The company said it added nearly 3 million subscribers to its Office 365 platform. More than 15 million people now subscribe to the service.
"Commercial cloud, commercial 365 business, all of this is what I think you're going to see in terms of better numbers or better outlook," Tim Seymour, managing partner at Triogem Asset Management, said in a CNBC "Closing Bell" interview Tuesday.
Sales of Microsoft's Windows and Office software, which historically accounted for the bulk of its business, continued to struggle amid a sagging personal computer market. Windows OEM revenue in the quarter dipped 22 percent. The company said sales were "impacted by PC market declines following the XP end-of-support refresh cycle."
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Office products and services sales fell 4 percent from a year earlier, while Windows volume licensing slipped 8 percent.
"They're in this transition phase as a business right now," said Cole Wilcox, CEO of Longboard Asset Management, in a "Closing Bell" interview Tuesday.
But he added that Microsoft seems poised to make big advances in the cloud segment moving forward.
The company also highlighted bright spots in its hardware business like the Surface tablet segment, which saw revenue growth of 117 percent year over year boosted by the launch of the Surface 3. Xbox gaming sales jumped 27 percent.
Earlier this month, Microsoft said it planned to cut up to 7,800 positions, primarily in the phone business.
In a bold promotional move, the Redmond, Washington-based company in January said the forthcoming Windows 10 operating system would be free for qualifying users of Windows 7 and Windows 8. The platform will be released July 29.
In Microsoft's conference call, Nadella stressed that Microsoft 10's release could ease some of the pressure on the PC market.
Market research firm Gartner recently cut its forecast for 2015 PC and phone sales, saying the arrival of Windows 10 would slow rather than help a rebound in corporate PCs as businesses generally wait a while before upgrading to new platforms, Re/code reported earlier this month.
Gartner now sees the market growing just 1.5 percent this year, down from earlier projections for a 2.8 percent year-over-year increase.
—CNBC's Karma Allen contributed to this report.