The software giant says strong sales of its Windows 7 operating system is continuing to help boost its profits, with 175 million licences sold since its launch last year.
Total revenues hit $16bn (£10.5bn) with strong sales from the Bing search engine and the Xbox games console.
Profits for the year to the end of June were $18.76bn (£12.20bn), a 29% increase on the previous 12 months.
“The revenue growth, combined with our ongoing cost discipline, helped us achieve another quarter of margin expansion,” says Peter Klein, Microsoft’s chief financial officer.
In the UK, Microsoft has invested millions into pushing its products using the “I’m a PC” advertising series. The ads now also showcase Internet Explorer 8, following the EU’s decision to force users to make their own browser choices, and Hotmail, its online e-mail service.
Microsoft says Windows 7 has proved to be Microsoft’s best-selling operating system to date after the disappointing Vista launch. Initial YouGov figures suggested its marketing had helped to boost interest in the product.
It is now focusing on parents and children in its summer campaign for Office 2010, amid claims that sales of the software suite have been “disappointing” since its launch a month ago.