Microsoft’s cloud business continues to gain momentum.
The technology giant said Thursday that its cloud unit’s annualized revenue run rate reached $20.4 billion, marking an important milestone for the company in showing investors that its business is growing. Microsoft calculated that number by taking the cloud unit’s best month in its fiscal first quarter ending Sept. 30 and then multiplying it by 12.
Microsoft CEO Satya Nadella told analysts during the company’s quarterly earnings call on Thursday that hitting the number means that the company is “outpacing the goal we set just two years ago.” In Oct. 2015, Nadella predicted that Microsoft would hit $20 billion in annual cloud sales by 2018.
Under Nadella, Microsoft has been pitching its cloud business as its future and away from its older slower growing businesses like its Windows operating system for personal computers. Microsoft’s (MSFT) cloud business includes the Azure cloud computing service, Office 365 workplace software, Dynamics 365 database, and other services.
Although Microsoft bragged about its annual run rate for cloud sales, the reality is that the number is quite fuzzy. The $20.4 billion the company cited is merely an annual projection based on one month’s performance.
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Unlike its rival Amazon (AMZN), Microsoft does not disclose sales of its Azure cloud computing service, which is akin to Amazon Web Services. In these businesses, Amazon and Microsoft sell computing services in a pay-as-you go model.
Microsoft’s shares rose 4.25% in after-hours trading on Thursday to $82.11