Microsoft: $23.38 billion in revenue, $6.48 billion in operating income for fiscal Q4 2014

Microsoft has announced that for the second calendar quarter of 2014 (which is considered the fourth quarter of 2014 in Microsoft's fiscal year) the company generated $23.38 billion in revenues, along with $6.48 billion in operating income.

For the quarter, OEM revenue grew by 3% and Office 365 Home and Personal subscribers climbed to a healthy 5.6 million subscribers; they added 1 million subscribers in the most recent quarter.

The recently acquired phone hardware unit from Nokia added 1.99 billion of revenue to the bottom line from the sales of 5.8 million Lumia Smartphones, and 30.3 million non-Lumia phones. 

Bing also saw a strong quarter as well, with Microsoft saying the revenue grew by 40% and the company now saying that the serve up 19.2% of the searches performed on the web. That means that roughly 1 in 5 searches now uses Bing technology. 

The commercial cloud side of Microsoft saw massive growth with an annualized rate of 147% that exceeds $4.4 billion. And, not so surprisingly, Windows volume license grew by 11%, likely thanks to the boost of sales as Windows XP has been put to bed.

On the Surface side of the balance sheet, that division brought in $409 million which Microsoft attributes to the Surface 2 and Pro 2 devices. Of course, the Pro 3 did launch in this quarter, but it was until the last few days of the month that the device became available at retail outlets.

The Xbox figures are a bit more ambiguous this quarter with Microsoft saying that they sold 1.1 million consoles. While they say this is an improvement over last year, where they sold 1 million during this time period, the Xbox One was not on sale. The company did not break down the figures of the Xbox One vs Xbox 360 which is likely not a good sign.

It is worth pointing out that net income did drop for this quarter compared to a year ago. This year, Microsoft brought in 4.612 billion in Net Income on $23.382 billion in revenue whereas last year they brought in $4.965 billion on $19.896 billion in revenue. This means that their operating margin has shrunk but revenues have continued to climb.

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Sony wishes it could make 6 billion in one year let alone not lose billions. MS has enough diversity in it's services to not be in any danger in any one area. They coul;d literally lose desktop PC's and still be making money. All these people trying to hint at MS being in trouble in the future are simply speculating based on bias.

Call me when they go one QTR without making Billions in profit then we can talk about some type of MS decline.

I expected them to give more exact figures on their Xbox sales figures. Like the article suggest probably not a good sign they were some ambiguous with their numbers.

Gonna be the one to ask but how does this compare to Apple? Does Apple still make more money from Microsoft even with a tiny percentage of the market?

Depends on the market... Apple have a much bigger market in some sectors and overall they have a revenue around 60% greater than Microsoft so they certainly sell more stuff in total.

Microsoft's operating income was $6.48 billion (which I understand is typically profit before tax), whereas Apple's net profit was $7.7 billion (which I understand is typically profit after tax). - I haven't looked into the details but these are not useful for any real comparison without more info (i.e. you can't work out who has better overall margins), but assuming Apple don't have a negative tax rate (who knows with their accountants!?) then yes Apple make more money.

The size of these companies make them incredible difficult to compare as they are so diverse and very different beyond their consumer fronts (selling phone and computers). For example Microsoft's research division is vast and heavily invests in new technologies.

bithush said,
Gonna be the one to ask but how does this compare to Apple? Does Apple still make more money from Microsoft even with a tiny percentage of the market?

Headline figures:

Apple: Revenues $37.43 billion: Earnings $7.70 billion: Margin: 21%
Microsoft: Revenues $23.38 billion: Earnings $6.48 billion: Margin: 28%

bithush said,
Gonna be the one to ask but how does this compare to Apple? Does Apple still make more money from Microsoft even with a tiny percentage of the market?
overall Apple has a higher profit but Microsoft makes more profit per $ revenue.

It's hard to believe they're just dumping a market where they sold 30 million non-smart-phones like that though. They've completely canceled all non-Windows Phone from the old Nokia. They're certainly not going to fill that gap even with cheap Windows Phones/Lumias. They're just dropping that entire market segment and all that obvious, easy revenue. It's weird.

pmbAustin said,
It's hard to believe they're just dumping a market where they sold 30 million non-smart-phones like that though. They've completely canceled all non-Windows Phone from the old Nokia. They're certainly not going to fill that gap even with cheap Windows Phones/Lumias. They're just dropping that entire market segment and all that obvious, easy revenue. It's weird.

I really think there is something in the water in Redmond that has caused everyone at MS to lose their minds. Seriously, you can't go for this many years with that much stupidity, without some kind of outside influence.

derekaw said,
'Decreasing profits' is not good at all.

The big shake up will show what direction Microsoft will fall into, we won't see the effects for another few quarters.

5.8million is lower than what they could do if they released newer 8.1 devices quicker, I mean the 930 is just hitting the market now, so it's not in that quarter at all, and the 63x was towards the end, doubt it had any impact either.

