Tag Archives: Wash

Microsoft announces quarterly dividend increase – Stories

Annual shareholders meeting set for Nov. 28, 2018

REDMOND, Wash. — Sept. 18, 2018 — Microsoft Corp. on Tuesday announced that its board of directors declared a quarterly dividend of $0.46 per share, reflecting a 4 cent or 9.5 percent increase over the previous quarter’s dividend. The dividend is payable Dec. 13, 2018, to shareholders of record on Nov. 15, 2018. The ex-dividend date will be Nov. 14, 2018.

In addition, the company announced the date for the 2018 Annual Shareholders Meeting, to be held Nov. 28, 2018. Shareholders at the close of business on Sept. 26, 2018, the record date, will be entitled to vote at the Annual Shareholders Meeting.

Microsoft (Nasdaq “MSFT” @microsoft) enables digital transformation for the era of an intelligent cloud and an intelligent edge. Its mission is to empower every person and every organization on the planet to achieve more.

For more information, financial analysts and investors only:

Investor Relations, Microsoft, (425) 706-4400

For more information, press only:

Microsoft Media Relations, WE Communications, (425) 638-7777, [email protected]

Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://www.microsoft.com/news. Web links, telephone numbers, and titles were correct at time of publication, but may since have changed. Shareholder and financial information is available at http://www.microsoft.com/en-us/investor.

Network Business Systems and Microsoft announce agreement to deliver broadband internet to rural communities in Illinois, Iowa and South Dakota – Stories

The partnership will benefit hundreds of thousands of unserved and underserved people

REDMOND, Wash. — Sept. 13, 2018 — On Thursday, Network Business Systems Inc., an Illinois-based wireless internet provider, and Microsoft Corp. announced a new agreement to deliver broadband internet access to rural communities in Illinois, Iowa and South Dakota, including approximately 126,700 people who are currently unserved.

This partnership addresses a critical need, as approximately 36 percent of people living in rural Illinois, 22 percent in rural Iowa and 25 percent in rural South Dakota lack access to broadband internet. In today’s digital economy, broadband internet access is a necessity, enabling people and small businesses to take advantage of advancements in technology, including education, healthcare and precision agriculture, and access a range of cloud-based services to run their businesses and improve their lives.

The partnership with Network Business Systems is part of the Microsoft Airband Initiative, which aims to extend broadband access to 2 million unserved people in rural America by July 4, 2022. Network Business Systems will construct and deploy wireless internet access networks using a mix of technologies including TV white spaces — vacant spectrum that can travel over long distances and rough terrain, including the heavy foliage that is common in the Midwestern landscape.

“Everyone deserves to have access to broadband no matter where they live because access to broadband is access to digital opportunity,” said Shelley McKinley, Microsoft’s head of Technology and Corporate Responsibility. “Our partnership with Network Business Systems will help ensure that hundreds of thousands of people in Illinois, Iowa and South Dakota can participate in the 21st century economy.”

“Bringing broadband internet to underserved areas is more important than ever, especially as industries including education, healthcare and business are depending more on internet access,” said Kari Hofmann, general manager of Network Business Systems. “We are very glad that Microsoft is investing the money in championing the further use of TV white spaces.”

Across the U.S., 19.4 million people in rural areas lack access to broadband internet. The Microsoft Airband Initiative is focused on bringing broadband coverage to people living in rural America through commercial partnerships and investment in digital skills training for people in the newly connected communities. Proceeds from Airband connectivity projects will be reinvested into the program to expand broadband to more rural areas.

About Network Business Systems Inc.

Network Business Systems Inc. has been providing rural broadband services for over 18 years. Being a technology consulting company, NBS identified a long-term need for rural internet providers that would be able to grow with the demand that rural America has, while handling the financial challenges that go along with providing rural broadband. NBS continues to provide high speed internet networks by partnering with local governments and agricultural companies. By partnering with local companies, we are able to keep costs down and provide robust internet connections and the lowest price possible to the consumer, while paying a living wage to our employees. NBS is a rural broadband provider to the residential, small business, and to enterprise sized businesses that need carrier grade connections with SLA agreements that are just as reliable as a fiber connection in urban cities.

About Microsoft

Microsoft (Nasdaq “MSFT” @microsoft) enables digital transformation for the era of an intelligent cloud and an intelligent edge. Its mission is to empower every person and every organization on the planet to achieve more.

