Speaking during an episode of the Windows Weekly podcast, the company's marketing chief Chris Capossela revealed that their "breakthrough" smartphone is in the pipeline.
Capossela stopped short of confirming that the mystery device is the Surface Phone we've been hearing about, but his remarks line up with those rumours.
The Surface Phone is expected to blur the line between PCs and smartphones by ditching Qualcomm chips in favour of Intel architecture and adopting a similar software configuration to home computers.
This would enable Microsoft to build on Windows 10 Mobile's Continuum feature, which allows smartphone users to plug their handset into a computer monitor for a desktop-like experience.
The Surface Phone is reportedly on course for release around May 2016, a date that coincides with the launch of Windows 10's Redstone update.
Source: Digital Spy