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Commercial revenue climbs as Microsoft sees lower fourth quarter earnings

by Jason Gumpert
Editor, MSDynamicsWorld.com

Microsoft at WPC 2014 

Microsoft reported its fiscal fourth quarter earnings this afternoon, missing analyst estimates. Revenue of $23.38 billion was an increase of 18 percent from the same quarter in 2013.

The analyst consensus of earnings sat at $0.60 per share. The newly completed acquisition of Nokia accounted for a $.08 per share earnings decrease. Gross margin, operating income, and diluted earnings per share ("EPS") for the quarter were $15.79 billion, $6.48 billion, and $0.55 per share, respectively.

For Microsoft's fiscal year 2014, the company's revenue, gross margin, operating income, and diluted EPS were $86.83 billion (up 12%), $59.90 billion (up 4%), $27.76 billion (up 4%), and $2.63 per share (up 2%), respectively.

Commercial revenue, which includes Microsoft Business Solutions (MBS) and its Dynamics ERP and CRM products, grew in the fourth quarter by 11% to $13.48 billion, with gross margin up 10 percent to $10.99 billion.  Commercial cloud revenue (part of what the company calls "Commercial Other") more than doubled to a run rate of greater than $4.4 billion.

Last week at Microsoft's Worldwide Partner Conference 2014 (WPC), officials said that Dynamics CRM has hit forty straight quarters of "double digit" revenue growth.  They also said that Dynamics ERP products overall saw "record revenue" in fiscal year 2014. Dynamics AX saw "double digit revenue growth across the board". Dynamics GP, SL, and NAV combined saw a 30 percent increase in customer adds.

Microsoft's GAAP operating income was up 7 percent over the same quarter in 2013, with revenue up 18 percent and gross margin up 10 percent. Non-GAAP earnings per share were up 6 percent, compared with a 7 percent decrease in GAAP EPS.

Operating expenses climbed by $1 billion, or 12 percent. Cash flow from operations was up 61 percent to $9.5 billion. 

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About Jason Gumpert

As the editor of MSDynamicsWorld.com, Jason oversees all editorial content on the site and at our events, as well as providing site management and strategy. He can be reached at jgumpert@msdynamicsworld.com.

Prior to co-founding MSDynamicsWorld.com, Jason was a Principal Software Consultant at Parametric Technology Corporation (PTC), where he implemented solutions, trained customers, managed software development, and spent some time in the pre-sales engineering organization. He has also held consulting positions at CSC Consulting and Monitor Group.

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