For more information, press only:

Microsoft Media Relations, WE Communications for Microsoft, +1 (425) 638-7777,

[email protected]

Network Business System Inquiries, Kari Hofmann, general manager of Network Business Systems, +1 (309) 944-8823, ext. 101, [email protected] For more information on NBS or connectivity information: www.nbson.com or 888.944.8823.

Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://news.microsoft.com. Web links, telephone numbers and titles were correct at time of publication, but may have changed. For additional assistance, journalists and analysts may contact Microsoft’s Rapid Response Team or other appropriate contacts listed at http://news.microsoft.com/microsoft-public-relations-contacts.

National FFA Organization and Microsoft announce initiative to bring transformational innovation to over 650,000 students nationwide – Stories

FARGO, N.D., and REDMOND, Wash. — July 26, 2018 — The National FFA Organization and Microsoft Corp., on Thursday announced their collaboration to bring innovative technology, science, research and entrepreneurship to the classrooms of the more than 650,000 FFA student members nationwide through an initiative known as Blue 365.

FFA logoFFA members are the future of the food industry, which is relying on this generation to meet unparalleled challenges to feed a growing world population. In a modern world where the food and agriculture industries are reliant on precision agriculture, big data, cloud technology, robotic systems, advanced communications and other sophisticated technologies, Blue 365 will serve as a catalyst for evolving sustainability, innovative efficiency and preparing the future leaders who will solve the world’s critical agricultural challenges. At an event in Fargo today, National FFA CEO Mark Poeschl and Microsoft’s Brad Smith and Mary Snapp were joined by North Dakota Governor Doug Burgum, USDA State Director Clare Carlson, and North Dakota State FFA President Brianna Maddock.

“Today’s FFA members are our future industry leaders,” Poeschl said. “The future relies on connecting diversity of innovational approach, solutions-orientation and cutting-edge technology. We are excited that Microsoft shares our vision of Blue 365. Through agricultural education and FFA, our members are evolving their skill sets for the 21st century demands; they will be the change in our industry. Blue 365 can be the spark needed to create the next big idea in agriculture.”

Blue 365 will be unveiled in Indianapolis, Indiana, this October at the 91st National FFA Convention & Expo, the nation’s largest student convention. With the vision and commitment of title sponsors Microsoft and AgriNovus Indiana, The Blue Room, a 17,000-square-foot interactive space, will showcase the cutting-edge technology, research and innovation happening across the spectrum. Through experiential learning and specific focus on the most critical challenges facing our communities — from respecting the planet to the urgent matter of feeding the world — The Blue Room experience serves to inspire and equip students to activate their potential.

“While digital technology is transforming every part of the American economy, not everyone is acquiring the skills to thrive,” said Brad Smith, president, Microsoft. “As a company, we’re focused on ensuring everyone, regardless of their geography or circumstance, has access to the digital skills they need to compete and prosper. And our partnership with the National FFA will expand this work, helping students across the country prepare for digital jobs and the farms of the future.”

Microsoft’s participation in Blue 365 is part of its commitment to helping people who may be impacted by technological advances and builds on its TechSpark initiative launched last year. TechSpark is a civic program fostering greater opportunity and job creation in smaller metropolitan areas. The initiative is in six regions, including in North Dakota, and focuses on five program areas: digital transformation, digital skills and computer science education, career pathways, rural broadband connectivity, and support for nonprofits.

“Technology is changing every job, every industry and every organization, and agriculture is no exception,” Burgum said. “Today’s announcement from Microsoft and FFA will provide a valuable tool for our educators as they work to equip students with the skills necessary to succeed in a 21st century economy. Given FFA’s long and storied history in North Dakota and Microsoft’s commitment to investing in the future of our young people, Blue 365’s potential to support student learning is undeniable.”

“FFA students across America will lead the food and agriculture industry into the future. They must have opportunities to integrate digital skills into both their classroom studies and project-based learning,” said Mary Snapp, corporate vice president and lead for Microsoft Philanthropies. “Our partnership will help ensure that curriculum is up to date so that these young leaders can use technology to drive innovation in farms of the future, sustain and renew our planet, and enrich their communities.

