The cloud was one of the priorities for Chief Executive Satya Nadella, who took over in early 2014 and was worried about the stagnation in Redmond’s Windows business.
Microsoft along with Amazon is likely to see 80 per cent growth each year for at least two or three years. Microsoft's revenue in what it calls its "intelligent cloud" businesses, which includes the Azure cloud platform and server software, rose seven percent to $6.7 billion.
Azure grew 102 percent, but Microsoft did not say what the actual revenue figure was.
However that means it makes $12.1 billion for cloud-related revenue, up sharply from over $8 billion a year ago.
Despite the boost in revenue, Microsoft is still struggling to increase profit in the capital-intensive cloud business. It said operating profit in its intelligent cloud businesses fell 17 percent to $2.19 billion in the quarter.
Microsoft said the drop was mainly due to higher research, development, sales and marketing costs, as it makes investments and acquisitions to "drive cloud sales capacity and innovation".
Microsoft posted revenue for its fiscal fourth quarter ended June 30, adjusted for some one-time items, of $22.6 billion, up 2 percent from a year ago. That beat Wall Street's average forecast of $22.1 billion.
It reported net income of $3.1 billion, or 39 cents per share, compared with a loss of $3.2 billion, or 40 cents per share, a year earlier. In the year-ago quarter it took a $7.5 billion charge to write down the value of its purchase of Nokia's handset business.
Office consumer products and cloud services were up 19 percent and Office 365 increased subscribers to 23.1 million during the quarter.
This means that people predicting that Office was dying were wrong. Microsoft shares are up 64 percent since his predecessor the shy and retiring CEO Steve Ballmer announced his plan to retire, in August 2013.