Thursday, January 24th 2013

Microsoft Reports Record Revenue of $21.5 Billion in Second Quarter

Microsoft Corp. today announced quarterly revenue of $21.46 billion for the quarter ended December 31, 2012. Operating income, net income, and diluted earnings per share for the quarter were $7.77 billion, $6.38 billion, and $0.76 per share.

These financial results reflect the net deferral of revenue for the Windows Upgrade Offer, Office Upgrade Offer and Pre-sales, and the Entertainment and Devices Division Video Game Deferral, partially offset by the recognition of previously deferred revenue for Windows 8 Pre-sales. The following table reconciles these financial results reported in accordance with generally accepted accounting principles (GAAP) to non-GAAP financial results. We have provided this non-GAAP financial information to aid investors in better understanding the company's performance.


"Our big, bold ambition to reimagine Windows as well as launch Surface and Windows Phone 8 has sparked growing enthusiasm with our customers and unprecedented opportunity and creativity with our partners and developers," said Steve Ballmer, chief executive officer at Microsoft. "With new Windows devices, including Surface Pro, and the new Office on the horizon, we'll continue to drive excitement for the Windows ecosystem and deliver our software through devices and services people love and businesses need."

The Windows Division posted revenue of $5.88 billion, a 24% increase from the prior year period. Adjusting for the net deferral of revenue for the Windows Upgrade Offer and the recognition of the previously deferred revenue from Windows 8 Pre-sales, Windows Division non-GAAP revenue increased 11% for the second quarter. Microsoft has sold over 60 million Windows 8 licenses to date.

"We saw strong growth in our enterprise business driven by multi-year commitments to the Microsoft platform, which positions us well for long-term growth," said Peter Klein, chief financial officer at Microsoft. "Multi-year licensing revenue grew double-digits across Windows, Server & Tools, and the Microsoft Business Division."

The Server & Tools business reported $5.19 billion of revenue, a 9% increase from the prior year period, driven by double-digit percentage revenue growth in SQL Server and System Center.

"We see strong momentum in our enterprise business. With the launch of SQL Server 2012 and Windows Server 2012, we continue to see healthy growth in our data platform and infrastructure businesses and win share from our competitors," said Kevin Turner, chief operating officer at Microsoft. "With the coming launch of the new Office, we will provide a cloud-enabled suite of products that will deliver unparalleled productivity and flexibility."

The Microsoft Business Division posted $5.69 billion of revenue, a 10% decrease from the prior year period. Adjusting for the impact of the Office Upgrade Offer and Pre-sales, Microsoft Business Division non-GAAP revenue increased 3% for the second quarter. Revenue from Microsoft's productivity server offerings - collectively including Lync, SharePoint, and Exchange – continued double-digit percentage growth.

The Online Services Division reported revenue of $869 million, an 11% increase from the prior year period. Online advertising revenue grew 15% driven by an increase in revenue per search.

The Entertainment and Devices Division posted revenue of $3.77 billion, a decrease of 11% from the prior year period. Adjusting for the Video Game Deferral, the division's non-GAAP revenue decreased 2% for the second quarter. Xbox continues to be the top-selling console in the United States. During the quarter, Microsoft launched Windows Phone 8 with a broad array of carriers and devices.

Business Outlook
Microsoft reaffirms fiscal year 2013 operating expense guidance of $30.3 billion to $30.9 billion.
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12 Comments on Microsoft Reports Record Revenue of $21.5 Billion in Second Quarter

#1
Easy Rhino
Linux Advocate
yes, record revenue but guess what? from the WSJ

Microsoft's Profit Down 3.7% as Business, Entertainment Sales Fall
Posted on Reply
#2
drdeathx
by: Easy Rhino
yes, record revenue but guess what? from the WSJ

Microsoft's Profit Down 3.7% as Business, Entertainment Sales Fall
Desktop PC's down 20%. See a correlation? Not bad IMO.
Posted on Reply
#3
Gnomepatrol
by: Easy Rhino
yes, record revenue but guess what? from the WSJ

Microsoft's Profit Down 3.7% as Business, Entertainment Sales Fall
I had the same reaction when I read this. What exactly are they making their profits on? Software would make the only sense, but what software is allowing them to reach this level of Revenue?

Maybe a more precise breakdown will come later, but I doubt it.
Posted on Reply
#4
drdeathx
by: Gnomepatrol
I had the same reaction when I read this. What exactly are they making their profits on? Software would make the only sense, but what software is allowing them to reach this level of Revenue?

Maybe a more precise breakdown will come later, but I doubt it.
Profits were down doen't mean they don't make money
Posted on Reply
#5
Frick
Fishfaced Nincompoop
I think Office and Server are their main moneymakers. I could be wrong though.
Posted on Reply
#6
jihadjoe
Possibly SQL and Exchange too.
A couple of places I work with still use SQL 2005 for their databases because licenses for the newer versions are expensive.
Posted on Reply
#7
AndreiD
Maybe Windows 8 is selling well too?
I bought it and some friends for their discounted 39.99$ price, it's actually not bad at all, with Classic Shell it's pretty much Windows 7 with lots of back end improvements.
Posted on Reply
#8
v12dock
The value of the dollar is dropping of course you are making 'record profits'
Posted on Reply
#9
Dave65
by: AndreiD
Maybe Windows 8 is selling well too?
I bought it and some friends for their discounted 39.99$ price, it's actually not bad at all, with Classic Shell it's pretty much Windows 7 with lots of back end improvements.
Windows 8 is fine once you get the hang of it..Classic Shell works well.
Posted on Reply
#10
Frick
Fishfaced Nincompoop
by: Frick
I think Office and Server are their main moneymakers. I could be wrong though.
Herp derp Windows is actually their biggest one now.
Posted on Reply
#11
TRWOV
by: Easy Rhino
yes, record revenue but guess what? from the WSJ

Microsoft's Profit Down 3.7% as Business, Entertainment Sales Fall
You need to look at what brought their profit down to make a good judgment, remember that there's spending and there's investing. Did they put more $$$ on R&D? Did they buy some startup? Some random factor like exchange rates? Labor costs? Fines?
Posted on Reply
#12
Easy Rhino
Linux Advocate
by: TRWOV
You need to look at what brought their profit down to make a good judgment, remember that there's spending and there's investing. Did they put more $$$ on R&D? Did they buy some startup? Some random factor like exchange rates? Labor costs? Fines?
well that is exactly my point. reporting record revenue is pointless.
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