The National FFA Organization provides leadership, personal growth and career success training through agricultural education to 653,359 student members who belong to one of 8,568 local FFA chapters throughout the U.S., Puerto Rico and the U.S. Virgin Islands.

About National FFA Organization

The National FFA Organization is a national youth organization of 653,359 student members as part of 8,568 local FFA chapters in all 50 states, Puerto Rico and the U.S. Virgin Islands. The FFA mission is to make a positive difference in the lives of students by developing their potential for premier leadership, personal growth and career success through agricultural education. The National FFA Organization operates under a federal charter granted by the 81st United States Congress and it is an integral part of public instruction in agriculture. The U.S. Department of Education provides leadership and helps set direction for FFA as a service to state and local agricultural education programs. For more, visit the National FFA Organization online at FFA.org and on Facebook, Twitter and the official National FFA Organization blog.

About National FFA Foundation

The National FFA Foundation builds partnerships with industry, education, government, other foundations and individuals to secure financial resources that recognize FFA member achievements, develop student leaders and support the future of agricultural education. Governed by a 19-member board of trustees composed of educators, business leaders, individual donors and FFA Alumni, the foundation is a separately registered nonprofit organization. About 82 percent of every dollar received by the foundation supports FFA members and agricultural education opportunities. For more, visit FFA.org/Give.

About Microsoft

Microsoft (Nasdaq “MSFT” @microsoft) enables digital transformation for the era of an intelligent cloud and an intelligent edge. Its mission is to empower every person and every organization on the planet to achieve more.

For more information, press only:

Microsoft Media Relations, WE Communications for Microsoft, (425) 638-7777,

[email protected]

Kristy Meyer, National FFA Organization, (800) 293-2387, [email protected]

Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://news.microsoft.com. Web links, telephone numbers and titles were correct at time of publication but may have changed. For additional assistance, journalists and analysts may contact Microsoft’s Rapid Response Team or other appropriate contacts listed at http://news.microsoft.com/microsoft-public-relations-contacts.

Microsoft Cloud drives record fourth quarter results | Stories

REDMOND, Wash. — July 19, 2018 — Microsoft Corp. today announced the following results for the quarter ended June 30, 2018, as compared to the corresponding period of last fiscal year:

  • Revenue was $30.1 billion and increased 17%
  • Operating income was $10.4 billion and increased 35%
  • Net income was $8.9 billion GAAP and $8.8 billion non-GAAP
  • Diluted earnings per share was $1.14 GAAP and $1.13 non-GAAP

“We had an incredible year, surpassing $100 billion in revenue as a result of our teams’ relentless focus on customer success and the trust customers are placing in Microsoft,” said Satya Nadella, chief executive officer of Microsoft. “Our early investments in the intelligent cloud and intelligent edge are paying off, and we will continue to expand our reach in large and growing markets with differentiated innovation.”

The following table reconciles our financial results reported in accordance with generally accepted accounting principles (GAAP) to non-GAAP financial results. Additional information regarding our non-GAAP definition is provided below. All growth comparisons relate to the corresponding period in the last fiscal year.

Three Months Ended June 30,
 ($ in millions, except per share amounts) Revenue Operating Income Net Income Diluted Earnings per Share
2017 As Reported (GAAP) $25,605 $7,682 $8,069 $1.03
  Restructuring Expenses 306 243 0.03
2017 As Adjusted (non-GAAP) $25,605 $7,988 $8,312 $1.06
2018 As Reported (GAAP) $30,085 $10,379 $8,873 $1.14
  Net TCJA Impact (104) (0.01)
2018 As Adjusted (non-GAAP) $30,085 $10,379 $8,769 $1.13
Percentage Change Y/Y (GAAP) 17% 35% 10% 11%
Percentage Change Y/Y (non-GAAP) 17% 30% 5% 7%
Percentage Change Y/Y (non-GAAP) Constant Currency 15% 24% 2% 3%

GAAP results include a net benefit of $104 million related to the Tax Cuts and Jobs Act (TCJA) for the three months ended June 30, 2018 and a charge of $306 million related to restructuring expenses for the three months ended June 30, 2017, which are excluded from our non-GAAP results.

Microsoft returned $5.3 billion to shareholders in the form of dividends and share repurchases in the fourth quarter of fiscal year 2018, an increase of 16% compared to the fourth quarter of fiscal year 2017.

