Microsoft (MSFT) Tops Q4 EPS by 11c

Microsoft (NASDAQ: MSFT) reported Q4 EPS of $0.69, $0.11 better than the analyst estimate of $0.58. Revenue for the quarter came in at $22.6 billion versus the consensus estimate of $22.14 billion.

“This past year was pivotal in both our own transformation and in partnering with our customers who are navigating their own digital transformations,” said Satya Nadella, chief executive officer at Microsoft. “The Microsoft Cloud is seeing significant customer momentum and we’re well positioned to reach new opportunities in the year ahead.”

The current quarter effective tax rate reflected a favorable mix of our income between the U.S. and foreign countries, as well as benefits associated with distributions from foreign affiliates. As such, the GAAP and non-GAAP tax rates were 7% and 15%, respectively.

“This fiscal year we invested in innovation and expanded our market presence in key product areas and geographies,” said Amy Hood, executive vice president and chief financial officer at Microsoft. “I am pleased with the execution from our sales teams and partners this quarter who delivered a strong finish to the fiscal year."

Revenue in Productivity and Business Processes grew 5% (up 8% in constant currency) to $7.0 billion, with the following business highlights:

· Office commercial products and cloud services revenue grew 5% (up 9% in constant currency) driven by Office 365 commercial revenue growth of 54% (up 59% in constant currency)

· Office consumer products and cloud services revenue grew 19% (up 18% in constant currency) with Office 365 consumer subscribers increasing to 23.1 million

· Dynamics products and cloud services revenue grew 6% (up 7% in constant currency) with Dynamics CRM Online paid seats growing more than 2.5x year-over-year

Revenue in Intelligent Cloud grew 7% (up 10% in constant currency) to $6.7 billion, with the following business highlights:

· Server products and cloud services revenue increased 5% (up 8% in constant currency) driven by double-digit annuity revenue growth

· Azure revenue grew 102% (up 108% in constant currency) with Azure compute usage more than doubling year-over-year

· Enterprise Mobility customers nearly doubled year-over-year to over 33,000, and the installed base grew nearly 2.5x year-over-year

Revenue in More Personal Computing declined 4% (down 2% in constant currency) to $8.9 billion, with the following business 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

For earnings history and earnings-related data on Microsoft (MSFT) click here.

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