Microsoft has reported better-than-expected financial results for the first quarter ended 30 September 2015, due to increasing demand for its cloud products.
Revenue however dropped 12% to $20.4bn Q1, compared to $23.2bn it reported during the year-ago period.
Net income increased 2% to $4.6bn, or $0.57 earnings per share, compared to $4.5bn, or $0.54 earnings per share, for the same period last year.
Productivity and business processes revenue declined 3% to $6.3bn, while revenue in intelligent cloud increased 8% to $5.9bn.
Revenue in more personal computing dropped 17% to $9.4bn. The company said even though Windows OEM revenue declined 6%, it was better than the overall PC market, supported by the launch of Windows 10, which is running on 110 million devices.
Microsoft returned $6.9bn to shareholders in the form of share repurchases and dividends during the quarter.
The results mark the first time the company has reported after consolidating five operating segments into three.
Microsoft CEO Satya Nadella said: "We are making strong progress across each of our three ambitions by delivering innovation people love.
"Customer excitement for new devices, Windows 10, Office 365 and Azure is increasing as we bring together the best Microsoft experiences to empower people to achieve more."
The company has been shifting its focus towards software and cloud services due to sluggish demand for the Windows operating system.
Microsoft chief operating officer Kevin Turner said:"We’re seeing great traction with businesses who want to bring Microsoft’s cloud, mobile device management technology and data analytics together to improve security and productivity resulting in almost 70 percent year-over-year growth in our commercial cloud run rate."
Microsoft has recently laid off about 1,000 employees from its phone division. Earlier this year, the company said it would cut 7,800 jobs.