“Exceptional sales execution delivered double-digit revenue growth across all segments and strong progress against our strategic priorities, anchored by commercial cloud revenue growing 53% year-over-year to $6.9 billion,” said Amy Hood, executive vice president and chief financial officer of Microsoft.

Revenue in Productivity and Business Processes was $9.7 billion and increased 13% (up 10% in constant currency), with the following business highlights:

  • Office commercial products and cloud services revenue increased 10% (up 8% in constant currency) driven by Office 365 commercial revenue growth of 38% (up 35% in constant currency)
  • Office consumer products and cloud services revenue increased 8% (up 6% in constant currency) and Office 365 consumer subscribers increased to 31.4 million
  • LinkedIn revenue increased 37% (up 34% in constant currency) with continued acceleration in engagement highlighted by LinkedIn sessions growth of 41%
  • Dynamics products and cloud services revenue increased 11% (up 8% in constant currency) driven by Dynamics 365 revenue growth of 61% (up 56% in constant currency)

Revenue in Intelligent Cloud was $9.6 billion and increased 23% (up 20% in constant currency), with the following business highlights:

  • Server products and cloud services revenue increased 26% (up 24% in constant currency) driven by Azure revenue growth of 89% (up 85% in constant currency)
  • Enterprise Services revenue increased 8% (up 7% in constant currency)

Revenue in More Personal Computing was $10.8 billion and increased 17% (up 16% in constant currency), with the following business highlights:

  • Windows OEM revenue increased 7% (up 7% in constant currency) driven by OEM Pro revenue growth of 14%
  • Windows commercial products and cloud services revenue increased 23% (up 19% in constant currency) driven by an increased volume of multi-year agreements and the mix of products that carry higher in-quarter revenue recognition
  • Gaming revenue increased 39% (up 38% in constant currency) with Xbox software and services revenue growth of 36% (up 35% in constant currency) mainly from third party title strength
  • Surface revenue increased 25% (up 21% in constant currency) driven by strong performance of the latest editions of Surface against a low prior year comparable
  • Search advertising revenue excluding traffic acquisition costs increased 17% (up 16% in constant currency) driven by higher revenue per search and search volume

Fiscal Year 2018 Results

Microsoft Corp. today announced the following results for the fiscal year ended June 30, 2018, as compared to the corresponding period of last fiscal year:

  • Revenue was $110.4 billion and increased 14%
  • Operating income was $35.1 billion and increased 21%
  • Net income was $16.6 billion GAAP and $30.3 billion non-GAAP
  • Diluted earnings per share was $2.13 GAAP and $3.88 non-GAAP
  • GAAP results include a $13.7 billion net charge related to TCJA

The following table reconciles our financial results reported in accordance with GAAP to non-GAAP financial results. Additional information regarding our non-GAAP definition is provided below. All growth comparisons relate to the corresponding period in the last fiscal year.

Twelve Months Ended June 30,
 ($ in millions, except per share amounts) Revenue Operating Income Net Income Diluted Earnings per Share
2017 As Reported (GAAP) $96,571 $29,025 $25,489 $3.25
  Restructuring Expenses 306 243 0.04
2017 As Adjusted (non-GAAP) $96,571 $29,331 $25,732 $3.29
2018 As Reported (GAAP) $110,360 $35,058 $16,571 $2.13
  Net TCJA Impact 13,696 1.75
2018 As Adjusted (non-GAAP) $110,360 $35,058 $30,267 $3.88
Percentage Change Y/Y (GAAP) 14% 21% (35)% (34)%
Percentage Change Y/Y (non-GAAP) 14% 20% 18% 18%
Percentage Change Y/Y (non-GAAP) Constant Currency 13% 17% 15% 16%

GAAP results include a net charge of $13.7 billion related to TCJA for the twelve months ended June 30, 2018 and a charge of $306 million related to restructuring expenses for the twelve months ended June 30, 2017, which are excluded from our non-GAAP results.

Business Outlook

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

Webcast Details

Satya Nadella, chief executive officer, Amy Hood, executive vice president and chief financial officer, Frank Brod, chief accounting officer, Carolyn Frantz, deputy general counsel and corporate secretary, 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 July 19, 2019.

