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Azure sales and Xbox biz props Microsoft’s net profit at $4.99B


Microsoft has reported a profit of $4.99 billion for the quarter ended December 31, 2015 (Q2 FY16), a 14.85% decline from $5.86 billion last year. The total revenues for the quarter stood at $23.79 billion, down 10.12% from $26.47 billion the corresponding quarter last year. The operating income of the company stood at $6.03 billion, a 22.5% decline from $7.78 billion last year.

Here are a few takeaways from their earnings and call with analysts:

Cloud business:

Azure revenue grew 140% this quarter in constant currency, with revenue coming from new and existing customers. Microsoft CEO Satya Nadella mentions that organizations like NTT DOCOMO, Honeywell, NASA’s Jet Propulsion Labs, Dow Chemical and the UN Development Programme have deployed various solutions on Azure.

“We are leading innovation in new Agile and DevOps workloads as well, with Azure App Services, PowerApps and Visual Studio Team Services, where we surpassed 3.8 million developer subscriptions” Nadella said. He said that its enterprise mobility solution customers have also doubled year on year.

Increase in Windows 10 adoption:

Nadella mentions that Microsoft crossed over 200 million active devices running Windows 10 this month. “More than 76% of our enterprise customers are in active pilots, including organizations like Kimberly-Clark and Alaska Airlines, and 22 million enterprise and education devices are already running Windows 10” he said.

According to Nadella, Microsoft doubled its Windows Store paid transactions from PC and tablet customers during the holiday season. “Next, as we unify and grow the Windows 10 platform, we grow new monetization opportunities with the Windows Store, search and gaming.“

Bing search shares up:

Bing’s share of the US search market now exceeds 21% while nearly 30% of the company’s search revenues in December came from Windows 10 devices, due to user engagement with Cortana. Note that in November, Microsoft launched an update to its Windows 10 OS for PCs and mobile devices, which included making available its digital personal assistant Cortana in India, Canada, Japan and Australia.

48 million Xbox Live users:

Nadella said that Microsoft Xbox live now has 48 million users across consoles and PCs. “On December 28, we had more fans using Xbox Live than any other day in the Xbox history.  Our games also performed strongly this quarter. We doubled the number of Xbox One gamers playing Microsoft published titles year over year” he said.

Minecraft was the top paid app globally on Windows 10, iOS and Android, with active users growing by 18% year on year.

Decline in OEM & phones business:

OEM business declined by 5% this quarter, with non-Pro OEM revenue declining by 3%. Microsoft’s OEM business outperformed the overall PC market “driven by a higher mix of premium and mid-range devices, which led to higher average revenue per license than the prior year,” said Amy E. Hood, CFO and EVP at Microsoft.

Devices revenue decreased 22% in constant currency, primarily due to phone where revenue declined 49% in constant currency. Surface revenue increased 22% or 29% in constant currency, with the launch of Surface Pro 4 and Surface Book. According to Hood, “With Surface, we created a new type of device, the 2 in 1, and partners are now bringing similar devices to market with success. At the same time, this was the best quarter for Surface ever with over $1.3 billion in sales.”



– Revenue in More Personal Computing declined 5% to $12.7 billion year on year (YoY).

– Revenue in Intelligent Cloud grew 5% to $6.3 billion YoY.

– Revenue in Productivity and Business Processes declined 2% to $6.7 billion YoY.

Download: Press Release | Transcript

Image source: Flickr user Michael Kappel under CC BY-NC 2.0

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