Earnings for the quarter were $1.82 per share, exceeding the $1.55 per share analysts had forecast.
“The next decade of economic performance for every business will be defined by the speed of their digital transformation,” Nadella said on a call with analysts Tuesday.
Analysts say the company’s cloud business growth is still in its early days.
“This cloud shift and WFH dynamic looks here to stay and the company stands to be a major beneficiary of this trend,” Wedbush analyst Dan Ives said in a note to investors Tuesday.
Investors may have some concerns about Azure’s growth rate, however, despite the strong earnings. Microsoft shares fell nearly 2% in after hours trading Tuesday night. Azure’s 48% revenue growth rate during the quarter is down from 59% during the same period in the prior year.
Some analysts, however, argue this slowing growth is to be expected given the large size of the business. Nadella said Tuesday he expects tech spending to double over the next 10 years.
Gaming also presents a major growth opportunity for Microsoft.
“Gaming is one of the largest and fastest-growing forms of entertainment in the world. We expect there to be more than $200 billion of revenue in this industry in 2021,” Kyle Vikstrom, Microsoft’s director of investor relations, told CNN Business.
“We’re seeing a really great early response to the console that’s going to launch next quarter,” Vikstrom said.
Correction: Kyle Vikstrom, Microsoft’s director of investor relations, said the company expects more than $200 billion of revenue from gaming in 2021. A previous version of this story said it was expected in 2020.