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Microsoft Quarterly Earnings (ending calendar Q3 2020) - includes Xbox Rev +30%

Oct 26, 2018
23,657
33,299
885
(MS's fiscal calendar is different than the standard calendar year)

As a whole company $37 billion sales, $14 billion net profit.


Earnings Release FY21 Q1
  • · Server products and cloud services revenue increased 22% (up 21% in constant currency) driven by Azure revenue growth of 48% (up 47% in constant currency)
  • · Windows OEM revenue declined 5%
  • · Windows Commercial products and cloud services revenue increased 13% (up 12% in constant currency)
  • · Xbox content and services revenue increased 30%
  • · Surface revenue increased 37% (up 36%in constant currency)
  • · Search advertising revenue excluding traffic acquisition costs decreased 10% (down 11% in constant currency)
Microsoft returned $9.5 billion to shareholders in the form of share repurchases and dividends in the first quarter of fiscal year 2021, an increase of 21% compared to the first quarter of fiscal year 2020.

Business Outlook
Microsoft will provide forward-looking guidance in connection with this quarterly earnings announcement on its earnings conference call and webcast.

Quarterly Highlights, Product Releases, and Enhancements
Every quarter Microsoft delivers hundreds of products, either as new releases, services, or enhancements to current products and services. These releases are a result of significant research and development investments, made over multiple years, designed to help customers be more productive and secure and to deliver differentiated value across the cloud and the edge.
Here are the major product releases and other highlights for the quarter, organized by product categories, to help illustrate how we are accelerating innovation across our businesses while expanding our market opportunities.

Responding to COVID-19
At Microsoft, our focus remains on ensuring the safety of our employees, striving to protect the health and well-being of the communities in which we operate, and providing technology and resources to our customers and partners to help them do their best work while remote. Additional information about Microsoft’s COVID-19 response can be found here.
Environmental, Social, and Governance (ESG)
To better execute on Microsoft’s mission, we focus our Environmental, Social, and Governance (ESG) efforts where we can have the most positive impact. To learn more about our latest initiatives and priorities, please visit our investor relations ESG website.

Webcast Details
Satya Nadella, chief executive officer, Amy Hood, executive vice president and chief financial officer, Alice Jolla, chief accounting officer, Keith Dolliver, deputy general counsel, and Michael Spencer, general manager of investor relations, will host a conference call and webcast at 2:30 p.m. Pacific time (5:30 p.m. Eastern time) 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/en-us/investor. The webcast will be available for replay through the close of business on October 27, 2021.

Constant Currency

Microsoft presents constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars using the average exchange rates from the comparative period rather than the actual exchange rates in effect during the respective periods. All growth comparisons relate to the corresponding period in the last fiscal year. Microsoft has provided this non-GAAP financial information to aid investors in better understanding our performance. The non-GAAP financial measures presented in this release should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.
Financial Performance Constant Currency Reconciliation
Three Months Ended September 30,
($ in millions, except per share amounts)
Revenue
Operating Income
Net Income
Diluted Earnings per Share
2019 As Reported
$33,055
$12,686
$10,678
$1.38
2020 As Reported
$37,154
$15,876
$13,893
$1.82
Percentage Change Y/Y
12%​
25%​
30%​
32%​
Constant Currency Impact
$108
$71
$231
$0.03
Percentage Change Y/Y Constant Currency
12%​
25%​
28%​
30%​
Segment Revenue Constant Currency Reconciliation
Three Months Ended September 30,
($ in millions)
Productivity and Business Processes
Intelligent Cloud
More Personal Computing
2019 As Reported
$11,077
$10,845
$11,133
2020 As Reported
$12,319
$12,986
$11,849
Percentage Change Y/Y
11%​
20%​
6%​
Constant Currency Impact
$32
$42
$34
Percentage Change Y/Y Constant Currency
11%​
19%​
6%​
Selected Product and Service Revenue Constant Currency Reconciliation
Three Months Ended September 30, 2020
Percentage Change Y/Y (GAAP)
Constant Currency Impact
Percentage Change Y/Y Constant Currency
Office Commercial products and cloud services
9%
0%
9%
Office 365 Commercial
21%
(1)%
20%
Office Consumer products and cloud services
13%
0%
13%
LinkedIn
16%
0%
16%
Dynamics products and cloud services
19%
(1)%
18%
Dynamics 365
38%
(1)%
37%
Server products and cloud services
22%
(1)%
21%
Azure
48%
(1)%
47%
Windows OEM
(5)%
0%
(5)%
Windows Commercial products and cloud services
13%
(1)%
12%
Xbox content and services
30%
0%
30%
Surface
37%
(1)%
36%
Search advertising excluding traffic acquisition costs
(10)%
(1)%
(11)%
 

