Microsoft released its latest earnings report after closing bell tonight, posting non-GAAP earnings of 76 cents per share on $22.3 billion in non-GAAP revenue and $20.5 billion in GAAP revenue. Analysts had been expecting 68 cents per share in earnings on $21.7 billion in sales for its first quarter of fiscal 2017. In the same quarter last year, the company reported 70 cents per share in earnings, $20.4 billion in GAAP revenue, and $21.66 billion in non-GAAP revenue.

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Company management had guided for revenue of $21.8 billion to $22 billion but warned that as more and more customers shift to the cloud, its revenue might struggle during the quarter. Cloud revenues are more subscription-based rather than an up-front injection in sales.

Microsoft posts solid results

Microsoft’s GAAP earnings declined to 60 cents per share from 61 cents per share last year. The company said the net impact from Windows 10 revenue deferrals amounted to $1.9 billion in the quarter, compared to $1.3 billion in the year-ago quarter. The Windows 10 deferrals had a negative impact of 16 cents per share in this year’s September quarter and 9 cents per share in the year-ago quarter.

The company’s Productivity and Business Processes revenue increased 6% to $6.7 billion on the back of growth in Office commercial and consumer products, while Intelligent Cloud revenue rose 8% to $6.4 billion. Server products and cloud services revenue rose 11%, while Azure revenue surged 116% as Azure compute usage more than doubled from last year.

“Our first quarter results showed continued demand for our cloud-based services,” said Microsoft CFO Amy Hood in a statement. “We continue to invest, position ourselves for long-term growth, and execute well across our businesses.”

Microsoft’s PC segment declines less than expected

More Personal Computing revenue fell 1% to $9.3 billion on the back of flat Windows OEM revenue and flat Windows commercial revenues. Phone revenues plunged 72%, while gaming revenue fell 5% as Xbox console revenue fell but was offset by higher Xbox software and services revenue. Search ad revenue excluding traffic acquisition costs increased 9%.

Microsoft returned $6.6 billion to shareholders through dividends and share buybacks during the quarter.

Shares of Microsoft surged by as much as 5.28% to $60.27 in after-hours trades after closing regular trading hours down 0.49% at $57.25.