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Commenting on the results John Connors, chief financial officer at Microsoft, said: "During the quarter, we saw broader customer adoption of our licensing programs than we anticipated, as customers recognised the value of entering into long-term licensing agreements for our products."
Microsoft reported $7.75bn (£5.0bn) in revenue for the first quarter of its financial year ending in June 2003. This represents a 26% increase on revenue collected in the same quarter last year.
Net income for the quarter was $2.73bn (£1.8bn), compared to $1.28bn (£0.8bn), for the same period last year.
Strong sales of Windows XP and servers helped bolster profits. Microsoft said that retailers and computer manufacturers had sold more than 67 million copies of Windows XP in the year since the operating system was launched.
Revenues at Microsoft's Server Platforms division, which includes Windows server operating systems and various enterprise server software products such as SQL Server and Exchange, were up 14% on the same period last year.
Microsoft's emerging Business Solutions division, comprised of software and services through bCentral, and the recently acquired businesses of Great Plains Software and Navision, recorded $106m (£69m) in revenue - up from $74m (£48m) a year ago. The division added more than 1,400 new customers, the company said.
MSN saw a slight decline compared to the previous year's first fiscal quarter, with revenue of $427 million, down from $430 million in the same quarter for the previous year.