Today, Microsoft (Nasdaq “MSFT” @Microsoft) releases its fourth quarter earnings for fiscal year 2016 ending June 30, 2016. The results are:
Revenue $20.6 billion GAAP, and $22.6 billion non-GAAP
Net income of $3.1 billion GAAP, and $5.5 billion non-GAAP
Earnings per share was $0.69 non-GAAP, and $0.39 GAAP
This is the part we are most interested at. The results of Surface, Windows phones, and Xbox. Despite PC market decline, Windows OEM non-Pro revenue grew 27%. Surface revenue is up also by 9%. On the other hand, phone revenue declined by 71%, which is what we are expecting following Microsoft’s decision to streamline its phone business – pulling out of consumer market and focus on the enterprise. Search advertising also grew because of Windows 10 usage.
Here are the highlights:
- Windows OEM non-Pro revenue grew 27% (up 27% in constant currency), outpacing the consumer PC market, and Windows OEM Pro revenue grew 2% (up 2% in constant currency)
- Surface revenue increased 9% (up 9% in constant currency) driven by Surface Pro 4 and Surface Book
- Phone revenue declined 71% (down 70% in constant currency)
- Xbox Live monthly active users grew 33% year-over-year to 49 million
- Search advertising revenue excluding traffic acquisition costs grew 16% (up 17% in constant currency) with continued benefit from Windows 10 usage.
- Devices revenue decreased $782 million or 35%, mainly due to lower revenue from phones, driven by the change in strategy for the phone business, offset in part by higher Surface revenue. Phone revenue decreased $870 million or 71%, driven by a reduction in volume of phones sold. Surface revenue increased $76 million or 9%, primarily driven by the release of Surface Pro 4 and Surface Book in the second quarter of fiscal year 2016, offset in part by a decline in revenue from Surface Pro 3 and Surface 3.
- Gaming revenue decreased $152 million or 9%, primarily due to lower Xbox hardware revenue, offset in part by higher revenue from Xbox Live. Xbox hardware revenue decreased 33%, mainly due to a decline in consoles sold and lower prices of consoles sold. Xbox Live revenue increased 4%, driven by higher volume of transactions and revenue per transaction.
- Search advertising revenue increased $514 million or 54%. Search advertising revenue, excluding traffic acquisition costs, increased 16%, primarily driven by growth in Bing, due to higher revenue per search and higher search volume.
- Windows revenue increased slightly, mainly due to higher revenue from Windows OEM, offset in part by lower revenue from patent licensing. Windows OEM revenue increased 11%. Windows OEM non-Pro revenue grew 27%, outperforming the consumer PC market, driven by a higher mix of premium licenses sold. Windows OEM Pro revenue grew 2%, reflecting a stabilizing commercial PC market and a higher mix of business PCs sold with Windows Pro. Patent licensing revenue decreased 21%, due to a decline in licensed units and license revenue per unit. Windows revenue included an unfavorable foreign currency impact of approximately 3%