Hope MS can move faster and also this next quarter is when the new OEM makers show up, so that'll be interesting.

Studio384 said,
Note that the 5.8 million is not for the full quarter, 3 weeks are missing due to the acquisition.

Those 3 weeks could count for a small shift in the final numbers, maybe it's over 6 million that way, still they could do better if they'd get the ball rolling and release at a better rate. Still no new 830, 730 and so on, not to mention the 63x could've been better had they went with 1GB at least, people still question the 512MB choice but I blame Nokia for that one.

George P said,

Those 3 weeks could count for a small shift in the final numbers, maybe it's over 6 million that way, still they could do better if they'd get the ball rolling and release at a better rate. Still no new 830, 730 and so on, not to mention the 63x could've been better had they went with 1GB at least, people still question the 512MB choice but I blame Nokia for that one.


Dividing the 5.8 m by 9 weeks and then multiplying the result by 12 weeks, full quarter, you get a projection of around 7.7 m units. Not too bad but not good either; and yes, lack of new devices is hurting badly: the 1520 is too big, the 930 is not impressive and quite expensive for a six months old model; I was looking for McLaren but now nothing is compelling me to replace my 920.

Looks like Microsoft took another $900 million write-down for Surface RT. That accounted for ($0.07) of diluted EPS. IOW, without Surface RT, they would have beaten topline numbers.

TMYW said,
Looks like Microsoft took another $900 million write-down for Surface RT. That accounted for ($0.07) of diluted EPS. IOW, without Surface RT, they would have beaten topline numbers.

I mean bottomline numbers. They beat topline numbers, unlike Apple.

I've looked at a few places and I see no writedown listed for Surface, all I see is a $692million loss from the Nokia phone division even though it had $1.99billion in revenues.

The Seattle newspaper is characterizing this as a Surface MINI related write down!

That's a pretty big surprise if true. I figured that the Mini was going to make a reappearance around back to school season.

TMYW said,
http://www.microsoft.com/inves...ebcast/FY14/Q4/default.aspx

Look for "Surface RT Inventory Adjustments". I'm not sure if this was the same $900 million write-down that we knew about since last year. If that's the case, then I guess it wasn't booked until now (end of the fiscal year).

That was the same/original $900 million, there's no new one listed. It happened last year but they didn't post it till now when their fiscal year ended like you said. If there was a new write-off it'd be reported by everyone and everything tech related yet it's not.

The loss that cut into the numbers is the one I saw, the Nokia division loss of $692million. Take that out and I think EPS beats or matches expectations.

calimike said,
@bdsams tweeted Microsoft: 5.8 million Lumia Smartphones, and 30.3 million non-Lumia phones

Logic suggests when Microsoft ceases production of non-Windows Phones its market share will drop.

thealexweb said,

Logic suggests when Microsoft ceases production of non-Windows Phones its market share will drop.

Who says they weren't running WP OS?

thealexweb said,

I thought this 30.3mn figures were Android X, S40 and S60 devices.

Windows Phone runs on other hardware... There are many non-Nokia OEMS producing Windows Phones.

Studio384 said,

Through the reason is obvious: Microsoft is rolling out a new generation of Lumia devices, and all other OEMs too, so people wait to buy their device.

Just spent $250 to fix the screen and the shell of my 920 because this "new generation" seems more and more like the one celebrated by Gertrude Stein: " The lost generation"...

Dot Matrix said,

Windows Phone runs on other hardware... There are many non-Nokia OEMS producing Windows Phones.

Accounting for 10% of the market....

Astra.Xtreme said,
They missed expectations and EPS is down from a year ago, so not exactly good news.

The expectations didn't account for another Surface RT writedown. Otherwise, they would have beaten earnings by 2 cents instead of missing by 5 cents.

I don't remember anyone saying Microsoft was dead. Certain decisions they've made may have been "dead" wrong, however, they are a very profitable company.

Dot Matrix said,
The death of Microsoft is clearly exaggerated.

There are lots of ways to die. Quick if you are hit by a bus, maybe you have 10 years with an undiagnosed terminal cancer, maybe you don't die at all and just end up paralysed and horribly incapacitated and on life support then finally having someone pull the plug?

Dot Matrix said,
The death of Microsoft is clearly exaggerated.

Apple: Revenues $37.43 billion: Earnings $7.70 billion: Margin: 21%
Microsoft: Revenues $23.38 billion: Earnings $6.48 billion: Margin: 28%

The numbers don't lie. Microsoft is a significantly more profitable company than Apple.

Major_Plonquer said,

Apple: Revenues $37.43 billion: Earnings $7.70 billion: Margin: 21%
Microsoft: Revenues $23.38 billion: Earnings $6.48 billion: Margin: 28%

The numbers don't lie. Microsoft is a significantly more profitable company than Apple.

There are fundamental differences between "operating income" and "net profit";
following is a correct comparison of the results of the two companies:

MSFT:
Operating income: B 6.482
Net income: B 4.612

Apple:
Operating income: B 10.282
Net income: B 7.748