Post Earnings Coverage as Microsoft EPS Improved 13 Percent; Revenue Gained 4 Percent

Upcoming AWS Coverage on Iron Mountain Post-Earnings Results

LONDON, UK / ACCESSWIRE / February 3, 2017 / Active Wall St. announces its post-earnings coverage on Microsoft Corp. (NASDAQ: MSFT). The Company posted its second quarter fiscal 2017 results on January 26, 2017. Microsoft completed the acquisition of LinkedIn Corp. on December 08, 2016. For Q2 FY17, the results of LinkedIn, including amortization of acquired intangible assets, contributed revenue, operating income, net income, and diluted earnings per share of $228 million, $(201) million, $(100) million, and $(0.01), respectively. Register with us now for your free membership at: http://www.activewallst.com/register/.

One of Microsoft’s competitors within the Business Software & Services space, Iron Mountain Inc. (NYSE: IRM), announced on January 24, 2017, that it will report its Q4 and full year 2016 financial results before market hours on Thursday February 23, 2017. The Company will also host a conference call to discuss results on the same day. AWS will be initiating a research report on Iron Mountain in the coming days.

Today, AWS is promoting its earnings coverage on MSFT; touching on stock like IRM. Get our free coverage by signing up to:

http://www.activewallst.com/registration-3/?symbol=MSFT

http://www.activewallst.com/registration-3/?symbol=IRM

Earnings Reviewed

For the quarter ended on December 31, 2016, Microsoft’s revenue was $26.07 billion, up 2% and 4% in constant currency. The reported figure came in above analysts’ expectations and the Company’s own guidance. The Company’s gross margin grew 0.7 points to 62.0% in the reported quarter. Operating income totaled $8.2 billion, growing 5%, or 8% in constant currency, on a y-o-y basis.

Microsoft’s Commercial bookings increased 7% or 12% in constant currency. Commercial unearned revenue met the Company’s guidance of $21.1 billion, growing 8% and 9% in constant currency even with an FX headwind of approximately $150 million due to the strengthening US dollar through the reported quarter, while the Company’s contracted not billed balance reached an all-time high, exceeding $28 billion. For Q2 FY17, Microsoft’s commercial cloud revenue run rate grew to more than $14 billion, up 49%.

Microsoft’s net income for Q2 FY17 totaled $6.52 billion up 10% on a y-o-y basis. On a per share basis, Microsoft reported earnings of $0.83, an increase of 9% and 13% in constant currency compared to the year ago same quarter. The Company’s earnings numbers came in above market expectations of $0.79 per share.

Segment Results

During Q2 FY17, Microsoft’s Revenue from the Productivity and Business Processes, which includes the Office and Dynamics CRM businesses, was $7.38 billion, increasing 10%, or 12% in constant currency, compared to the year ago comparable period. Office commercial products and cloud services revenue increased 5% driven by Office 365 commercial revenue growth of 47%. Office consumer products and cloud services revenue increased 22% and Office 365 consumer subscribers increased to 24.9 million. Dynamics products and cloud services revenue increased 7% driven by Dynamics 365 revenue growth. The segment’s operating income totaled $3.26 billion, down 1%, but up 1% on a constant currency basis.

For the reported quarter, revenue from Microsoft’s Intelligent Cloud, which comprises server and enterprise products and services, totaled $6.86 billion which was higher by 8% on a y-o-y basis. The segment’s server products and cloud services revenue increased 12% driven by double-digit annuity revenue growth. Azure’s revenue increased 93% with Azure compute usage more than doubling on a y-o-y basis. Enterprise Services revenue decreased 4% with declines in custom support agreements offset by growth in Premier Support Services and consulting. The segment reported operating income of $2.40 billion, down 7% on a y-o-y basis.

Microsoft’s More Personal Computing segment which includes the Windows, Gaming, Devices and Search businesses reported revenue of $11.82 billion, down 5% on a y-o-y basis. The decline was primarily attributed to lower phone revenue. Windows OEM revenue increased 5%. Windows commercial products and cloud services revenue increased 5%, driven by annuity revenue growth. The segments Search advertising revenue excluding traffic acquisition costs increased 10%, bolstered by increased revenue per search and search volume. Gaming revenue decreased 3% with lower Xbox console revenue offset by Xbox software and services revenue growth. The segment’s operating income surged 33%, or 37% on a currency neutral basis, to $2.50 billion.

During Q2 FY17, Microsoft’s OEM business grew 5%. OEM Pro grew 6%, driven by an improving commercial PC market and enterprise demand for Windows 10. OEM Non-Pro grew 5%, ahead of the consumer PC market, as the Company’s partner ecosystem continued to see growth and share gains in the Windows premium device category. Windows commercial products and cloud services grew 5% and 6% in constant currency, with double-digit annuity billings growth and installed base expansion.

Balance Sheet

Microsoft ended Q2 FY17, with cash, cash equivalents, and short term investments balance of $122.78 billion compared to cash, cash equivalents, and short term investments balance of $113.24 billion as on June 30, 2016. The Company generated $6.29 billion as net cash from operation in Q2 FY17 compared to net cash of $5.62 billion in Q2 FY16. Microsoft returned $6.5 billion to shareholders through stock repurchases and dividends, also completing its prior $40 billion share repurchase program during the reported quarter.

Outlook

For Q3 FY17, Microsoft expects Productivity & Business Process revenues in the range of $7.65 billion to $7.85 billion, including $0.95 billion of revenue from LinkedIn, with a 2 point negative impact from FX. From the Intelligent Cloud the Company expects to generate revenues of $6.45 billion–$6.65 billion (2% impact from currency) and More Personal Computing revenue of around $9.05 billion–$9.35 billion (1% impact from currency).

Stock Performance

On February 02, 2017, Microsoft’s share price finished the trading session at $63.17, slightly sliding 0.64%. A total volume of 45.67 million shares exchanged hands, which was higher than the 3 months average volume of 26.07 million shares. The stock has surged 12.33% and 24.43% in the last six months and past twelve months, respectively. Furthermore, since the start of the year, shares of the Company have gained 1.66%. The stock is trading at a PE ratio of 29.74 and has a dividend yield of 2.47%.

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