Kagey K

Member
Dec 18, 2013
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You have to delete this, it goes against what every financial analyst in Gaff has been saying regarding MS needing money from sony/GamePass is making MS broke/No one is interested in Xbox/MS needs to exit the game industry... etc
If their profit stays the same as this quarter they could have bought Zeni 8 times in the upcoming year.
 
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Jun 21, 2020
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So does this confirm Xbox is dead yet? anyone? *cricket noises intensify*

Where are all the usual GAF analysts predicting Xbox's impending doom?

 
Oct 26, 2018
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$14 billion net profit in one quarter.

I think Natella can open up the coffers to buy more studios. The profits are actually accelerating even during COVID. They report $1.82 earnings per share. Expectations were only $1.54. They beat analysts estimates by $0.28 or by about 20%.

Crazy.
 

FunkMiller

Member
Aug 14, 2014
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More revenue doesn't necessarily mean more income or positive income at all...but I know it isn't something you guys want to discuss.

While it’s most certainly true that revenue reports without actual profit margins are pretty useless if you want an accurate analysis of a company’s fortunes, I think it’s fair to say that a 30% revenue increase for a company as large as Microsoft must indicate a healthy business model.
 

mckmas8808

Ah. Peace and quiet. #ADayWithoutAWoman
May 24, 2005
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More revenue doesn't necessarily mean more income or positive income at all...but I know it isn't something you guys want to discuss.

I was wondering this too. I'm curious about the net income of Xbox. I never doubted MS was making more revenue.
 
Oct 26, 2018
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At the current quarterly sales and profit, 4 quarters of this is about $150 billion sales at $56 billion profit. And each year it's growing faster and faster.

At this rate in about 4 - 5 years, MS will make more profit than Sony does in top line sales as Sony's 3 year performance has been stagnant at about $85 billion sales at $5 - 9 billion profit per year.
 

Arkam

Member
Jan 21, 2012
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Here, Now and maybe later
2020 has been rough for many, but damn are game companies raking in cash this year!

$3.1bn revenue by Xbox for the quarter, the best Q1 for Microsoft's gaming segment ever.

Clearly their strategy isn't working and it's time to start publishing IPs on PlayStation.

To be Devil's advocate.... Didn't SIE say they had the best Q1 in the entire history of Sony Corp? So there MAY (or may not) be something there worth emulating ;)
 
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NEbeast

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Jul 28, 2020
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You have to delete this, it goes against what every financial analyst in Gaff has been saying regarding MS needing money from sony/GamePass is making MS broke/No one is interested in Xbox/MS needs to exit the game industry... etc

These replies are sad, why make it about Sony? Be happy that it's more money to be invested into xbox.
 
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Oct 26, 2018
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2020 has been rough for many, but damn are game companies raking in cash this year!
Yup. Big money. Basically impossible to fail. Any game company screwing up financially this year has go to be doing something oddly wrong.

Even Turtle Beach is doing great again. A few years ago when PUBG was the rage, their stock went from $2 to $20. Then it died off. Now back to $20 as people are holing up at home gaming.
 
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Clear

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Feb 2, 2009
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I was wondering this too. I'm curious about the net income of Xbox. I never doubted MS was making more revenue.

Its also difficult to determine if that revenue is recurrent, people don't buy year-long subs every month so its hard to determine how sustainable the uplift is going to be. The value of such an approach cannot be judged in the short term, its by definition a long-term strategy that requires constant investment in order to keep it fresh. Acquisition/production cost of content is not going to be a flat-line, the larger the roster of teams/studios feeding the service the higher the running costs, we are talking literally hundreds of millions in burn-rate over the course of a single year.
 
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MrFunSocks

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Jul 9, 2020
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Man they REALLY need to hurry up and get some zenimax games out on PS5 so they can get some revenue. They might go under without it.

