Microsoft's Q3 strong as commercial cloud revenue hits $15.2 billion run rate

28 April 2017, 01:13 | Shawn Tate

Office consumer products and cloud services revenue rose 15 percent, as the number of Office 365 consumer subscribers increased to 26.2 million.

The company reported net income of $5.7 billion non-GAAP ($4.8 billion GAAP) for the three months ending March 31, 2017, on revenue of $23.6 billion non-GAAP ($22.1 billion GAAP).

Microsoft reversed two consecutive quarterly declines in its gaming revenue, with an increase last quarter of 4% (6% CC), "driven by growth in Xbox Live".

This is the first quarter that Microsoft is counting LinkedIn's contributions to its results, and the social network was responsible for $975 million of revenue.

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Microsoft reported earnings today, beating Wall Street estimates on EPS, but coming in with a slight miss on revenue. Diluted earnings per share stood at $0.73 non-GAAP ($0.61 GAAP).

The reason was a shortfall in the company's More Personal Computing segment, which includes Windows and hardware like the Surface tablets, booked $8.84 billion in revenue - well behind average expectations of $9.22 billion (according to StreetAccount), and down 7% from previous year. Even though there was a 5% rise in Windows OEM revenue, Microsoft Surface's revenue fell by 26% which was likely caused by lack of major upgrades to the product line.

Under Chief Executive Satya Nadella, who took the helm in 2014, Microsoft has sharpened its focus on the fast-growing cloud computing unit to counter a prolonged slowdown in the PC market, which has weighed on demand for its Windows software. Revenue gained 7.6% to $22.1 billion and was $23.6 billion on an adjusted basis. Server products and cloud services revenue was up 15 percent.

Operating expenses jumped 12% from last year's quarter, to $8.4 billion, due in large part to the acquisition of LinkedIn. There are now 26.2 million consumers subscribed to Office 365.

Cloud: Total revenue from Microsoft's "Intelligent Cloud" business hit $6.8 billion this quarter.



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