Microsoft Cloud Powers Third Quarter Results

Press release
Published April 29th, 2018 - 11:11 GMT
Microsoft returned $6.3 billion to shareholders in the form of dividends and share repurchases in the third quarter of fiscal year 2018, an increase of 37%.
Microsoft returned $6.3 billion to shareholders in the form of dividends and share repurchases in the third quarter of fiscal year 2018, an increase of 37%.

Microsoft Corp. announced the following results for the quarter ended March 31, 2018, as compared to the corresponding period of last fiscal year:

  • Revenue was $26.8 billion and increased 16%
  • Operating income was $8.3 billion and increased 23%
  • Net income was $7.4 billion and increased 35%
  • Diluted earnings per share was $0.95 and increased 36%

“Our results this quarter reflect the trust people and organizations are placing in the Microsoft Cloud,” said Satya Nadella, chief executive officer of Microsoft. “We are innovating across key growth categories of infrastructure, AI, productivity, and business applications to deliver differentiated value to customers.”

Microsoft returned $6.3 billion to shareholders in the form of dividends and share repurchases in the third quarter of fiscal year 2018, an increase of 37%.

“With consistent investment and strong sales execution, this quarter we achieved better than expected performance across all segments,” said Amy Hood, executive vice president and chief financial officer at Microsoft. “We delivered double-digit revenue and operating income growth driven by 58% growth in our commercial cloud revenue.”

Revenue in Productivity and Business Processes was $9.0 billion and increased 17% (up 14% in constant currency), with the following business highlights:

  • Office commercial products and cloud services revenue increased 14% (up 12% in constant currency) driven by Office 365 commercial revenue growth of 42% (up 40% in constant currency)
  • Office consumer products and cloud services revenue increased 12% (up 9% in constant currency) and Office 365 consumer subscribers increased to 30.6 million
  • LinkedIn revenue increased 37% (up 33% in constant currency) with continued acceleration in engagement highlighted by LinkedIn sessions growth of over 30%
  • Dynamics products and cloud services revenue increased 17% (up 14% in constant currency) driven by Dynamics 365 revenue growth of 65% (up 62% in constant currency)

Revenue in Intelligent Cloud was $7.9 billion and increased 17% (up 15% in constant currency), with the following business highlights:

  • Server products and cloud services revenue increased 20% (up 17% in constant currency) driven by Azure revenue growth of 93% (up 89% in constant currency)
  • Enterprise Services revenue increased 8% (5% in constant currency)

Revenue in More Personal Computing was $9.9 billion and increased 13% (up 11% in constant currency), with the following business highlights:

  • Windows OEM revenue increased 4% (up 4% in constant currency) driven by OEM Pro revenue growth of 11%
  • Windows commercial products and cloud services revenue increased 21% (up 17% in constant currency) driven by an increased volume of multi-year agreements and the mix of products that carry higher in-quarter revenue recognition
  • Gaming revenue increased 18% (up 16% in constant currency) driven by Xbox software and services revenue growth of 24% (up 21% in constant currency) mainly from third party title strength
  • Surface revenue increased 32% (up 27% in constant currency) against a prior year comparable impacted by product end-of-life-cycle dynamics
  • Search advertising revenue excluding traffic acquisition costs increased 16% (up 14% in constant currency) driven by higher revenue per search and search volume

Business Outlook

Microsoft will provide forward-looking guidance in connection with this quarterly earnings announcement on its earnings conference call and webcast.

Webcast Details

Satya Nadella, chief executive officer, Amy Hood, executive vice president and chief financial officer, Frank Brod, chief accounting officer, Carolyn Frantz, deputy general counsel and corporate secretary, and Michael Spencer, general manager of investor relations, will host a conference call and webcast at 2:30 p.m. Pacific time (5:30 p.m. Eastern time) today to discuss details of the company’s performance for the quarter and certain forward-looking information. The session may be accessed at http://www.microsoft.com/en-us/investor. The webcast will be available for replay through the close of business on April 26, 2019.

New Accounting Standards

We adopted new accounting standards related to revenue recognition and leases effective July 1, 2017. The prior periods presented here have been restated to reflect adoption of these new standards.

Constant Currency

Microsoft presents constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars using the average exchange rates from the comparative period rather than the actual exchange rates in effect during the respective periods. All growth comparisons relate to the corresponding period in the last fiscal year. Microsoft has provided this non-GAAP financial information to aid investors in better understanding our performance. The non-GAAP financial measures presented in this release should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with generally accepted accounting principles (GAAP).

Financial Performance Constant Currency Reconciliation

 

Three Months Ended March 31,

 ($ in millions, except per share amounts)

Revenue

Operating Income

Net Income

Diluted Earnings per Share

2017 As Reported

$23,212

$6,723

$5,486

$0.70

2018 As Reported

$26,819

$8,292

$7,424

$0.95

Percentage Change Y/Y

16%

23%

35%

36%

Constant Currency Impact

$506

$216

$254

$0.03

Percentage Change Y/Y Constant Currency

13%

20%

31%

31%

Segment Revenue Constant Currency Reconciliation

 

Three Months Ended March 31,

 ($ in millions)

Productivity and Business Processes

Intelligent Cloud

More Personal Computing

2017 As Reported

$7,707

$6,730

$8,775

2018 As Reported

$9,006

$7,896

$9,917

Percentage Change Y/Y

17%

17%

13%

Constant Currency Impact

$193

$162

$151

Percentage Change Y/Y Constant Currency

14%

15%

11%

Selected Product and Service Revenue Constant Currency Reconciliation        

 

Three Months Ended March 31, 2018

 

Percentage Change Y/Y (GAAP)

Constant Currency Impact

Percentage Change Y/Y Constant Currency

Office commercial products and cloud services

14%

(2)%

12%

Office 365 commercial

42%

(2)%

40%

Office consumer products and cloud services

12%

(3)%

9%

LinkedIn

37%

(4)%

33%

Dynamics products and cloud services

17%

(3)%

14%

Dynamics 365

65%

(3)%

62%

Server products and cloud services

20%

(3)%

17%

Azure

93%

(4)%

89%

Enterprise Services

8%

(3)%

5%

Windows OEM

4%

0%

4%

Windows commercial products and cloud services

21%

(4)%

17%

Search advertising excluding traffic acquisition costs

16%

(2)%

14%

Surface

32%

(5)%

27%

Gaming

18%

(2)%

16%

Xbox software and services

24%

(3)%

21%

Background Information

Microsoft

Microsoft enables digital transformation for the era of an intelligent cloud and an intelligent edge. Its mission is to empower every person and every organization on the planet to achieve more.

Check out our PR service


Signal PressWire is the world’s largest independent Middle East PR distribution service.

Subscribe

Sign up to our newsletter for exclusive updates and enhanced content