New Accounting Standards

We adopted new accounting standards related to revenue recognition and leases effective July 1, 2017. The prior periods presented here have been restated to reflect adoption of these new standards.

Non-GAAP Definition

Restructuring Expenses. We recorded $306 million of restructuring charges primarily related to our sales and marketing restructuring plan during the three months ended June 30, 2017.

TCJA Impact. We recorded a benefit of $104 million during the three months ended June 30, 2018 and a net charge of $13.7 billion during the twelve months ended June 30, 2018 related to TCJA. As of June 30, 2018, we have not completed our accounting for the tax effects of TCJA. Our net charge is provisional based on reasonable estimates for those tax effects. Changes to these estimates or new guidance issued by regulators may materially impact our provision for income taxes and effective tax rate in the period in which the adjustments are made. Our accounting for the tax effects of TCJA will be completed during the measurement period, which should not extend beyond the second fiscal quarter of 2019.

We have provided non-GAAP financial measures related to restructuring expenses and TCJA to aid investors in better understanding our performance. We believe these non-GAAP measures aid investors by providing additional insight into our operational performance and help clarify trends affecting our business. For comparability of reporting, management considers non-GAAP measures in conjunction with GAAP financial results in evaluating business 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.

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 June 30,
 ($ in millions, except per share amounts) Revenue Operating Income Net Income Diluted Earnings per Share
2017 As Reported (GAAP) $25,605 $7,682 $8,069 $1.03
2017 As Adjusted (non-GAAP) $25,605 $7,988 $8,312 $1.06
2018 As Reported (GAAP) $30,085 $10,379 $8,873 $1.14
2018 As Adjusted (non-GAAP) $30,085 $10,379 $8,769 $1.13
Percentage Change Y/Y (GAAP) 17% 35% 10% 11%
Percentage Change Y/Y (non-GAAP) 17% 30% 5% 7%
Constant Currency Impact $549 $450 $279 $0.04
Percentage Change Y/Y (non-GAAP) Constant Currency 15% 24% 2% 3%

 

Twelve Months Ended June 30,
 ($ in millions, except per share amounts) Revenue Operating Income Net Income Diluted Earnings per Share
2017 As Reported (GAAP) $96,571 $29,025 $25,489 $3.25
2017 As Adjusted (non-GAAP) $96,571 $29,331 $25,732 $3.29
2018 As Reported (GAAP) $110,360 $35,058 $16,571 $2.13
2018 As Adjusted (non-GAAP) $110,360 $35,058 $30,267 $3.88
Percentage Change Y/Y (GAAP) 14% 21% (35)% (34)%
Percentage Change Y/Y (non-GAAP) 14% 20% 18% 18%
Constant Currency Impact 1,275 654 569 $0.07
Percentage Change Y/Y (non-GAAP) Constant Currency 13% 17% 15% 16%

 Segment Revenue Constant Currency Reconciliation

Three Months Ended June 30,
 ($ in millions) Productivity and Business Processes Intelligent Cloud More Personal Computing
2017 As Reported $8,548 $7,822 $9,235
2018 As Reported $9,668 $9,606 $10,811
Percentage Change Y/Y 13% 23% 17%
Constant Currency Impact $228 $182 $139
Percentage Change Y/Y Constant Currency 10% 20% 16%

 Selected Product and Service Revenue Constant Currency Reconciliation 

Three Months Ended June 30, 2018
Percentage Change Y/Y (GAAP) Constant Currency Impact Percentage Change Y/Y Constant Currency
Office commercial products and cloud services 10% (2)% 8%
Office 365 commercial 38% (3)% 35%
Office consumer products and cloud services 8% (2)% 6%
LinkedIn 37% (3)% 34%
Dynamics products and cloud services 11% (3)% 8%
Dynamics 365 61% (5)% 56%
Server products and cloud services 26% (2)% 24%
Azure 89% (4)% 85%
Enterprise Services 8% (1)% 7%
Windows OEM 7% 0% 7%
Windows commercial products and cloud services 23% (4)% 19%
Search advertising excluding traffic acquisition costs 17% (1)% 16%
Surface 25% (4)% 21%
Gaming 39% (1)% 38%
Xbox software and services 36% (1)% 35%

About Microsoft

Microsoft (Nasdaq “MSFT” @microsoft) enables digital transformation for the era of an intelligent cloud and an intelligent edge. Its mission is to empower every person and every organization on the planet to achieve more.

