That was far better than the $3.2bn loss for the same period past year when Microsoft booked hefty charges on writing down the value of mobile phone assets it bought from Nokia.
This segment, which includes results for Windows licensing and devices (Surface, phones, and Xbox), declined 4 percent to $8.9 billion.
The company's Productivity and Business Processes segment recorded a 5% increase in revenue or 8% in constant currency, bringing it to $7 billion.
Corporate versions of the Office 365 cloud-based productivity software saw revenue increase by 54 per cent, the Redmond, Washington-based company said. Office consumer products and cloud services were up 19%, and consumer subscribers for Office 365 hit 23.1 million. Instead, investors are bidding up the stock in after-hours trading this afternoon on revenues that topped expectations and earnings that crushed estimates.
"The Microsoft Cloud is seeing significant customer momentum, and we're well positioned to reach new opportunities in the year ahead", said Nadella in a statement. For the previous quarter, Microsoft reported $22.1 billion in sales.
Microsoft came up with its quarterly earnings report on Tuesday for the quarter that ended on June 30.
CEO Satya Nadella was upbeat about the growth, claiming it as proof that his cloud and mobile strategy is paying dividends.
Previously, the analysts forecasted the company to report EPS of 58 cents on revenue of $22.14 billion.
Microsoft says that it had a $12.1 billion "run rate" for commercial cloud products in the last quarter.
Amy Hood, chief financial officer, said during a conference call with analysts following the earnings announcement that Microsoft should obtain more benefits in the coming year after investing in cloud infrastructure.
Microsoft last month agreed a deal to buy professional networking website LinkedIn for $26bn - by far the biggest acquisition in the company's history. Phone sales fell 71% during the quarter but the company likely saved around $500-800 million in reducing hardware activities.
Microsoft will mark the one-year anniversary of Windows 10 with a major update to the software. "Deferred revenue growth was pretty decent", Parakh said. It blamed pulling out the smartphone business as a reason to likely miss the 1-billion Windows 10 devices target by 2018.