Satya Nadella president and CEO of Microsoft

Satya Nadella, president and CEO of Microsoft.

Microsoft Earnings Expected to be Driven by Cloud

Microsoft's earnings will be released today, and according to Forbes, it's expected that its cloud products will be a key driver in its growth. Here's what you should know.

Microsoft (MSFT) will be releasing its second quarter financial results, and it's likely that much of the company's expected growth will be attributed to its various cloud services and offerings.

As noted by Forbes, Microsoft has been transitioning itself from a traditional software and operating system company that based its sales on license revenue to a more cloud-based firm that aims to achieve revenue from subscriptions. It hasn't been an easy road, but Microsoft has made significant progress over the last year.

The company, which currently has annual revenue of $96 billion, was known to have most of that revenue come from perpetual license sales. But that's all in the past. As noted in the Forbes article, things have changed significantly at Microsoft, and the companys is now much more focused on the cloud.

Cloud services have been on the rise at Microsoft, and it's expected that Microsoft's fiscal 2015 second quarter financial statements will show that cloud is driving the company's growth. Traditional software is in decline, whereas cloud-based software-as-a-service (SaaS) offerings are on the rise. And that's true of Microsoft's Office 365 and Azure offerings.

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As for its infrastructure-as-a-service (IaaS) offering, Microsoft's gains over the last year are impressive. In IaaS, it has become the clear number two, with only Amazon Web Services ahead of it. In SaaS, Microsoft has gained significant market share with Office 365. Although it continues to do battle with Google for cloud-based office productivity mindshare, Microsoft does have the familiarity of the Office brand to help it gain traction.

For the first quarter of fiscal 2015, Microsoft showed a 147 percent growth in cloud revenue. That includes both Office 365 and Azure. It's a very strong number, and it's likely Microsoft will once again show significant growth in cloud revenue for Q2.

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