Forward-Looking Statements

Statements in this release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors such as:

  • intense competition in all of our markets that may lead to lower revenue or operating margins;
  • increasing focus on cloud-based services presenting execution and competitive risks;
  • significant investments in new products and services that may not achieve expected returns;
  • acquisitions, joint ventures, and strategic alliances that may have an adverse effect on our business;
  • impairment of goodwill or amortizable intangible assets causing a significant charge to earnings;
  • a change in our ability to earn expected revenues from our intellectual property rights;
  • claims that Microsoft has infringed the intellectual property rights of others;
  • the possibility that we may fail to protect our source code;
  • cyberattacks and security vulnerabilities that could lead to reduced revenue, increased costs, liability claims, or harm to our reputation or competitive position;
  • disclosure and misuse of personal data that could cause liability and harm to our reputation;
  • the possibility that we may not be able to protect information stored in our products and services from use by others;
  • abuse of our advertising or social platforms that may harm our reputation or user engagement;
  • excessive outages, data losses, and disruptions of our online services if we fail to maintain an adequate operations infrastructure;
  • government litigation and regulatory activity relating to competition rules that may limit how we design and market our products;
  • potential liability under trade protection, anti-corruption, and other laws resulting from our global operations;
  • laws and regulations relating to the handling of personal data that may impede the adoption of our services or result in increased costs, legal claims, fines, or reputational damage;
  • the dependence of our business on our ability to attract and retain talented employees;
  • claims against us that may result in adverse outcomes in legal disputes;
  • additional tax liabilities;
  • quality or supply problems;
  • exposure to increased economic and operational uncertainties from operating a global business, including the effects of foreign currency exchange;
  • catastrophic events or geo-political conditions that may disrupt our business;
  • adverse economic or market conditions that may harm our business;
  • changes in our sales organization that may impact revenues;
  • the development of the internet of things presenting security, privacy, and execution risks;
  • issues about the use of artificial intelligence in our offerings that may result in competitive harm, legal liability, or reputational harm; and
  • damage to our reputation or our brands that may harm our business and operating results.

For more information about risks and uncertainties associated with Microsoft’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of Microsoft’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Microsoft’s Investor Relations department at (800) 285-7772 or at Microsoft’s Investor Relations website at http://www.microsoft.com/en-us/investor.

All information in this release is as of June 30, 2018. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.

For more information, press only:

Microsoft Media Relations, WE Communications for Microsoft, (425) 638-7777, [email protected]

For more information, financial analysts and investors only:

Michael Spencer, general manager, Investor Relations, (425) 706-4400

Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://www.microsoft.com/news. Web links, telephone numbers, and titles were correct at time of publication, but may since have changed. Shareholder and financial information, as well as today’s 2:30 p.m. Pacific time conference call with investors and analysts, is available at http://www.microsoft.com/en-us/investor.

FY18 Q4 – Press Releases – Investor Relations

Microsoft Cloud Drives Record Fourth Quarter Results

REDMOND, Wash. — July 19, 2018 — Microsoft Corp. today announced the following results for the quarter ended June 30, 2018, as compared to the corresponding period of last fiscal year:

·        Revenue was $30.1 billion and increased 17%

·        Operating income was $10.4 billion and increased 35%

·        Net income was $8.9 billion GAAP and $8.8 billion non-GAAP

·        Diluted earnings per share was $1.14 GAAP and $1.13 non-GAAP

“We had an incredible year, surpassing $100 billion in revenue as a result of our teams’ relentless focus on customer success and the trust customers are placing in Microsoft,” said Satya Nadella, chief executive officer of Microsoft. “Our early investments in the intelligent cloud and intelligent edge are paying off, and we will continue to expand our reach in large and growing markets with differentiated innovation.”

The following table reconciles our financial results reported in accordance with generally accepted accounting principles (GAAP) to non-GAAP financial results. Additional information regarding our non-GAAP definition is provided below. All growth comparisons relate to the corresponding period in the last fiscal year.

