Microsoft’s cloud transformation remains on track, with its latest quarterly earnings offering more encouragement even as the tech giant saw its overall revenues dip.

The big news from the call was Microsoft Azure’s fantastic performance – revenues jumped by 127 percent from one year ago, with sales of Azure Premium Services like Machine Learning tripling in the last quarter of 2015 compared to a year ago. Microsoft also boasted that over a third of the Fortune 500 has adopted its Enterprise Mobility solutions for securing mobile devices.

Overall though, Microsoft’s revenue declined by 10 percent year-over-year to just $23.8 billion for the quarter, which makes it all the more important that the company to sustain its cloud growth.

To be fair to Microsoft it wasn’t helped by the strength of the U.S. dollar versus other currencies, a factor that has hit other companies like Apple and IBM, among others. One impact of this was seen in its Productivity and Business Processes segment, where revenues were down two percent compared to the previous year, in spite of Microsoft’s claims of a “continued strong performance” for Dynamics CRM Online and Office 365.

Microsoft’s mobile phone business performance also attracted headlines, for the wrong reasons. Overall revenues from smartphone sales fell by 53 percent compared to the same period last year. Part of this might be due to Microsoft’s changed strategy, which has seen it opt to lay-off thousands of workers and focus on building a smaller number of Windows Phones models, as opposed to the broad range of phones that Nokia built. However, cynics will argue that consumers simply don’t like Windows Phone anymore, not that they really did to begin with.

Whatever the reasons, Microsoft sold just 4.5 million Lumia phones over the last quarter, compared to 10.5 million shipped one year ago.

The decline in phone revenue meant that Microsoft’s overall devices revenue experienced quite a drop, falling by 26 percent compared to one year ago, even though Surface device sales pulled in an impressive $1.35 billion. That was a 22 percent increase from one year ago, with Microsoft citing the launch of the Surface Book and Surface Pro 4 as the main reasons for the increase.

In other segments, OEM Windows license sales were down 5 percent, outperforming the PC market’s overall decline but still not too encouraging. Search revenue was up 21 percent, while Xbox Live subscriptions rose by 30 percent.

“It was a strong holiday season for Microsoft, highlighted by Surface and Xbox,” Kevin Turner, COO at Microsoft, said in the call. “Our commercial business executed well, as our sales teams and partners helped customers realize the value of Microsoft’s cloud technologies across Azure, Office 365 and CRM Online.”

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