Insane growth almost across the board. Azure is unbelievable and as a dev that uses it they’re just hitting home run after home run. Trying to justify buying the surface pro x 2 atm haha

Compare this to Sony’s last quarter results where they launched TLOU2 and it hopefully shows people in here where they both stand - Sony had $2.15bil profit. MS had ~7x that. Hopefully people can understand why MS don’t need to release zenimax games on the PS5 now lol.

Its also difficult to determine if that revenue is recurrent, people don't buy year-long subs every month so its hard to determine how sustainable the uplift is going to be.
They don’t sell year long subs, so it’s pretty easy to determine.
 
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diffusionx

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Feb 25, 2006
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Consoomer spending is out of control as people escape some temporary respite from the living hell that our governments have created for us. I am not sure how useful these 2020 numbers are from a long term sustainability/viability of strategy viewpoint, for anyone, but especially a company that is remaking the console business.
 

Clear

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Feb 2, 2009
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They don’t sell year long subs, so it’s pretty easy to determine.

So they haven't been offering bargain-price conversions from 12 months XBL Gold to 12 months GP Ultimate for months now? Did I hallucinate it, and all the many threads with people talking about such offers?
 
Oct 26, 2018
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Consoomer spending is out of control as people escape some temporary respite from the living hell that our governments have created for us. I am not sure how useful these 2020 numbers are from a long term sustainability/viability of strategy viewpoint, for anyone, but especially a company that is remaking the console business.
People are stockpiling cash and savings as they are holed up at home or cautious to go out.

At some point government's will give the green light to get back to normal.

What people do with their wads of cash nobody knows. They might play safe and do a extra mortgage payment or two. They might pay off credit cards. Knowing the average person seems dumb with cash, they'll probably just blow it all and buy a new dining room set.
 

diffusionx

Member
Feb 25, 2006
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People are stockpiling cash and savings as they are holed up at home or cautious to go out.

At some point government's will give the green light to get back to normal.

What people do with their wads of cash nobody knows. They might play safe and do a extra mortgage payment or two. They might pay off credit cards. Knowing the average person seems dumb with cash, they'll probably just blow it all and buy a new dining room set.

This is what I am talking about...


Massive booms of hardware sales right before the end of a console gen is not normal. Videogame hardware up 15% 6-10 weeks before a new console gen is unprecedented. We were already seeing a decline in 2019 and 2018 before the government decided to lock us indoors and destroy the economy. So the numbers are great for everyone and doesn't speak to individual moves or strategies IMO.
 
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MrFunSocks

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Jul 9, 2020
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At the current quarterly sales and profit, 4 quarters of this is about $150 billion sales at $56 billion profit. And each year it's growing faster and faster.

At this rate in about 4 - 5 years, MS will make more profit than Sony does in top line sales as Sony's 3 year performance has been stagnant at about $85 billion sales at $5 - 9 billion profit per year.
That’s not how this works. This is MS as a whole, not Xbox. Xbox isn’t gonna post $56bil in profit on the Xbox division in a year ever lol.

MS as a whole absolutely dwarf Sony, always have. PlayStation is far bigger than Xbox though.
 

12Dannu123

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Sep 23, 2016
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That’s not how this works. This is MS as a whole, not Xbox. Xbox isn’t gonna post $56bil in profit on the Xbox division in a year ever lol.

MS as a whole absolutely dwarf Sony, always have. PlayStation is far bigger than Xbox though.

You should use those words the other way around. Microsoft is far bigger than Sony, but PlayStation dwarfs Xbox. They aren't far bigger.
 
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Oct 26, 2018
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That’s not how this works. This is MS as a whole, not Xbox. Xbox isn’t gonna post $56bil in profit on the Xbox division in a year ever lol.

MS as a whole absolutely dwarf Sony, always have. PlayStation is far bigger than Xbox though.
For sure. Company level.

And extremely important too because it gives MS ammo to do what it wants and buy more studios. Zenimax at $7.5 billion cost is about 6 weeks of profit.

Sony at $5-9 billion per year (trailing 3 years) can't do shit. They are going to bank most of it to play catch up with billions of losses years back.

In fact, their biggest acquisition the past 10 years isn't even gaming related. I think it was a music label at $2 billion.
 
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