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Microsoft Cloud Strength Highlights Mixed Third Quarter Results

by Dann Anthony Maurno
Assistant Editor, MSDW

Microsoft has released results for the quarter ended March 31, 2016, and once again, the cloud provided the brightest highlights.

Azure revenue grew by 120% year-over-year (YoY), while Dynamics CRM Online seats more than doubled YoY and enterprise mobility customers more than doubled.

"Digital transformation is the number one priority on our customers' agenda," said Microsoft COO Kevin Turner in a statement. "Companies from large established businesses to emerging start-ups are turning to our cloud solutions to help them move faster and generate new revenue."

For Microsoft overall results:

  • Revenue was $20.5 billion GAAP, and $22.1 billion non-GAAP
  • Operating income was $5.3 billion GAAP, and $6.8 billion non-GAAP
  • Net income was $3.8 billion GAAP, and $5.0 billion non-GAAP
  • Earnings per share was $0.47 GAAP, and $0.62 non-GAAP

Those GAAP figures paint a fairly somber picture, with revenues down 6% compared to Q3 2015; operating income down 20%; Net income down 25%; and Earnings per Share down 23%.

The Constant Currency method (which takes into account foreign currency fluctuations) yields far rosier results, with Revenue up 5%; Operating Income up 10%; Net Income up 6%; and Earnings per Share up 10%.

Similarly, Earnings per Share were just $0.47 - down 23% YoY. They remained even by non-GAAP measures, but were up 10% using Constant Currency.

That non-GAAP $0.62 figure is two cents short of analysts' forecasted profit of $0.64 per share on a revenue of $22.09 billion, though revenue was nearly spot-on against expectations at $22.1 billion non-GAAP. 

Revenue in Productivity and Business Processes - where the Dynamics products sit - grew 1% (up 6% in constant currency) to $6.5 billion, with the following business highlights:

  • Dynamics products and cloud services revenue grew 9% in constant currency with Dynamics CRM Online seat adds more than doubling ...

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About Dann Anthony Maurno

Dann Anthony Maurno is a seasoned business journalist who began his career as International Marketing Manager with Lilly Software, then moved on as a freelancer to write for such prestigious clients as CFO Magazine; Compliance Week;Manufacturing Business Technology; Decision Resources, Inc.; The Economist Intelligence Unit; and corporate clients such as Iron Mountain, Microsoft and SAP. He is the co-author of Thin Air: How Wireless Technology Supports Lean Initiatives(CRC/Productivity Press, 2010).