April 24, 2014 – Microsoft today released earnings for the quarter ending March 31, 2014, and it easily beat Wall Street’s predictions. Net income came in at $5.66 billion on revenues of $20.4 billion, down from $6.06 billion the same quarter a year ago.
Cloud computing is going well for Microsoft and as the new CEO, Satya Nadella, took the stage at his first earnings call, he touted cloud computing by saying “This is gold rush time in being able to capitalize on the opportunity.”
This quarter is an interesting one for Microsoft as it benefits from being close to the death of Windows XP whose support ended on April 8, 2014. Many companies paid to upgrade their computers to either Windows 7 or 8 which provided a boost to overall Windows revenue. 30% of PCs are still running the 13 year old operating system, bringing the numbers in at about 400-500 million active users as there are about 1.6 billion PCs in use. Looking forward, Microsoft is expected to benefit as more users jump ship to a newer version of Windows as well as paying for support for continuing to run Windows XP.
“This quarter’s results demonstrate the strength of our business, as well as the opportunities we see in a mobile-first, cloud-first world” Nadella is quoted as saying in a prepared statement. “We are making good progress in our consumer services like Bing and Office 365 Home, and our commercial customers continue to embrace our cloud solutions. Both position us well for long-term growth.” according to Nadella.
Devices and Consumer revenue grew 12% to $8.30 billion.
– Windows OEM revenue was up 4%, Windows Pro OEM revenue was up 19% and drove overall growth in Windows
– Office 365 Home added almost 1 million subscribers in 3 months and now has now has 4.4 million subscribers
– 2 million Xbox consoles sold, with 1.2 million Xbox One’s consoles. Total Xbox Ones sold are at 5.1 million, PlayStation 4 stands at 7 million
– Over 50% increase in Surface revenue at approximately $500 million
– Bing climbs to 18.6% of search in U.S., search advertising grew 38%. Combined with Yahoo holds 28.7%
Commercial revenue grew 7% to $12.23 billion.
– Office 365 revenues were up 100%, strong enterprise momentum as commercial seats nearly doubled
– Azure revenue up by over 150%
– Windows volume licensing up 11%, more business customers continue to select Windows as their choice
– Lync, SharePoint, and Exchange, as well as productivity server offerings, grew double digits
We are going to keep a close eye on the next quarter, as Microsoft will complete the take-over of the Nokia devices business and its 30,000 employees. The $7 billion deal is expected to close on April 24, 2014.