Nadella's Game Now: Microsoft CEO Makes His Mark In First Earnings Call

Microsoft beat Wall Street's profit expectations in its fiscal third-quarter earnings on Thursday, and recently anointed CEO Satya Nadella's shared details of how he plans to put his unique stamp on the company.

For the quarter ended March 31, Microsoft reported a profit of $5.66 billion, or $0.68 per share, on revenue of $20.40 billion. Wall Street analysts were expecting 63 cents per share on revenue of $20.49 billion.

Nadella was at the helm for all but two weeks of the quarter, and investors seemed to like the results, as Microsoft shares rose nearly 3 percent at $40.96 in Thursday after-hours trading.

[Related: Microsoft Unveils SQL Server 2014, New Azure Big Data Analytics Service ]

But Nadella's first earnings call was about more than the gaudy revenue and profit figures the software giant regularly puts up. In a Q&A during the call, Nadella told investors to expect Microsoft to continually evaluate the plans it has put in place for its goal of becoming a "mobile-first, cloud-first" company.

At one point, he said Microsoft will exhibit "courage in the face of reality" and act with a "challenger mindset." Though he didn’t elaborate on the courage comment, Nadella seemed to suggest that Microsoft won't hesitate to shed products and services that underperform or which don't fit with the mobile-first, cloud-first vision.

Nadella said Microsoft under his watch will be oriented around planning, execution and constant self-evaluation. And when things need to change, this close analysis will inform any changes that need to be made.

"We will increasingly focus on usage as an indicator of long-term success," Nadella said in response to one analyst's question about the plans he has put in place during his first 10 weeks as CEO.

Microsoft, which is closing its $7.2 billion acquisition of Nokia on Friday, could face challenges ahead as it transitions to making its own hardware.

Microsoft's Surface revenue was $500 million during the quarter, which is up 50 percent from last year's third quarter, but still represents a big dip from the $893 million it brought in during the holiday season quarter.

Otherwise, Nadella had lots of positive news to share with regard to growth in Microsoft's various businesses.

Microsoft's Commercial division saw revenue rise 7 percent compared to last year's quarter, while Devices & Consumer division revenue jumped 12 percent year-over-year.

Microsoft's Commercial Licensing business, which generates around half of its overall revenue, saw sales grow 10 percent during the quarter.

Despite the frosty reception, some customers have afforded Windows 8 and Windows 8.1, Windows volume licensing revenue rose 11 percent. Windows OEM revenue grew 4 percent during the quarter, which included 19 percent growth in Windows OEM Pro, the version most enterprises use.

Microsoft's Commercial 'Other' segment, which is home to Azure and Office 365, saw revenue jump 31 percent during the quarter. Microsoft CFO Amy Hood said Microsoft added nearly one million Office 365 Home customers in Q3 and now has 4.4 million Office 365 Home subscribers in total.

NEXT: Why Nadella Thinks Office 365 Is A Cloud Linchpin

Nadella said Office 365 is "the core engine" driving customer adoption of Microsoft's cloud, describing it as both a suite of SaaS apps and an "architecture for enterprises."

But it's not just about revenue: Office 365 sales are spurring Microsoft's internal enterprise infrastructure growth, which, in turn, is driving growth of its Azure cloud, Nadella said.

Microsoft's SharePoint, Lync and Exchange cash cows continue to moo contentedly during the quarter, with revenue for each growing in the double-digit percentage range.

Nadella has been particularly busy in the past month, presiding over the launch of Microsoft's Office for iPad apps; unveiling plans for "Universal Windows Apps," where developers write one batch of code that runs on PCs and mobile devices; and providing a glimpse of how Microsoft is using big data both internally and in its products and services.

Microsoft has $16 billion businesses that are driving much of its revenue these days. But in Nadella's first earnings call as CEO, he made it clear to investors that he plans to be more than just a caretaker.

PUBLISHED APRIL 24, 2014