Microsoft (MSFT) revealed a 17% increase in fiscal first-quarter profits on Thursday, solidly beating market expectations as the tech behemoth continues its makeover into a devices-and-services company.

The bullish results were highlighted by strong devices and hardware growth and sent shares of the Windows and Xbox maker soaring more than 6% in extended trading.

Microsoft said it earned $5.24 billion, or 62 cents a share, last quarter, compared with a profit of $4.47 billion, or 53 cents a share, a year earlier. Analysts had been expecting EPS of 54 cents.

Revenue jumped 15.7% to $18.53 billion, topping the Street’s view of $17.79 billion. Microsoft said the results reflect the deferral of $113 million of revenue tied to Windows 8.1 pre-sales.

“Our devices and services transformation is progressing and we are launching a wide range of compelling products and experiences this fall for both business and consumers,” Microsoft CEO Steve Ballmer said in a statement.

Ballmer has announced plans to step down and the company is said to be considering former Nokia (NOK) CEO Stephen Elop and Ford (F) CEO Alan Mulally among other candidates. 

Microsoft said its devices and consumer revenue rose 4% last quarter to $7.46 billion, easily exceeding the Street’s view of $6.84 billion. Devices and hardware revenue climbed 37% to $1.49 billion, compared with consensus calls from analysts for $1.07 billion.

The company also enjoyed a 47% surge in search advertising revenue. On the other hand, Windows OEM revenue declined 7%, while Surface tablet revenue increased to $400 million.

Meanwhile, Microsoft commercial revenue rose 10% to $11.20 billion amid double-digit SQL server growth. The company’s SQL server premium revenue soared more than 30% and its commercial cloud sales surged 103%.

“We saw strong focus across our teams, generating record first-quarter revenue even as we navigate a fundamental business transition. Our enterprise renewals were very healthy and our devices and consumer business continued to improve,” Microsoft Chief Financial Officer Amy Hood said in a statement.

In July, Microsoft revealed a sweeping reorganization by function that is aimed at helping the company innovate at a faster and more efficient pace.

In another sign of the company’s move towards devices, Microsoft is reportedly testing prototypes for an Internet-enabled eyewear device.

Shares of Redmond, Wash.-based Microsoft soared 5.84% to $35.69 in extended trading on Thursday, putting them on track to extend their 26% rally this year. 

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