Microsoft reported that during the third quarter 270 million monthly active devices were running the new Windows 10 operating system.
Results were hurt however by higher tax expenses due to the changing mix of revenue across geographies, as well as between cloud services and software licensing.
Amy Hood, Microsoft's chief financial officer, said her company's operational and financial discipline helped drive a solid quarter.
Largely driven by offerings like Office 365 and Dynamics CRM and ERP, the company's Productivity and Business Processes segment generated $6.5 billion in sales, a 1 percent year-over-year increase, or 6 percent using constant currency calculations that account for currency fluctuations.
Windows revenue from computer makers declined 2% in constant currency, even as the uptake of Microsoft's nine-month-old Windows 10 has been rapid.
Its Surface lineup continues to perform well, seeing an increase of 61% thanks to devices like the Surface Pro 4 and Surface Book. Here are some of the highlights from Microsoft's latest earnings report.
Windows OEM revenue is down two percent in constant currency, but Microsoft says this performance is actually better than that of the PC market as a whole.
Microsoft on Thursday, April 21, reported a 25% plunge in quarterly profits as the company navigated away from its role as a software seller to a services model.
There's also been growth all-round in Microsoft's cloud services, with Office commercial revenue growing 7 percent and Office consumer revenue growing 6 percent.
In what analysts said was a bright spot, its More Personal Computing division - Microsoft's largest - saw sales gain 1% to $9.49 billion and operating profit increase 57% to $1.65 billion.
Microsoft profits for the quarter came in at $3.8bn, down from $5bn a year ago. Operating income for the segment declined by 14%, to $2.19 billion.
The worldwide business of Microsoft was hurt by a strong USA dollar, as well as declining PC sales. Still, the company said, this quarter's result outperformed the overall PC market.
Many investors gauge Microsoft's cloud strength by looking at what it calls its commercial cloud, a separate measure that includes cloud businesses such as Azure and Office 365 software.
Not surprisingly, revenue from Windows revenue declined. 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.