Microsoft last night forecast sales for its cloud computing services that topped analysts' estimates, despite quarterly growth slowing for its Azure business.
Microsoft said it expected "intelligent cloud" revenue of $11.25 billion to $11.45 billion for its fiscal second quarter, above analysts' consensus of $11.2 billion, IBES data from Refinitiv showed.
Revenue from Azure grew 59% in the fiscal first quarter ended September 30, well below the 76% the same time last year and slightly lower than analysts' estimates.
Microsoft also expects "double-digit" percentage growth in both revenue and operating income for its fiscal 2020, company executives said on a conference call.
Since chief executive Satya Nadella took over in 2014, Microsoft has been diversifying from its Windows operating system software.
It has focused on its cloud services, which allow customers to move their computing work to data centres managed by Microsoft.
Worldwide spending on cloud infrastructure services grew nearly 38% year-on-year in the calendar second quarter to $26.3 billion, according to data from research firm Canalys.
Amazon.com's Amazon Web Services still dominates the market with a 31.5% share, followed by Microsoft with 18.1%.
Strength in the cloud business powered Microsoft's market value past $1 trillion for the first time in April.
However, the business faces intense competition from Amazon.com and Alphabet's Google.
Microsoft beat Wall Street expectations for its overall revenue and its intelligent cloud segment, which contains Azure, marking $33.1 billion in overall sales and cloud unit sales of $10.8 billion.
Microsoft also beat expectations in other segments. It forecast sales from a division that includes LinkedIn and Office software to range from $11.3 billion to $11.5 billion, in line with analysts' consensus estimate of $11.4 billion.
The technology company's personal computing division accounted for the largest share of its first-quarter revenue, rising 4% to $11.13 billion.
The unit includes Windows software, Xbox gaming consoles, online search advertising and Surface personal computers.
Windows results were boosted by 19% revenue growth for business computers, which was offset by a 7% decline for consumer PCs.
Mike Spencer, head of investor relations for Microsoft, said Google Chromebooks continued eat into Windows revenue for entry-level laptops.
But Microsoft forecast current-quarter revenue of $12.6 billion to $13 billion for the personal computing division, below analysts' consensus estimate of $13.38 billion.
Net income rose 21% to $10.68 billion, or $1.38 per share, while total revenue rose 14% to $33.06 billion.
Analysts had expected a profit of $1.25 per share on revenue of $32.23 billion, according to IBES data from Refinitiv.