Posted by on
Categories: Azure IBM Microsoft

It’s safe to say CEO @Satya Nadella’s transformation efforts are paying off in a big way. @Microsoft (NASDAQ: #MSFT) absolutely crushed 2017 and is picking up right where it left off so far this year. Microsoft stock hit an all-time high on Jan. 23, which may be a bit concerning to some investors. But even with its stellar run, the basis for so much bullishness is warranted, which bodes awfully well for Microsoft shareholders. Microsoft’s cloud sales get much of the attention, and for good reason. However, the really good news is that cloud-related sales won’t be the only growth driver in the months and years ahead.  IMAGE SOURCE: GETTY IMAGES. Laying the foundation Heading into Microsoft’s fiscal 2018 second-quarter earnings release on Jan. 31, it would be shocking if it reported anything other than outstanding results. One of the reasons Microsoft will almost certainly share good earnings news is the recurring revenue foundation it has established. Last quarter’s annual cloud revenue run rate of $20.4 billion isn’t merely an industry standard; it’s also recurring revenue investors can rely on well into the future. Microsoft, similar to another cloud leader IBM (NYSE:IBM) and its $17 billion annual cloud revenue run rate, has built its ongoing revenue base by focusing on Software-as-a-Service (SaaS) and Business-Process-as-a-Service (BPaaS) solutions. Unlike some cloud providers that offer little more than hosting, Microsoft recognized early on its Azure platform is a means to an end. Much as IBM delivers its suite of cognitive computing, data security, and analytics solutions via the cloud, Microsoft utilizes Azure to generate SaaS and BPaaS revenue. Outside of advertising, SaaS and BPaaS are expected to be the leading source of worldwide cloud revenue this year. SaaS tops the list of cloud revenue solutions with an expected $55.14 billion in sales this year. BPaaS won’t be far behind, projected to garner an impressive $47.56 billion in revenue in 2018.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.