Microsoft's Profit Goes Down, Windows Sales Still Strong

The company has reported its financial results for Q3 2014

Microsoft yesterday revealed its financial results for the third quarter of fiscal year 2014, posting $5.66 billion (€4.09 billion) in net income and $20.4 billion (€14.7 billion) in revenue. This means that revenues fell 0.4 percent versus Q3 2013, while the net income dropped by 6.6 percent.

The Devices and Consumer revenue grew 12 percent to $8.30 billion (€6 billion), the company said, with Windows OEM revenue going up by 4 percentage points. The Windows OEM Pro revenue also increased by 19 percent, while the software giant also sold no less than 2.0 million Xbox console units, including 1.2 million Xbox One consoles.

The company also revealed that Office 365 Home now has 4.4 million subscribers, which means that the cloud-based productivity suite has added approximately 1 million subscribers in just three months.

Surface sales are still an enigma for every one of us, but Microsoft did reveal that its Surface revenue grew over 50 percent to reach $500 million (€361 million). At the same time, Bing US search share has also increased significantly to 18.6 percent, while search advertising revenue grew 38%.

Just as expected, the new CEO Satya Nadella praised Microsoft's performance on the market, saying that the strength of the company's business was the main catalyst for this increase.

“This quarter’s results demonstrate the strength of our business, as well as the opportunities we see in a mobile-first, cloud-first world. We are making good progress in our consumer services like Bing and Office 365 Home, and our commercial customers continue to embrace our cloud solutions. Both position us well for long-term growth,” said Satya Nadella, chief executive officer at Microsoft. “We are focused on executing rapidly and delivering bold, innovative products that people love to use.”

The commercial revenue of Microsoft also posted an increase of 7 percentage points to $12.23 billion (€8.84 billion), with Windows volume licensing revenue growing 11 percent. This was possible because “business customers continue to make Windows their platform of choice,” Microsoft said.

Kevin Turner, chief operating officer at Microsoft, says that Microsoft will continue to improve its business in cloud services and data platform, so the commercial revenue is expected to keep growing in the next quarters.

“Our products and services continue to deliver differentiated business value to our customers, and we continue to win share in areas like cloud services, data platform, and infrastructure management. Our SQL Server business grew double-digits again this quarter, and with the announcements of SQL 2014 and Power BI for Office 365, we offer a unique, comprehensive, end-to-end data and analytics solution.”

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