 

Three Months Ended June 30,

 ($ in millions, except per share amounts)

Revenue

Operating Income

Net Income

Diluted Earnings per Share

2017 As Reported (GAAP)

$25,605

$7,682

$8,069

$1.03

  Restructuring Expenses

306

243

0.03

2017 As Adjusted (non-GAAP)

$25,605

$7,988

$8,312

$1.06

2018 As Reported (GAAP)

$30,085

$10,379

$8,873

$1.14

  Net TCJA Impact

(104)

(0.01)

2018 As Adjusted (non-GAAP)

$30,085

$10,379

$8,769

$1.13

Percentage Change Y/Y (GAAP)

17%

35%

10%

11%

Percentage Change Y/Y (non-GAAP)

17%

30%

5%

7%

Percentage Change Y/Y (non-GAAP) Constant Currency

15%

24%

2%

3%

 

GAAP results include a net benefit of $104 million related to the Tax Cuts and Jobs Act (TCJA) for the three months ended June 30, 2018 and a charge of $306 million related to restructuring expenses for the three months ended June 30, 2017, which are excluded from our non-GAAP results.

Microsoft returned $5.3 billion to shareholders in the form of dividends and share repurchases in the fourth quarter of fiscal year 2018, an increase of 16% compared to the fourth quarter of fiscal year 2017.

“Exceptional sales execution delivered double-digit revenue growth across all segments and strong progress against our strategic priorities, anchored by commercial cloud revenue growing 53% year-over-year to $6.9 billion,” said Amy Hood, executive vice president and chief financial officer of Microsoft. 

Revenue in Productivity and Business Processes was $9.7 billion and increased 13% (up 10% in constant currency), with the following business highlights:

·        Office commercial products and cloud services revenue increased 10% (up 8% in constant currency) driven by Office 365 commercial revenue growth of 38% (up 35% in constant currency)

·        Office consumer products and cloud services revenue increased 8% (up 6% in constant currency) and Office 365 consumer subscribers increased to 31.4 million

·        LinkedIn revenue increased 37% (up 34% in constant currency) with continued acceleration in engagement highlighted by LinkedIn sessions growth of 41%

·        Dynamics products and cloud services revenue increased 11% (up 8% in constant currency) driven by Dynamics 365 revenue growth of 61% (up 56% in constant currency)

Revenue in Intelligent Cloud was $9.6 billion and increased 23% (up 20% in constant currency), with the following business highlights:

·        Server products and cloud services revenue increased 26% (up 24% in constant currency) driven by Azure revenue growth of 89% (up 85% in constant currency)

·        Enterprise Services revenue increased 8% (up 7% in constant currency)

Revenue in More Personal Computing was $10.8 billion and increased 17% (up 16% in constant currency), with the following business highlights:

·        Windows OEM revenue increased 7% (up 7% in constant currency) driven by OEM Pro revenue growth of 14%

·        Windows commercial products and cloud services revenue increased 23% (up 19% in constant currency) driven by an increased volume of multi-year agreements and the mix of products that carry higher in-quarter revenue recognition

·        Gaming revenue increased 39% (up 38% in constant currency) with Xbox software and services revenue growth of 36% (up 35% in constant currency) mainly from third party title strength

·        Surface revenue increased 25% (up 21% in constant currency) driven by strong performance of the latest editions of Surface against a low prior year comparable

·        Search advertising revenue excluding traffic acquisition costs increased 17% (up 16% in constant currency) driven by higher revenue per search and search volume

Fiscal Year 2018 Results

Microsoft Corp. today announced the following results for the fiscal year ended June 30, 2018, as compared to the corresponding period of last fiscal year:

·        Revenue was $110.4 billion and increased 14%

·        Operating income was $35.1 billion and increased 21%

·        Net income was $16.6 billion GAAP and $30.3 billion non-GAAP

·        Diluted earnings per share was $2.13 GAAP and $3.88 non-GAAP

·        GAAP results include a $13.7 billion net charge related to TCJA

The following table reconciles our financial results reported in accordance with GAAP to non-GAAP financial results. Additional information regarding our non-GAAP definition is provided below. All growth comparisons relate to the corresponding period in the last fiscal year.

