The software giant's net income fell to $3.76bn, or 47 cents per share, in the third quarter ended 31 March, from $4.99bn, or 61 cents per share a year earlier.
Quarterly revenue came in at $22.1bn in line with analysts' expectations, and slightly more than the $21.7 last year.
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The company is moving away from the declining PC market, to incorporate products such as its cloud computing platform Azure and Office 365.
"Organisations using digital technology to transform and drive new growth increasingly choose Microsoft as a partner," Satya Nadella, chief executive officer at Microsoft, said.
"As these organisations turn to us, we're seeing momentum across Microsoft's cloud services and with Windows 10."
Its intelligent cloud business swelled eight percent in the third quarter to $6.1bn, compared to $6.4bn in the last quarter. Within this, Azure revenue grew 120 per cent.
Subscriptions to Office 365 rose from 20.6m to 22.2m quarter-on-quarter.