Microsoft beats forecasts as cloud service booms

Microsoft beat Wall Street forecasts for the fourth quarter as more businesses bought its cloud computing services and the latest version of its Office software.

The US tech giant’s net income rose to $8.9bn (£6.8bn), or $1.14 a share, from $8.1bn, or $1.03 a share in the three months to the end of June, while revenue rose 17% to $30.1bn.

Analysts on average had expected earnings of $1.08 a share and $29.2bn.

The forecast-beating performance was driven by an 89% revenue increase at the Azure cloud business, while sales of Office 365 rose 38%. Annual revenue topped $100bn for the first time, rising 14% to $110.4bn.

Satya Nadella, Microsoft chief executive, said: "We had an incredible year, surpassing $100 billion in revenue as a result of our teams’ relentless focus on customer success and the trust customers are placing in Microsoft.

"Our early investments in the intelligent cloud and intelligent edge are paying off, and we will continue to expand our reach in large and growing markets with differentiated innovation."

Microsoft’s investment in cloud computing is paying off as companies shift their work to the cloud to cut data storage and software costs. The company’s shares have risen 180% since Nadella took over in 2014 and turned the business’s focus on to the cloud and away from the low-growth market for PC software.

Microsoft bought code-sharing website GitHub in the fourth quarter for $7.5bn - one of a string of multimillion dollar cloud deals designed to speed up its expansion.