In a report today the tech giant said profits were up 17% from the same period last year, and Microsoft's shares rocketed 6% in after hours trading on the news.
"Our devices and services transformation is progressing," Microsoft CEO Steve Ballmer told investors, adding that Microsoft is launching a "wide range" of new products in the coming quarter.
The report caps off a busy few months for Microsoft, including the release of a new range of Surface tablets, the acquisition of Finnish mobile manufacturer Nokia and the troubled release of Windows 8.1.
The company said revenues from its Surface tablets "grew to $400 million with sequential growth in revenue and units sold over the prior quarter", which is sure to give analysts some hope after Microsoft previously wrote down $900 million in revenue after slower than expected sales.
Reuters reported analysts had cut their profit estimates for Microsoft over the past three months as they were "concerned by the launch of an ambitious reorganization by retiring Chief Executive Steve Ballmer and the pricey acquisition of Nokia's handset business, even as the company's core personal computer market ebbs away."
Microsoft is yet to announce a replacment for Ballmer, who will leave the position in 2014.
"The earnings report will positively surprise the market, especially in the context of the soft expectations going in and the dismal report last quarter," Todd Lowenstein, a portfolio manager at fund firm HighMark Capital said according to Reuters.
"Beating on revenue and earnings handily will boost confidence that the reorganization is pivoting them in the right direction."
For the first fiscal quarter Microsoft posted a 17% increase in profit to $5.2 billion,, up from $4.5 billion the same time last year.
Revenue rose 16% to $18.5 billion while analysts had expected $17.8 billion, on average.
Microsoft shares rose to $35.65 after hours, after closing at $33.72 on Nasdaq.