Microsoft revenue up 8% in Q2, net income dips 2%

Microsoft today reported 8 percent increase in Q2 revenue to $26.47 billion and 2 percent dip in operating income to $7.77 billion.

Microsoft faced challenging market conditions in China and Japan. In Japan, the PC market lagged due to the macroeconomic environment along with the combined impact of XP end of support and the VAT increase last year.

“We are taking bold steps forward across our business, and specifically with Windows 10, to deliver new experiences, new categories, and new opportunities to our customers,” said Microsoft CEO Satya Nadella.

Microsoft and main biz divisions

Devices and Consumer revenue grew 8 percent to $12.9 billion.

Surface tablet revenue rose 24 percent to $1.1 billion — driven by Surface Pro 3 and accessories.

Office 365 Home and Personal subscribers increased 30 percent sequentially to over 9.2 million.

Search advertising revenue grew 23 percent, with Bing U.S. market share at 19.7 percent, up 150 basis points over prior year.

Xbox console sales totaled 6.6 million units.

Microsoft phone hardware revenue reached $2.3 billion. Microsoft sold 10.5 million Lumia units — driven by growth in affordable smartphones.

Windows OEM Pro revenue declined 13 percent; revenue was impacted by the business PC market and Pro mix returning to pre-Windows XP end of support levels and by new lower-priced licenses for devices sold to academic customers.

Microsoft CEO Satya Nadella

Windows OEM non-Pro revenue declined 13 percent, with license growth from opening price point devices.

Commercial revenue grew 5 percent to $13.3 billion.

Commercial cloud revenue grew 114 percent driven by Office 365, Azure and Dynamic CRM Online, and is now on an annualized revenue run rate of $5.5 billion.

Office Commercial products and services revenue declined 1 percent; transactional revenue was impacted by the continued transition to Office 365 and declines in commercial PCs following the XP refresh cycle.

Server products and services revenue grew 9 percent, with double-digit growth of SQL Server and System Center.

Windows volume licensing revenue increased 3 percent.

Microsoft expects year-on-year revenue declines in China, Russia and Japan in Q3.

Baburajan K
[email protected]