These results include the impact of a $7.5 billion non-cash impairment charge related to assets associated with the acquisition of the Nokia Devices and Services (NDS) business, in addition to a restructuring charge of $780 million, along with other charges.
Some highlights:
- Devices and Consumer revenue declined 13% (down 10% in constant currency) to $8.7 billion, with the following business highlights:
- Windows OEM revenue decreased 22% as revenue was impacted by PC market declines following the XP end-of-support refresh cycle
- Surface revenue grew 117% to $888 million, driven by Surface Pro 3 and launch of the Surface 3
- Total Xbox revenue grew 27% based on strong growth in consoles, Xbox Live transactions and first party games
- Search advertising revenue grew 21% with Bing U.S. market share at 20.3%, up 110 basis points over the prior year
- Office 365 Consumer subscribers increased to 15.2 million, with nearly 3 million subscribers added in the quarter.
- Officer Consumer revenue declined 42%
- Windows Phone revenue declined 68%
Commercial revenue increased slightly (up 4% in constant currency) to $13.5 billion, with the following business highlights:
- Commercial cloud revenue grew 88% (up 96% in constant currency) driven by Office 365, Azure and Dynamics CRM Online and is now on an annualized revenue run rate of over $8 billion
- Server products and services revenue grew 4% (up 9% in constant currency), with stable annuity performance offsetting declines in transactional revenue
- Dynamics revenue grew 6% (up 15% in constant currency), with the Dynamics CRM Online install base growing almost 2.5x
- Office Commercial products and services revenue declined 4% (up 1% in constant currency), with continued transition to Office 365 and lower transactional revenue due to declining business PCs following the XP end-of-support refresh cycle
- Windows volume licensing revenue declined 8% (down 4% in constant currency), driven primarily by transactional revenue declining following the XP end-of-support refresh cycle with annuity growth on a constant currency basis
“In our commercial business we continue to transform the product mix to annuity cloud solutions and now have 75,000 partners transacting in our cloud,” said Kevin Turner, chief operating officer at Microsoft. “We are also expanding the opportunity for more partners to sell Surface, and in the coming months will go from over 150 to more than 4,500 resellers globally.”