However, the company's overall revenue fell by 6% on the same period a year ago to 20.5 billion dollars (£14.3bn). Windows 10 is the fastest-growing version of Microsoft's operating system, and as of Thursday, it had been installed on 270 million devices, representing 35% growth from the previous quarter.
As Microsoft relies less and less on revenue from PCs and Windows licensing, the company is moving forward across a treacherous landscape to hopefully emerge highly profitable and competitive in the future world of Cloud computing.
The company blamed a higher than expected tax rate for part of the lower net income.
What's more, the company's phone revenue also dipped by 46 per, on top of last quarter's similar 49 per cent fall. Azure revenue grew 120% in constant currency, Microsoft said, with Azure SQL usage more than doubling. Analysts surveyed by FactSet were expecting adjusted earnings of 64 cents a share and revenue of $22.1 billion. Revenue from its Surface devices was up to $1.1 billion, a 61% increase year on year. Microsoft's hardware efforts were a mixed bag, with just 2.3 million Lumia smartphones sold in the three months to the end of March, compared to 8.6 million sold during the same quarter in 2015.
Microsoft reported that Office commercial products and cloud services revenue grew by 7%, driven by Office 365 revenue growth of 63% in constant currency - the exchange rate that eliminates the effects of exchange rate fluctuations.
Windows Phone now has a 2.54 percent share of the global mobile and tablet operating system market, according to March data from the Web and mobile analytics firm Net Applications. The commercial cloud segment of the company clubs together revenues from Azure and Dynamics CRM Online as well as Enterprise Mobility Suite (EMS), along with Office 365 business services, which encompasses Exchange Online, SharePoint Online and Skype for Business Online.
Meanwhile, "the intelligent cloud" was one of the key focus areas of Microsoft executives during the company's quarterly earnings calls.
"For the first time, we're opening up Office 365 not just as an enterprise tool in the service, but as a developer platform", he said. Revenue grew 1% to $6.5bn.
There was good news on the Xbox front too, with Xbox Live active users rising by 26% compared to past year, with 46 million players now using the service.
Run rate are fictionalizedprojected earnings that firms like Microsoft are throwing out "run rates" to convince Wall St their cloud business is real and long term. During its fiscal third quarter, Windows 10 continued to benefit Bing, as Microsoft's search advertising revenue excluding traffic acquisition costs rose 18% on a constant currency basis.
Source: Future of Microsoft's Phone Business in Question After Lumia Sales Plummet
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