REDMOND, Wash. — October 24, 2013 —
Microsoft Corp. today announced revenue of $18.53 billion for the
quarter ended September 30, 2013. Gross margin, operating income, net
income, and diluted earnings per share for the quarter were $13.42
billion, $6.33 billion, $5.24 billion, and $0.62 per share.
These financial results reflect the deferral of $113 million of
revenue primarily related to Windows 8.1 Pre-sales. All growth
comparisons in the press release relate to the corresponding period in
the last fiscal year, unless otherwise noted.
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 devices and services transformation is progressing and we are
launching a wide range of compelling products and experiences this fall
for both business and consumers,” said Steve Ballmer, chief executive
officer at Microsoft. “Our new commercial services will help us continue
to outgrow the enterprise market, and we are seeing lots of consumer
excitement for Xbox One, Surface 2 and Surface Pro 2, and the full
spectrum of Windows 8.1 and Windows Phone devices.”
“We saw strong focus across our teams, generating record first-quarter
revenue even as we navigate a fundamental business transition. Our
enterprise renewals were very healthy and our devices and consumer
business continued to improve,” said Amy Hood, chief financial officer
at Microsoft. “We are making strategic investments in areas like
technological innovation, supply chain management, and global cloud
operations to build for the future and create long-term shareholder
value.”
Devices and Consumer revenue grew 4% to $7.46 billion.
- Windows OEM revenue declined 7%; Windows Pro revenue grew for the second consecutive quarter.
- Surface revenue grew to $400 million with sequential growth in revenue and units sold over the prior quarter.
- Search advertising revenue grew 47% driven by an increase in revenue per search and volume.
Commercial revenue grew 10% to $11.20 billion.
- SQL Server revenue grew double-digits, with SQL Server Premium revenue growing more than 30%.
- Lync, SharePoint, and Exchange, our productivity server offerings, collectively grew double-digits.
- Commercial cloud revenue grew 103%.
“We continue to execute well across our businesses and we are seeing
robust demand for our enterprise products and cloud services. Strong
customer adoption of Office 365, Azure, and Dynamics CRM Online is
accelerating our business transition to the cloud,” said Kevin Turner,
chief operating officer at Microsoft. “Our investments in SQL database
platform, Hyper-V, System Center, and Lync are driving market share
gains as these comprehensive solutions enable customers to increase
their insight and efficiency.”
Business Outlook
Microsoft will provide forward-looking guidance in connection with
this quarterly earnings announcement on its earnings conference call and
webcast detailed below.
Webcast Details
Amy Hood, executive vice president and chief financial officer, Frank
Brod, chief accounting officer, and Chris Suh, general manager of
Investor Relations, will host a conference call and webcast at 2:30 p.m.
PDT (5:30 p.m. EDT) today to discuss details of the company’s
performance for the quarter and certain forward-looking information. The
session may be accessed at http://www.microsoft.com/investor/. The webcast will be available for replay through the close of business on October 24, 2014.
Adjusted Financial Results and Non-GAAP Measures
For the first quarter of fiscal year 2014, GAAP revenue, operating
income, and diluted earnings per share included the deferral of $113
million of revenue primarily related to Windows 8.1 Pre-sales. During
the first quarter of fiscal year 2013, GAAP revenue, operating income,
and diluted earnings per share included the deferral of $1.4 billion of
revenue related to the Windows Upgrade Offer, Windows 8 Pre-sales, and
Office Offer. These items are defined below. In addition to these
financial results reported in accordance with GAAP, we have provided
certain non-GAAP financial information to aid investors in better
understanding the company’s performance. Presenting these measures
without the impact of these items gives additional insight into
operational performance and helps clarify trends affecting the company’s
business. For comparability of reporting, management considers this
information in conjunction with GAAP amounts in evaluating business
performance. These non-GAAP financial measures should not be considered
as a substitute for, or superior to, the measures of financial
performance prepared in accordance with GAAP.
Non-GAAP Definitions
Revenue deferred on Pre-sales of Windows 8.1 to original equipment
manufacturers and retailers before general availability (“Windows 8.1
Pre-sales”).
Revenue deferred on sales of Windows 7 with an option to upgrade to
Windows 8 Pro at a discounted price (the “Windows Upgrade Offer”) and
Pre-sales of Windows 8 to OEMs and retailers before general
availability.
Revenue deferred on sales of the previous version of the Microsoft
Office system, with a guarantee to be upgraded to the new Office at
minimal or no cost (the “Office Upgrade Offer”) and Pre-sales of the new
Office to OEMs and retailers before general availability (collectively,
the “Office Offer”).
About Microsoft
Founded in 1975, Microsoft (Nasdaq “MSFT”) is the worldwide leader in
software, services and solutions that help people and businesses realize
their full potential.
Forward-Looking Statements
Statements in this release that are “forward-looking statements” are
based on current expectations and assumptions that are subject to risks
and uncertainties. Actual results could differ materially because of
factors such as:
- intense competition in all of Microsoft’s markets;
- increasing focus on services presents execution and competitive risks;
- significant investments in new products and services that may not be profitable;
- acquisitions, joint ventures, and strategic alliances, including our acquisition of Nokia’s Devices and Services business, may have an adverse effect on our business;
- Microsoft’s continued ability to protect its intellectual property rights;
- claims that Microsoft has infringed the intellectual property rights of others;
- the possibility of unauthorized disclosure of significant portions of Microsoft’s source code;
- cyber-attacks and security vulnerabilities in Microsoft products that could reduce revenue or lead to liability;
- improper disclosure of personal data that could result in liability and harm to Microsoft’s reputation;
- outages, data losses, and disruptions of our online services if we fail to maintain an adequate operations infrastructure;
- government litigation and regulation that may limit how Microsoft designs and markets its products;
- Microsoft’s ability to attract and retain talented employees;
- delays in product development and related product release schedules;
- adverse economic or market conditions my harm our business;
- adverse results in legal disputes;
- unanticipated tax liabilities;
- our hardware and software products may experience quality or supply problems;
- impairment of goodwill or amortizable intangible assets causing a charge to earnings;
- exposure to increased economic and regulatory uncertainties from operating a global business; and
- catastrophic events or geo-political conditions may disrupt our business.
For further information regarding risks and uncertainties associated
with Microsoft’s business, please refer to the “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” and “Risk
Factors” sections of Microsoft’s SEC filings, including, but not
limited to, its annual report on Form 10-K and quarterly reports on Form
10-Q, copies of which may be obtained by contacting Microsoft’s
Investor Relations department at (800) 285-7772 or at Microsoft’s
Investor Relations website at http://www.microsoft.com/investor/.
All information in this release is as of October 24, 2013. The company
undertakes no duty to update any forward-looking statement to conform
the statement to actual results or changes in the company’s
expectations.
For more information, financial analysts and investors only:
Chris Suh, general manager, Investor Relations, (425) 706-4400
Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://www.microsoft.com/news/. Web links, telephone numbers, and titles were correct at time of publication, but may since have changed. Shareholder and financial information, as well as today’s 2:30 p.m. PDT conference call with investors and analysts, is available at http://www.microsoft.com/investor/.
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