In the company's Productivity and Business Processes division, which includes Office 365, revenue rose 17 percent over previous year to $9 billion but was almost flat compared to last quarter.
Revenue in the three months ended in March rose 16% year over year to $26.82 billion, yielding earnings per share of 95 cents. In this division, Windows OEM revenue increased 4% and Windows commercial products and cloud services reported an increase in revenue of 21%. In the same period a year ago the company reported EPS of $0.70 on revenues of $23.2 billion.
Microsoft's commercial cloud business revenue rose by 58% to $6 billion; the margins improved as well to 57%.
The company had an Operating Income of $8.3 billion with Net Income coming in at $7.4 billion. "We are innovating across key growth categories of infrastructure, AI, productivity, and business applications to deliver differentiated value to customers".
Intelligent Cloud hit $7.9B (+15%).
In terms of the divisions, revenue in More Personal Computing was $9.9 billion and increased 13%, the commercial cloud performed strongly during the quarter as well, with Azure recording a revenue increase of 93%.
The "More Personal Computing" unit saw a 13 percent revenue gain to $9.9 billion, and within that Windows revenues for personal computers were up some four percent.
Shares in Microsoft were little changed in after-hours trade despite the stronger-than-expected results.
Microsoft also saw an 18 percent in gaming revenue from its Xbox software and services, and a 32 percent rise from its Surface devices.
Microsoft's stock closed up more than 2 percent to $94.26 in Thursday's regular session.
In the fiscal third quarter Microsoft acquired data storage company Avere and gaming start-up PlayFab, and it announced a major reorganization that included the departure of Windows and Devices chief Terry Myerson from the company.