Microsoft blows Wall Street away as cloud sales soar

Commercial unit's sales up 10 per cent annually

Microsoft has wowed Wall Street after posting revenue growth of more than a quarter in Q1, driven by strong demand for cloud services and devices.

For the three months to 30 September, the software giant's net income took a 13.4 per cent tumble to $4.5bn (£2.81bn) on sales which shot up by 25.2 per cent over the same period to $23.2bn – smashing analysts' expectations of $22bn.

The results reflect $1.14bn of expenses relating to the huge tranche of job cuts it announced in the summer and its acquisition of Nokia's mobile unit, which closed this year.

Its Devices and Consumer unit revenue grew 47 per cent year on year to $10.96bn, driven partly by the Surface Pro 3 launch which saw sales in the Surface unit reach $908m during the quarter.

Its Commercial business was up 10 per cent to $12.28bn thanks to rocketing growth in its business cloud offerings, which Microsoft chief executive Satya Nadella said was outperforming the industry.

"Our commercial cloud revenue grew 128 per cent year over year – the fifth consecutive quarter of triple-digit growth," he said on an earnings call. "In fact, we are the only company with cloud revenue at our scale that is growing at triple-digit rates. And 80 per cent of the Fortune 500 are now on the Microsoft cloud."

Elsewhere in the Commercial arm, server products and services sales soared 13 per cent annually, thanks to double-digit growth in SQL Server, System Centre and Windows Server products.

Looking ahead, Nadella (pictured) said the coming launch of Windows 10 will be the "best ever" for businesses.

The firm's chief financial officer Amy Hood said FY15 was off to a good start.

"We delivered a strong start to the year, with continued cloud momentum and meaningful progress across our device businesses," she said.

"We will continue to invest in high-growth opportunities and drive efficiencies across the organisation to deliver long-term shareholder value."