Microsoft Corp. continued its recent record of smashing earnings expectations with fiscal fourth-quarter results that handily beat analyst estimates on growth in its cloud business that has accelerated since last quarter.

The company reported sales of $46.2 billion today, up 21% from the same period last year. Profit surged 47%, to $2.17 a share, well ahead of analysts’ estimates of $1.90.

After initially declining about 2% when results were announced, Microsoft shares rallied and were up about 1.5% after-hours. The stock is up nearly 30% for the year, compared with about a 20% gain in the S&P 500.

Microsoft’s Azure cloud turned in a particularly impressive performance, growing 51% year-over-year compared with an average of 50% growth the past two quarters, although in constant currency the increase was 45%. Microsoft doesn’t break out Azure revenue but it said revenue in the division it calls “Intelligent Cloud,” which includes Azure, rose 26% in constant currency, to $17.4 billion. Analysts had expected revenue of between $16.2 billion to $16.45 billion. Chief Financial Officer Amy Hood said “Azure revenue growth should remain relatively stable” through the next quarter.

Microsoft said its commercial bookings grew 30% in the quarter, with 36% growth in its Commercial Cloud revenue to $19.5 billion. Commercial Cloud segment $69 billion in annual revenue, up 34% for the year said Chief Executive Satya Nadella. “We are seeing revenue growth across industries, customer segments and geographies with over 50% of sales coming from outside the U.S.,” he said. One negative surprise: a 23% drop in sales of the Surface portable computer line, which is a small part of the overall business.

“The only weak area was in Windows and Surface, which were down, but that was due to microchip supply issues, not any lack of demand,” said Andrew Bartels, a principal analyst at Forrester Research Inc. “Intelligent Cloud was the star.”

Bartels noted, however, that last year’s comparable core “included the depths of the pandemic recession, so Microsoft’s growth comes off of a relatively low base.” He said favorable exchange rates also helped boost the numbers.

They also helped mask what the analyst said was relatively weak quarter-over-quarter growth in Azure, which he estimated at 3%. “I think it is likely that Azure’s quarter-to-quarter revenue growth did slow, and that would be a sign that year-over-year growth rates in future quarters could drop to 40% or even 30%,” he said.

Revenue in Productivity and Business Processes was $14.7 billion and increased 21% in constant currency led by Office 365 Commercial revenue growth of 20% and 42% growth in LinkedIn revenue, influenced no doubt by a surge in hiring following reopenings. LinkedIn surpassed a run rate of $10 billion in annual revenue, up 27%. “In the past five years since our acquisition revenue has tripled and growth has accelerated,” Nadella said, noting the sessions were up more than 30% and LinkedIn advertising revenue surpassed $1 billion in the quarter.

The Dynamics line of products and cloud services grew 26% in constant currency with the Dynamics 365 line of enterprise resource planning and customer relationship management applications growing 42%.

Revenue in the segment Microsoft calls “More Personal Computing” rose 6% in constant currency, to $14.1 billion, with the Windows Commercial products and cloud services revenue jumping 14%.

With Zoom Communications Inc. having stolen a lead in the videoconferencing market and a $108 billion marketing capitalization during a surge of pandemic-related activity, Nadella took time to put in a plug for Microsoft’s Teams collaboration platform.

“Teams usage has never been higher with more than 250 million active monthly users,” he said. “Teams is at the center of orchestrating collaboration across the entire [software-as-a-service estate from human resources to marketing to finance. And we’re just getting started.”

Hood issued a bullish forecast for fiscal 2022, saying the company expects “healthy double-digit revenue and income growth.” Pund-IT’s King said Microsoft’s strong performance, particularly in the cloud, is a testament to the board’s wisdom in appointing him in 2014.

In reiterating its buy rating and raising Microsoft stock’s price target to $325 from $288 today, Mizuho Securities USA LLC asserted that “we maintain our view that Microsoft’s growth opportunities over the medium-term and beyond are greater than many realize and that Microsoft is positioning for materially greater success in the cloud.”

“His leadership of the company’s cloud group was perfect preparation for where Microsoft and much of the rest of the market have gone since then,” he said. “Nadella’s deep technical experience and business acumen also made him an antidote for the dumb mistakes and self-inflicted injuries that were all too common during the last phase of [former CEO] Steve Ballmer’s leadership.”

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