Nadella’s lead still working as Microsoft beats Wall Street targets on cloud services revenue

Microsoft CEO Satya Nadella
Microsoft CEO Satya Nadella

Microsoft posted quarterly profit and revenue that beat analysts’ estimates on Thursday, as more businesses signed up for its Azure cloud computing services and Office 365 productivity suite.

The company’s flagship Azure cloud product recorded revenue growth of 89pc in the fourth quarter ended June 30, with shares rising almost 4pc in after-hours trading.

Much of Microsoft’s recent growth has been fueled by its cloud computing business, which has benefited from companies rushing to shift their workloads to the cloud to cut data storage and software costs.

“The combination of the cloud, which is a megatrend that’s going to last for years to come, and the execution, this is company that knows how to sell and be innovative – it’s hard to argue with anything here,” said Tom Taulli, analyst.

Microsoft shares have risen 180pc since Satya Nadella took over as chief executive in 2014, refocusing the company on cloud computing rather than PC software. Its market cap edged above $800bn for the first time earlier this month.

Azure has a 16pc share of the global cloud infrastructure market, making it the second-biggest provider of cloud services after Inc’s Amazon Web Services, according to April estimates by research firm Canalys.

Revenue at Microsoft’s productivity and business processes unit, which includes Office 365, rose 13.1pc to $9.67bn, topping analysts’ average expectation of $9.65bn, according to Thomson Reuters.

Revenue for the company’s LinkedIn business and job network grew 37pc from the year-ago quarter, while its Dynamics 365 online business application suite posted a 61pc increase.