Microsoft cloud strength highlights fourth quarter results

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The FINANCIAL — Microsoft Corp. on July 20 announced the following results for the quarter ended June 30, 2017:

Revenue was $23.3 billion GAAP, and $24.7 billion non-GAAP

Operating income was $5.3 billion GAAP, and $7.0 billion non-GAAP

Net income was $6.5 billion GAAP, and $7.7 billion non-GAAP

Diluted earnings per share was $0.83 GAAP, and $0.98 non-GAAP

“Innovation across our cloud platforms drove strong results this quarter,” said Satya Nadella, chief executive officer at Microsoft, “Customers are looking to Microsoft and our thriving partner ecosystem to accelerate their own digital transformations and to unlock new opportunity in this era of intelligent cloud and intelligent edge.”

The current quarter effective tax rate was (17)% an (6)% in GAAP and non-GAAP, respectively. The tax rates reflect a $1.8 billion impact related to the utilization of prior years’ losses from Microsoft’s phone business that were not deductible in the years incurred. As a result of this tax item, earnings per share for the quarter increased by $0.23, according to Microsoft.

Microsoft returned $4.6 billion to shareholders in the form of share repurchases and dividends in the fourth quarter of fiscal year 2017.

“We delivered a strong finish to the year with 30% growth in commercial bookings this quarter,” said Amy Hood, executive vice president and chief financial officer at Microsoft. “We will continue to invest in key areas that drive future growth for Microsoft and our customers.”

Revenue in Productivity and Business Processes was $8.4 billion and increased 21% (up 23% in constant currency), with the following business highlights:

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Office commercial products and cloud services revenue increased 5% (up 6% in constant currency) driven by Office 365 commercial revenue growth of 43% (up 44% in constant currency)

Office consumer products and cloud services revenue increased 13% (up 13% in constant currency) and Office 365 consumer subscribers increased to 27.0 million

Dynamics products and cloud services revenue increased 7% (up 9% in constant currency) driven by Dynamics 365 revenue growth of 74% (up 75% in constant currency)

LinkedIn contributed revenue of $1.1 billion during the quarter

Revenue in Intelligent Cloud was $7.4 billion and increased 11% (up 12% in constant currency), with the following business highlights:

Server products and cloud services revenue increased 15% (up 16% in constant currency) driven by Azure revenue growth of 97% (up 98% in constant currency)

Enterprise Services revenue decreased 3% (down 1% in constant currency) with declines in custom support agreements offset by growth in Premier Support Services

Revenue in More Personal Computing was $8.8 billion and decreased 2% (down 1% in constant currency) driven primarily by lower phone revenue, with the following business highlights:

Windows OEM revenue increased 1% (up 1% in constant currency), slightly ahead of the overall PC market

Windows commercial products and cloud services revenue increased 8% (up 8% in constant currency) driven by annuity revenue growth

Surface revenue decreased 2% (down 1% in constant currency) mainly due to product lifecycle transitions

Search advertising revenue excluding traffic acquisition costs increased 10% (up 11% in constant currency) driven by higher revenue per search and search volume

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Gaming revenue increased 3% (up 4% in constant currency) as strength in Xbox software and services offset lower hardware revenue

Fiscal Year 2017 Results

Microsoft Corp. on July 20 announced the following results for the fiscal year ended June 30, 2017:

Revenue was $90.0 billion GAAP, and $96.7 billion non-GAAP

Operating income was $22.3 billion GAAP, and $29.3 billion non-GAAP

Net income was $21.2 billion GAAP, and $25.9 billion non-GAAP

Diluted earnings per share was $2.71 GAAP, and $3.31 non-GAAP

The current year effective tax rate was 8% and 14% in GAAP and non-GAAP, respectively. The tax rates reflect a $1.8 billion impact related to the utilization of prior years’ losses from Microsoft’s phone business that were not deductible in the years incurred. As a result of this tax item, earnings per share for the year increased by $0.23.

 

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