Microsoft reported fiscal first-quarter revenue of $13.33 billion.
The company said the PC market continued to deteriorate during the quarter.
During the quarter, Microsoft started rolling out the first annual update to its Windows 11 operating system.
Microsoft's quarterly revenue fell slightly but still topped Street expectations.
For the first time, revenue in the quarter from the Microsoft Cloud metric exceeded 50% of overall company revenue.
Microsoft shares have fallen about 26% so far this year, while the S&P 500 stock index is down 19% over the same period.
Revenue from sales of Windows licenses to device makers dropped 15% year over year.