’s cloud business, and on some investors’ belief that Microsoft is a safe haven as U.S. and European regulators sharpen their scrutiny of other large technology firms.

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