Microsoft brings in $4.6 billion in Net Income for Q1 2016

Posted on October 22, 2015 by Brad Sams in Windows with 0 Comments

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Microsoft has announced its Q1 results for 2016 and the company had revenue of $20.4 billion GAAP, and $21.7 billion non-GAAP, operating income was $5.8 billion GAAP, and $7.1 billion non-GAAP, Net income was $4.6 billion GAAP, and $5.4 billion non-GAAP, and EPS was $0.57 GAAP, and $0.67 non-GAAP.

During the quarter, Microsoft announced a 16% increase in its quarterly dividend to $0.36 and returned $6.9 billion to shareholders in the form of share repurchases and dividends.

This is the first quarter that Microsoft has moved to its new reporting model that breaks down the financials into three segments Productivity and Business Processes, Intelligent Cloud and More Personal Computing; going forward, all financial reporting will use this structure.

Revenue in Productivity and Business Processes declined 3% (up 4% in constant currency) to $6.3 billion, revenue in Intelligent Cloud grew 8% (up 14% in constant currency) to $5.9 billion and revenue in More Personal Computing declined 17% (down 13% in constant currency) to $9.4 billion.

Per the trend we have seen in the last few quarters, Office has continue to do well with the company saying that Office 365 subscription numbers have passed 18 million and that Office commercial products and cloud services revenue grew 5%.

On the Windows side of things, despite having more than 110 million installs of Windows 10, the company said that Windows OEM revenue declined 6%. But, they make the argument that they did perform better than the overall PC market because the Windows 10 launch spurred PC ecosystem innovation and helped drive hardware mix toward premium devices.

On the Windows Phone side, the story is not nearly as pretty. The company reported that revenue declined 54% as they shifted their strategy and released fewer devices during the time period; 5.8 million Lumias and 25.5 million non-Lumia phones were sold. New Lumia models will come out in a few weeks which should help see this number recover for Q2.

Surface Revenue for the quarter came in at $672 million, down significantly from the prior year (908 million), but that’s not too surprising as the company will release their new devices next week, which means Q2 will be much stronger.

On the gaming side, Microsoft says that there are now 39 million Xbox Live gamers and that gaming revenue was up by 6%. But, the company said hardware revenue was down, primarily because of lower volumes of the Xbox 360 being sold; the company did not list how many consoles were sold.

Based on the initial market reaction, after hours trading has $MSFT up 2.37 points (4.9%) at the time of posting, means that Wall St is pleased with the performance for this quarter. The reason for the spike in price is likely tied to the strong growth of its cloud computing business that many to be the future of the company.

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