Microsoft posted mixed first quarter earnings for its fiscal year 2016, with revenues of $21.66 billion – a 7. percent year-on-year decline that still exceeded analysts’ estimates. Microsoft also reported net income of $5.38 billion, or $0.67 per share, beating out Wall Street’s estimates of $0.59 per share.

Once again, Microsoft looked to emphasize its enterprise cloud services growth in an effort to put a positive spin on the news.

“We’re seeing great traction with businesses who want to bring Microsoft’s cloud, mobile device management technology and data analytics together to improve security and productivity resulting in almost 70 percent year-over-year growth in our commercial cloud run rate,” Microsoft COO Kevin Turner said in a statement.

And Turner backed up those comments by pointing to the company’s latest figures, which suggest an annual commercial cloud run rate in excess of $8.2 billion.

Overall, Microsoft’s server and cloud sales rose by 13 percent year-over-year, taking into account the company’s constant-currency calculations. Enterprise support services revenues posted 16 percent growth, while demand and revenue for Azure compute more than doubled. In total, Microsoft’s cloud segments pulled in $5.89 billion in revenues for the quarter, signaling that its cloud strategy is really beginning to pay off.

One particular success was Microsoft’s Office 365 portfolio, which saw sales rise by 70 percent. In addition, Microsoft’s cloud-based Dynamics customer relationship management (CRM) and enterprise resource planning software suite grew by 12 percent.

With regards to Microsoft’s traditional cash cow, Windows OEM sales fell by six percent in the quarter, which isn’t exactly a surprise when we consider Windows 10 is being given away for free to most customers. On the plus side, Windows volume licensing to enterprises did grow by four percent.

Satya Nadella, CEO of Microsoft, said there are now 110 million “active devices” now running Windows 10 during the conference call yesterday. He added that there are now eight million business PCs are running the new OS.

In another notable achievement, Microsoft revealed that its Bing search engine is now making a profit for the first time in its history thanks to a boon in ad revenues.

“During its first quarter fiscal 2016 earnings call, Microsoft announced that Bing had finally achieved profitability,” said ZDnet’s Mary Jo Foley. “Search contributed more than $1 billion to Microsoft’s first quarter for fiscal 2016, said Chief Financial Officer Amy Hood during the company’s October 22 earnings call.”

While Bing is a welcome bright spot, the nightmare that is Windows Phone continues to blot Microsoft’s earnings report. Windows Phone revenues fell by a whopping 54 percent for the quarter, once again highlighting its continued struggles in the smartphone market. Also disappointing was the performance of Microsoft’s Devices and Consumer unit, which pulled in $9 billion revenues, 17 percent less than the same period one year ago.

Even so, Nadella was bullish on Microsoft’s prospects in the consumer hardware market.

“Customer excitement for new devices, Windows 10, Office 365 and Azure is increasing as we bring together the best Microsoft experiences to empower people to achieve more,” Nadella said.

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