Microsoft endured an operating loss of $2.1 billion for the most recent quarter, the software giant has revealed in its last financial results before the launch of Windows 10. The heavy loss, which works out to be a loss per share of $0.40, is largely accounted for by the $7.5 billion impairment charge relating to its acquisition of Nokia, and a restructuring charges of $780 million and $160 million, though the rest of the financials appears to be more positive for the company.
If the restructuring and Nokia impairment charges were not included, Microsoft would have achieved an operating income of $6.4 billion for the quarter and an earnings per share of $0.62. Its revenue for the quarter reached $22.2 billion, a year-on-year decrease of five percent, and though it falls below the analyst expectations of a $0.56 EPS, it exceeded an expected revenue of $22.06 billion.
Its Devices and Consumer revenue is down 13 percent, to $8.7 billion, with a mixed bag of finer details. Windows OEM revenue decreased by 22 percent, caused through a decline in the PC market following the end of support for Windows XP. Surface revenue increased 117 percent to $888 million, thanks in part to the Surface Pro 3 and the Surface 3 launch. Xbox revenue increased 27 percent, with strong growth in console sales, first-party games, and Xbox Live transactions.
Search advertising revenue increased to 21 percent, with Bing’s US market share increasing 110 basis points compared to last year, to 20.3 percent. Office 365 also increased its consumer subscriber base, growing by nearly 3 million to 15.2 million.
On the commercial side, revenue increased slightly to $13.5 billion. Cloud revenue is up 88 percent, via increases in use of Office 365, Azure, and Dynamics CRM Online, and is now on an annualized revenue run rate exceeding $8 billion. Server products and services also increased 4 percent, with Dynamics revenue up 6 percent and almost a 2.5-times growth in the Dynamics CRM Online install base.
Office Commercial declined 4 percent, in part caused through the continued transition to Office 365, and the declining business PC market. Notably, the volume licensing revenue of Windows has gone down 8 percent, again caused through the end-of-support refresh cycle of Windows XP.
Our approach to investing in areas where we have differentiation and opportunity is paying off with Surface, Xbox, Bing, Office 365, Azure and Dynamics CRM Online all growing by at least double-digits,” said CEO Satya Nadella. “The upcoming release of Windows 10 will create new opportunities for Microsoft and our ecosystem.
At the same time as the quarterly results, Microsoft also revealed its full fiscal year results for 2015. The annual revenue reached $93.6 billion, with a gross margin of $60.5 billion, an operating income of $18.2 billion, and a diluted EPS of $1.48. Excluding impairment, integration, and restructuring charges, the operating income and EPS would have been $28.2 billion and $2.63 respectively.
