Cloud and Mobility: Microsoft Q3 Earnings Call

CEO Satya Nadella summed up third quarter earnings for Microsoft in two words: execution and transition. “We delivered solid financial results, and we took several steps to reorient Microsoft,” he said.

In the third-quarter earnings call on April 24, CEO Nadella and CFO Amy Hood said the third quarter was “very good” and called out double-digit growth in SQL Server, System Center, and Lync, among others.

Actually, the third-quarter earnings call on April 24 could have been summed up in two phrases: mobile first and cloud first.

“When we say mobile first—we mean mobility first. We think about users and their experience spanning a variety of devices,” Nadella said. Ironically, or perhaps appropriately, the company excluded discussion of its Nokia acquisition, to be finalized tomorrow, from the earnings call.

As for cloud, “Commercial cloud revenue more than doubled this quarter,” Hood said, and also noted that the company added nearly 1 million new users for Office 365 home this quarter. “We continue to invest in Azure and Office 365.”

Windows was mentioned less frequently—mostly in terms of the end of XP. Office 365 played a large part in the earnings call.

About Office 365, Nadella said, “I’m really, really excited about what’s happening there. It’s the core engine that’s driving a lot of the cloud.” He added “Office 365 growth is driving our enterprise infrastructure growth” in that the company runs its cloud business on Azure and thus has a built-in way to learn from daily experience and improve along the way.

“We continue to think how we can add innovation, modernize features, and that is far easier in a cloud world than on prem,” Hood added.

 In a statement that to some would appear to be an understatement, Nadella noted “The past two and a half months have been a period of significant change at Microsoft.”

The first 10 weeks have been extremely energizing,” he said, saying that he had to “relearn the place” to get “a fresh perspective.”

“We’re all the time reviewing. We have really picked up the pace on asking the hard questions, and …pushing ourselves.. . We want to be accountable and execute on our plans very well.”

“Being empowered to look weekly, monthly, and see how we can get better--that’s driven a lot of excitement around here,” Hood said.

Nadella returned several times to the core message of cloud first, mobile first—noting that the goals in those areas will define even the questions asked, such as “What does it mean for us culturally? What does it mean for our plans?”

Change, he said, “is not episodic—you’re planning all the time, you’re making changes based on circumstances.”

 “In the months ahead we will continue to be intensely focused on two things: rock solid execution and pivoting the company toward the future,” Nadella said.

“What you can expect is courage in the face of reality….we will be bold in our innovation, accountable to our partners and shareholders.”