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Microsoft's Q2 Beats Estimate, $25.7 Billion in Revenue

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Microsoft released their second quarter (fourth quarter calendar year) earnings today and the company had revenue of $23.8 billion GAAP, and $25.7 billion non-GAAP. For the period, operating income was $6.0 billion GAAP, and $7.9 billion non-GAAP  with a Net income of $5.0 billion GAAP, and $6.3 billion non-GAAP.

During the quarter, Office 365 growth was strong with the service recording 20.6 million subscribers and Office commercial products and cloud services revenue growing 5% in constant currency driven by Office 365 revenue growth of nearly 70% in constant currency.

Azure revenue grew 140% in constant currency with revenue from Azure premium services growing nearly 3x year-over-year with Server products and cloud services revenue growing 10% in constant currency.

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Revenue in More Personal Computing declined 5% (down 2% in constant currency) to $12.7 billion, with Windows OEM revenue declining 5% in constant currency which the company notes did outperform the PC market but the drop was driven by higher consumer premium and mid-range device mix.

Surface revenue increased 29% to $1.35 billion but Phone revenue declined 49% mostly driven by a change in strategy by the company. The company is now selling a much smaller mix of devices and is not churning out new phone like Nokia was doing when they were running the operation.

For the period, 4.5 million Lumia phones were sold and 22.5 million other phones in the second quarter of fiscal year 2016, compared with 10.5 million and 39.7 million sold, respectively, in the prior year.

Xbox Live monthly active users grew 30% year-over-year to a record 48 million users but the company notes that hardware revenue declined because of of the Xbox 360 sales volume dropping. Video game revenue did climb by 57%, thanks to Halo 5 and Minecraft.

Search advertising, revenue excluding traffic acquisition costs grew 21% in constant currency, driven by Windows 10 usage.

Of all the numbers reported, the most important is the Azure revenue growth. The company’s future is based on its cloud platform and seeing as it is growing steadily, it gives investors confidence that the company is cemented for the future.

 

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Brad Sams has more than a decade of writing and publishing experience under his belt including helping to establish new and seasoned publications From breaking news about upcoming Microsoft products to telling the story of how a billion dollar brand was birthed in his book, Beneath a Surface, Brad is a well-rounded journalist who has established himself as a trusted name in the industry.
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