Microsoft Aims for $20 Billion Cloud Sales Run Rate in 2018

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Microsoft Corp. wants to reach annualized revenue of $20 billion in its corporate cloud business in the fiscal year that ends in June 2018.

Chief Executive Officer Satya Nadella announced the run-rate goal for cloud services at a meeting Wednesday with analysts during the software maker’s Build conference in San Francisco. In the current fiscal year, the company will have a gross margin for its commercial cloud business of 44 percent, said Chief Financial Officer Amy Hood.

The company last week said it has a current run rate of $6.3 billion for the cloud business, which includes its Azure data-center services and cloud versions of Office software and customer management programs. Azure competes with Amazon.com Inc.’s Web-services business. Microsoft’s commercial cloud business has seen revenue more than double in each of the past seven quarters.

Run rate refers to quarterly revenue presented on an annualized basis.

Hood also predicted that Microsoft’s operating costs for the fiscal year beginning July 1 will be the same as in the current year, and the company will continue to incur capital expenses to support its cloud ambitions.

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