Earnings per share came to $0.96 on a non-Gaap basis, well above forecasts of 87 cents per share, according to analysts polled by FactSet. Revenues increased 12% to $28.9 billion, topping expectations of $28.4 billion.
Microsoft shares were up by less than 1% to $95.01 in after-hours trading.
CEO Satya Nadella said that Microsoft's investments in the Internet of Things, artificial intelligence and other areas would accelerate growth in the future.
Azure revenue grew 98% in the quarter, though Microsoft does not break out revenues for the cloud computing unit. Azure helped drive a 56% increase in Microsoft's commercial cloud revenues, which came to $5.5 billion in the quarter.
Look for more detail on the cloud computing competition on Thursday, when Alphabet (GOOGL) - Get Report reports results for Google Cloud Platform and Amazon (AMZN) - Get Report discloses results for Amazon Web services.
Revenues from LinkedIn, which Microsoft acquired for $26.2 billion in 2016, grew 475% to $1.3 billion.
The Xbox One X launch drove a 14% gain in sales of the gaming consel, and an 8% gain in gaming revenue.
Microsoft's cash and equivalents hit $142.8 billion, much of it overseas.
The Tax Cuts and Jobs Act resulted in a $13.8 billion net charge on a Gaap basis, Microsoft said.
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