MENU

Microsoft's Q3 FY17 Earnings Report Shows Azure, Office, And Windows Revenues Go Up, While Surface Goes Down

28 April 2017, 7:59 am EDT By Carl Velasco Tech Times
Close
Microsoft Station Q launches in Sydney as part of major quantum computing partnership
Microsoft has now released its earnings report for Q3 2017. The results suggest that while the company is successful in its Intelligent Cloud business, it needs to brush up on its Surface efforts.  ( Stephen Lam | Getty Images )

Microsoft has now officially outed its earnings report for the most recent fiscal quarter, and some of its divisions proved more impressive than others.

The company recorded a revenue of $23.6 billion, an earnings per share of $0.73, and a net income of $5.7 billion.

Here are the highlights of the report:

Microsoft's More Personal Computing unit in particular saw a decline, although the company's upwell in segments such as Intelligent Cloud and Productivity and Business Processes helped counter the downturn.

The figures show that market analysts' expectations were mostly right: They had expected Microsoft to earn $23.6 billion in revenue and achieve an earnings per share of $0.70.

That said, Wall Street still isn't too happy about it, presumably because it expected Microsoft to eclipse predictions. While the company's stock went up 0.65 percent in regular trading, it also went down about 1 percent in after-hours trading. This is mostly because of Surface revenue suffering.

Still, Satya Nadella, Microsoft's CEO, stressed the success of its cloud business.

"Our results this quarter reflect the trust customers are placing in the Microsoft Cloud," said Nadella. "From large multi-nationals to small and medium businesses to non-profits all over the world, organizations are using Microsoft's cloud platforms to power their digital transformation."

More Personal Computing

As mentioned above, Microsoft's More Personal Computing unit took quite a toll. This particular segment involves Windows devices, including phones, Surface devices, and the Xbox. It declined 7 percent to $8.8 billion against last year's $9.5 billion.

Surface: The drop is mostly attributed to lower Surface revenue, which decreased by 26 percent, now down to $831 million, against last year's $1.1 billion.

Windows Phones: The company's phone revenue also suffered significantly, declining by $730 million. Microsoft has decided not to give it a percentage altogether, signaling the company's intent to give the division less focus. Whether or not this confirms Microsoft is pulling out of the smartphone race is yet to be determined.

Search: Revenue growth in search soared 8 percent, taking traffic acquisition costs out of the equation. In the past, Microsoft had said this is because of Windows 10's firmer integration with Bing, the company's proprietary search engine.

Microsoft's Cloud Business

Microsoft's Intelligent Cloud business saw a $6.8 billion revenue in Q3 2017. Microsoft expects this to hit a $20 billion run rate by 2018.

Azure, the company's cloud computing platform, saw a 93 percent growth in revenue. The stellar Azure figures was mostly because of increased demand for its compute and premium services. The platform's yearly run rate is now $15.2 billion.

How LinkedIn Contributed

LinkedIn also helped Microsoft achieve growth in its Productivity and Business Processes segment. This is the first full quarter since Microsoft acquired LinkedIn for a whopping $26 billion. LinkedIn hit a $975 million revenue for Microsoft, slightly higher than the expected $950 million.

Office 365

Meanwhile, the Productivity and Business Processes segment itself, which bundles Office and Office 365 results, grew 22 percent, now up to $8 billion. Office 365 gained 1.3 million new users this quarter, which is a much-needed achievement considering the service has so far repeatedly failed to attract more than 1 million users per quarter.

Office products and cloud services shot up to 7 percent, and Office 365 revenue shot up to a whopping 45 percent.

Clearly, Q3 2017 is a successful time for Microsoft, and it spells an optimistic future for its Intelligent Cloud services. That said, Microsoft clearly has their work cut out for them, especially when it comes to putting more effort to grow Surface revenue.

Based on its most recent earnings report, we might see an upswell of support from Microsoft for products that didn't do very well. As such, we might be looking at big improvements for the Surface, Xbox, and possibly even Windows phones moving forward.

Thoughts about Microsoft's Q3 2017 performance? What do you think should the company focus on more? Feel free to sound off in the comments section below!

© 2017 Tech Times, All rights reserved. Do not reproduce without permission.

From Our Sponsor

How To Shop Smart: 5 Characteristics Of A Smart Shopper

You may love shopping, you may be a bargain hunter....but are you a smart shopper?
Real Time Analytics