Microsoft posted quarterly profit and sales that beat Wall Street's expectations on Thursday, as strong growth in hardware and cloud computing canceled out a stronger U.S. dollar's drag on international business.
The software and technology company posted earnings of 61 cents per share on $21.73 billion in revenue for its fiscal 2015 third quarter. Profit dropped 10 percent while sales increased 6 percent from the year-earlier period.
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"Customers continue to choose Microsoft to transform their business and as a result we saw incredible growth across our cloud services this quarter," said Microsoft CEO Satya Nadella in a release.
Shares were up 3 percent in extended trading. (Click here to see how Microsoft shares are doing now.)
Analysts expected Microsoft to post quarterly earnings of 51 cents per share on $21.06 billion in revenue, according to a consensus estimate from Thomson Reuters.
Sales in commercial cloud computing, which includes Office 365 and Azure services, soared 106 percent year-over-year, helping Microsoft overcome declines in commercial Office and licensing segments. Microsoft has attempted to shift to cloud and mobile-based revenue streams as more consumers shift from personal computers.
Nadella in Microsoft's earnings call touted the cloud business. He noted that Office 365 has 50 million active monthly users, while 50 trillion objects are stored in Azure.
Revenue in the company's devices and consumer segment floated 8 percent higher year-over-year. Sales of Surface tablets rose 44 percent from the previous year to $713 million, while advertising revenue in the company's Bing search engine grew 21 percent.
Xbox Live video game usage also climbed 30 percent year-over-year.
Microsoft's phone unit, which it has integrated since completing an acquisition of Nokia's device business last year, accounted for $1.4 billion in revenue on 8.6 Lumia units sold in the quarter. The technology company cited the continued inclusion of Nokia as part of its $190 million in restructuring expenses for the quarter.
It also said a strengthening U.S. dollar against key global currencies had a "significant impact" on business in the quarter.
The stock has slipped 7 percent this year.