Microsoft Corporation reported record revenue of $24.52 billion. These figures are an indication of growth by double-digits in the commercial and consumer divisions. The strong growth and gain in market share for most of its commercial products has put the company in a perfect position to welcome their next CEO. Steve Ballmer, Microsoft’s CEO, has played a huge role in doubling the Surface sales and boosting the growth of the hardware division. The latest reports on Microsoft shares indicate a 4% higher opening which is credited to the solid earnings by the company.
Total revenue growth
The total revenue of Microsoft rose by 11% to $24.5 billion in the quarter. This indicates a flat impressive gross margin despite the release of the new Xbox One, which exhibited a low gross margin during the same quarter. According to the chief financial officer of the company, Amy Hood, Microsoft delivered record revenue due to the high demand of their business offerings. He also acknowledges the effect of the strong progress made in the Consumer and Devices segment. The results are an indication of their focus to execute, cost discipline and enable long-term shareholding as they aim at transforming the company strategically.
Revenue from Devices and Consumers
It grew by 13% to $11.91 billion. There was a decline in revenue by Windows OEM. This reflects the strong growth of Windows OEM Pro revenue by 12%. This is offset by their continued softness in the consumer market. The Surface tablet revenue more than doubled sequentially from $400 million during the first quarter to $893 million during the second quarter. The company managed to sale a total of 7.4 million Xbox console units for the retail channel. These included 3.9 million One Consoles and 3.5 million 260 consoles. The Bing search share experienced growth to 18.2% and the search advertising revenue also grew by 34%.
Commercial revenue growth
The commercial revenue grew by 10% to $12.67 billion. The revenue kept growing into double-digits with the gain in market by the SQL Server. The system center exhibited continued strength with their double-digit growth in revenue. Revenue from the commercial cloud services was more than double. More appealing growth was exhibited by Azure and Office 365 commercial seats customers who grew in triple-digits.
The statements provided in the current release are only ‘forward-looking’. They are based on the current expectations and major assumptions that are subject to uncertainties and risks. Actual results of these figures are likely to differ slightly depending on some factors such as:
. Intense competition in all market categories at Microsoft.
. Increased focus on the services which is likely to present competitive and execution risks.
. Engaging in significant investments in new services and products that are likely to be unprofitable.
. Joint ventures, strategic alliances and device acquisitions are likely to have adverse effects on Microsoft.
. The ability to protect intellectual property rights.
. Security vulnerabilities and cyber-attacks that is likely to lead to liability or reduce the revenue of the company.
. The ability to attract and retain the efforts of talented employees.
Most investors are curiously waiting for the post-report earnings conference which will provide more facts based on the available figures.