Microsoft reported a modest rise in profits Thursday in the past quarter, beating most analyst forecasts, saying its new focus on cloud-based software is delivering results.
The US tech giant said profit in the quarter ended September 30 edged up two percent to $4.6 billion, while revenue dipped 12 percent to $23.2 billion, hit by currency movements.
"We are making strong progress across each of our three ambitions by delivering innovation people love," said chief executive Satya Nadella.
"Customer excitement for new devices, Windows 10, Office 365 and (cloud computing service) Azure is increasing as we bring together the best Microsoft experiences to empower people to achieve more."
In after-hours trade, Microsoft shares jumped more than six percent to $51.08 on the stronger-than-expected results.
Barclays analyst Raimo Lenschow called it a "strong and clean quarter" for Microsoft, saying the company "exceeded consensus on most metrics."
Revenue -- although down -- beat expectations and cost cutting had some success, Lenschow said in a note to clients.
Under Nadella, Microsoft has been shifting to offer more services through the Internet cloud to adapt to a new landscape in which mobile devices have become more important.
While Microsoft Windows remains the dominant PC operating system it has lost leadership to Google and Apple in mobile.
Microsoft said that in the just-ended fiscal first quarter, "intelligent cloud" revenue grew eight percent while personal computing revenue slipped 17 percent.
Revenue from its mobile phone operations slumped 54 percent from a year ago as it cut back on its handset business acquired from Nokia.
"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," said Kevin Turner, chief operating officer at Microsoft.
Microsoft earlier this month unveiled its first Windows 10 smartphones as it launched its first laptop, the Surface Book.
The launch marks the latest step by Nadella to build on the July release of Windows 10, which is running on 110 million devices around the world.