Summary
Microsoft Corporation (MSFT) reported its financial results for the fiscal third quarter ending March 31, 2016. The company experienced a year-over-year decrease in revenue and net income, largely influenced by a net revenue deferral related to Windows 10 and unfavorable foreign currency impacts. Despite these challenges, key growth areas like Microsoft Azure and Office 365 Commercial demonstrated strong performance, indicating a continued shift towards cloud-based services. The company's strategic restructuring in the phone business also impacted financial figures but aligns with the long-term mobile-first, cloud-first strategy. Operating income saw a significant decline, primarily due to lower gross margins and ongoing investments in cloud infrastructure. However, the company continued to return capital to shareholders through share repurchases and dividends, signaling confidence in its future financial health. Investors should note the ongoing legal and tax contingencies, which, while currently managed, represent potential future risks.
Financial Highlights
53 data points| Revenue | $20.53B |
| Cost of Revenue | $7.72B |
| Gross Profit | $12.81B |
| R&D Expenses | $2.98B |
| Operating Income | $5.28B |
| Interest Expense | $340.00M |
| Net Income | $3.76B |
| EPS (Basic) | $0.48 |
| EPS (Diluted) | $0.47 |
| Shares Outstanding (Basic) | 7.89B |
| Shares Outstanding (Diluted) | 7.99B |
Key Highlights
- 1Revenue decreased by 6% to $20.5 billion for the three months ended March 31, 2016, compared to the prior year, impacted by Windows 10 revenue deferrals and foreign currency exchange rates.
- 2Net income for the quarter was $3.76 billion, down from $4.99 billion in the same period last year, resulting in diluted EPS of $0.47 compared to $0.61.
- 3Commercial cloud annualized run rate exceeded $10 billion, driven by strong performance in Office 365 Commercial and Microsoft Azure, which saw revenue growth of 110%.
- 4The company continued its return of capital to shareholders, repurchasing approximately $3.6 billion of stock in the quarter and declaring a dividend of $0.36 per share.
- 5Operating income decreased by 20% to $5.28 billion, influenced by lower gross margins and increased operating expenses, partly offset by reduced restructuring charges compared to the prior year.
- 6The 'More Personal Computing' segment showed a slight revenue increase, driven by search advertising and gaming, but was offset by declines in Windows and Devices.
- 7Unearned revenue remained robust, totaling $25.9 billion, indicating future revenue streams from subscription and licensing agreements.