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Shares of the technology giant were up 1.76 percent at $80.15 in trading after the bell.
Microsoft's focus on fast-growing cloud applications and platforms is helping it beat slowing demand for personal computers that has hurt sales of Windows - the software that powered the company to the top during the dotcom boom.
Under Chief Executive Satya Nadella, Microsoft's cloud business - which includes products such as Office 365, Dynamic 365 and the flagship Azure computing platform - has emerged as a major growth driver.
Revenue from Microsoft's intelligent cloud business rose nearly 14 percent to $6.92 billion in the first quarter ended Sept. 30. Analysts on average had expected $6.70 billion, according to financial data and analytics firm FactSet.
Revenue from Azure, which competes with Amazon.com Inc's
Microsoft said commercial cloud annualized revenue run rate reached $20.4 billion in the quarter.
Revenue from Microsoft's personal computing division, its largest by revenue, fell 0.2 percent to $9.38 billion but handily beat analysts' estimate of $8.81 billion.
The unit includes Windows software, Xbox gaming consoles, online search advertising and Surface personal computers.
The technology giant's net income rose to $6.58 billion, or 84 cents per share, in the first quarter ended Sept. 30, from $5.67 billion, or 72 cents per share, a year earlier. (http://bit.ly/2lkGlyz)
Revenue rose 12 percent to $24.54 billion.
Microsoft's shares had risen nearly 27 percent this year through Thursday, eclipsing the 14.4 percent gain in the broader S&P 500 <.SPX>.
(Reporting by Pushkala A in Bengaluru; Editing by Arun Koyyur)