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How much is Azure’s revenue? Here’s an estimate.

Posted on November 1, 2020November 2, 2020 by Ellery

Azure’s revenue is not a public figure, but I wanted to try to estimate it as a business research exercise.

Calculation

This week, Microsoft released its Fiscal Year 21 Q1 (Jul. 2020 – Sept. 2020) earnings data. At the same time, MSFT also filed its FY21 Q1 Quarterly Report (Form 10-Q) to the SEC. I noticed the following paragraph in the 10-Q:

“Server products and cloud services revenue [in FY21 Q1] increased $2.0 billion or 22% [compared to FY20 Q1] , driven by Azure. Azure revenue grew 48%, due to growth in our consumption-based services. Server products revenue decreased 1% on a strong prior year comparable, with continued weakness in transactional licensing.”

— Form 10-Q

Now, I will make some assumptions:

  1. Azure is the dominant revenue generator in the “Server Products and Cloud Services” category (let’s call it SPCS).
  2. Server products play a secondary role in SPCS revenues.
  3. I assume other components in SPCS are negligible, since they aren’t mentioned in this 10-Q or any other filings I could find in the past 3 years.

Based on these assumptions, let’s construct some equations:

  • Let AR20Q1 be Azure revenue of FY20 Q1.
  • Let SR20Q1 be Server Products revenue of FY20 Q1.
  • (AR20Q1 + SR20Q1) is the total SPCS revenue of FY20 Q1, based on assumption #3.
  • According to the 10-Q quote above, AR21Q1 is 48% higher than AR20Q1, and SR21Q1 is 1% lower than SR20Q1.
  • Finally, the total SPCS revenue in FY21 Q1 was $2.0B or 22% higher than SPCS revenue in FY20 Q1. This means total SPCS revenue in FY20 Q1 was $2.0B / 22% = $9.1B, and total SPCS revenue in FY21 Q1 was $11.1B.

Now I arrive at the following system of equations:

  • AR20Q1 + SR20Q1 = $9.1B
  • 1.48AR20Q1 + 0.99SR20Q1 = $11.1B

Solving this equation gives:

  • AR20Q1 = $4.27B
  • SR20Q1 = $4.83B

And:

  • AR21Q1 = $6.32B

Results

So a very rough estimate is, for the quarter ended Sept. 30, 2020, Azure revenue was $6.32 billion. It grew 48%, year-over-year.

For comparison, AWS’s reported revenue for the same quarter was $11.60 billion. It grew 29%.

Notes about this result

  • This is a very rough estimate.
  • This result depends on some rather big assumptions, most importantly, that Azure and Server products are the only ones in the SPCS category.
  • If you factor in other numbers disclosed, such as Enterprise Services in the same category in previous 10-Q’s, result will be slightly different, because the assumptions underlying would be adjusted.
  • I do not use, nor do I have access to, internal revenue data at Microsoft. This exercise was done entirely based on data that Microsoft made publicly available.

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