Microsoft managed to beat analyst expectations by reporting better than forecasted revenues and profits.
However, net profits still fell to $4.5 billion from $5.2 billion from the same period a year ago, a fall of 13 per cent. Revenue increased to $23.2 billion, which is higher than analysts anticipated.
The software giant's Q1 financial results included a bill for integration and restricting expenses of $1.14 billion as the firm digested its acquisition of Nokia's phone business. The firm recently ditched the Nokia name.
The restructuring did not dent earnings for Microsoft from its Devices and Consumer unit. Buoyant sales of its Xbox games console and Surface computers helped increase revenue by 47 per cent to $10.96 billion. Nearly a billion dollars of sales were recorded for Surface, an increase of 127 per cent for the range.
The firm also shifted 2.4 million Xbox units in the last quarter, up 102 per cent on the previous year. Microsoft did not break down sales between Xbox One and Xbox 360.
Revenues from its commercial side also grew 10 per cent to $12.28 billion. Server products and services revenue increased 13 per cent, with double-digit growth for SQL Server, System Center and Windows Server.
The cloud also helped Microsoft. Office Commercial products and services revenue grew five per cent as customers transition to its cloud-based productivity suite Office 365. Commercial cloud revenue increased 128 per cent driven by Office 365, Azure and Dynamics CRM.
Microsoft Windows operating system appeared to have not so rosy growth. The firm said licensing from consumer Windows drove unspecified "positive unit growth" and did not divulge numbers, while non-Pro OEM licensing declined 1 per cent
Microsoft chief executive Satya Nadella said in a statement that the firm was "positioned for future growth".
"Our teams are delivering on our core focus of reinventing productivity and creating platforms that empower every individual and organisation," he said.
