Tech giant Microsoft’s (NASDAQ:MSFT) latest quarterly earnings featured impressive gains by its Azure cloud platform, which prompts the question, which of Canada’s public companies are most likely to benefit from Azure’s success?
Ralph Garcea of Echelon Wealth Partners recommends four: CGI Group (TSX:GIB.A), Nubeva (TSXV:NBVA), Trakopolis (TSXV:TRAK) and the soon to be trading Fusion Agiletech/Quisitive (TSXV:QUIS).
Cloud-based software and services are continuing to gain widespread acceptance, allowing the two dominant players in the field —Microsoft Azure and Amazon Web Services— to keep growing their subscribers.
Azure is a case in point. Microsoft’s third quarter fiscal 2018 earnings was delivered in late April, with revenue of US$26.8 billion, an increase of 16 per cent from Q3 of FY2017, with its net income up 35 per cent at US$7.4 billion.
The company’s largest division, More Personal Computing, was up 13 per cent year over year, but its Intelligent Cloud segment had the most impressive stat: revenue growth from Azure was up 93 per cent year over year.
“Our results this quarter reflect the trust people and organizations are placing in the Microsoft Cloud,” said CEO Satya Nadella in a statement. “We are innovating across key growth categories of infrastructure, AI, productivity, and business applications to deliver differentiated value to customers.”
That growth is indicative of the trend in enterprise IT towards multi-cloud architectures, says Garcea. “There is no doubt that cloud adoption has gone mainstream from an enterprise perspective,” says Garcea in a report to clients on Monday. “The question is how do we play this growth opportunity for Canadian investors?”
IT consulting company CGI Group is sure to benefit, says Garcea, as the company has more than 8,000 certified professionals around the world working with Microsoft technologies, providing clients with expertise on implementation, support, management and integration of Microsoft products.
SaaS cybersecurity company Nubeva Inc. also has close ties to Azure, says Garcea, as it develops and sells software that enables companies to run their security controls from inside public cloud platforms like Azure and Amazon’s AWS. “As industry applications, workloads, and network traffic migrate to the cloud, cloud-enabled visibility and security technologies are increasingly necessary to monitor and secure critical operations,” he says.
Calgary-based Trakopolis will also do well, since its cloud-based platform to track IoT assets runs on Azure, while, lastly, Fusion Agiletech/Quisitive has what Garcea deems an industry-leading strategic partnership with Microsoft, centred around Fusion’s AI and blockchain tech consulting services.
“MSFT continues to increase its share of enterprise IT spending as global companies move to multi-cloud architectures, initiate large digital transformation initiatives, and MSFT’s positioning for hybrid cloud architectures via the Azure Stack,” says Garcea.