 

 

Twelve Months Ended June 30,

 

 ($ in millions, except per share amounts)

Revenue

Operating Income

Net Income

Diluted Earnings per Share

2017 As Reported (GAAP)

$96,571

$29,025

$25,489

$3.25

  Restructuring Expenses

306

243

0.04

2017 As Adjusted (non-GAAP)

$96,571

$29,331

$25,732

$3.29

2018 As Reported (GAAP)

$110,360

$35,058

$16,571

$2.13

  Net TCJA Impact

13,696

1.75

2018 As Adjusted (non-GAAP)

$110,360

$35,058

$30,267

$3.88

Percentage Change Y/Y (GAAP)

14%

21%

(35)%

(34)%

Percentage Change Y/Y (non-GAAP)

14%

20%

18%

18%

Percentage Change Y/Y (non-GAAP) Constant Currency

13%

17%

15%

16%

 

GAAP results include a net charge of $13.7 billion related to TCJA for the twelve months ended June 30, 2018 and a charge of $306 million related to restructuring expenses for the twelve months ended June 30, 2017, which are excluded from our non-GAAP results.

Business Outlook

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

Webcast Details

Satya Nadella, chief executive officer, Amy Hood, executive vice president and chief financial officer, Frank Brod, chief accounting officer, Carolyn Frantz, deputy general counsel and corporate secretary, 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 July 19, 2019.

New Accounting Standards

We adopted new accounting standards related to revenue recognition and leases effective July 1, 2017.The prior periods presented here have been restated to reflect adoption of these new standards.

Non-GAAP Definition

Restructuring Expenses. We recorded $306 million of restructuring charges primarily related to our sales and marketing restructuring plan during the three months ended June 30, 2017.

TCJA Impact. We recorded a benefit of $104 million during the three months ended June 30, 2018 and a net charge of $13.7 billion during the twelve months ended June 30, 2018 related to TCJA. As of June 30, 2018, we have not completed our accounting for the tax effects of TCJA. Our net charge is provisional based on reasonable estimates for those tax effects. Changes to these estimates or new guidance issued by regulators may materially impact our provision for income taxes and effective tax rate in the period in which the adjustments are made. Our accounting for the tax effects of TCJA will be completed during the measurement period, which should not extend beyond the second fiscal quarter of 2019.

We have provided non-GAAP financial measures related to restructuring expenses and TCJA to aid investors in better understanding our performance. We believe these non-GAAP measures aid investors by providing additional insight into our operational performance and help clarify trends affecting our business. For comparability of reporting, management considers non-GAAP measures in conjunction with GAAP financial results in evaluating business 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.

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 June 30,

 ($ in millions, except per share amounts)

Revenue

Operating Income

Net Income

Diluted Earnings per Share

2017 As Reported (GAAP)

$25,605

$7,682

$8,069

$1.03

2017 As Adjusted (non-GAAP)

$25,605

$7,988

$8,312

$1.06

2018 As Reported (GAAP)

$30,085

$10,379

$8,873

$1.14

2018 As Adjusted (non-GAAP)

$30,085

$10,379

$8,769

$1.13

Percentage Change Y/Y (GAAP)

17%

35%

10%

11%

Percentage Change Y/Y (non-GAAP)

17%

30%

5%

7%

Constant Currency Impact

$549

$450

$279

$0.04

Percentage Change Y/Y (non-GAAP) Constant Currency

15%

24%

2%

3%

 

 

Twelve Months Ended June 30,

 ($ in millions, except per share amounts)

Revenue

Operating Income

Net Income

Diluted Earnings per Share

2017 As Reported (GAAP)

$96,571

$29,025

$25,489

$3.25

2017 As Adjusted (non-GAAP)

$96,571

$29,331

$25,732

$3.29

2018 As Reported (GAAP)

$110,360

$35,058

$16,571

$2.13

2018 As Adjusted (non-GAAP)

$110,360

$35,058

$30,267

$3.88

Percentage Change Y/Y (GAAP)

14%

21%

(35)%

(34)%

Percentage Change Y/Y (non-GAAP)

14%

20%

18%

18%

Constant Currency Impact

1,275

654

569

$0.07

Percentage Change Y/Y (non-GAAP) Constant Currency

13%

17%

15%

16%

 

Segment Revenue Constant Currency Reconciliation

 

Three Months Ended June 30,

 ($ in millions)

Productivity and Business Processes

Intelligent Cloud

More Personal Computing

2017 As Reported

$8,548

$7,822

$9,235

2018 As Reported

$9,668

$9,606

$10,811

Percentage Change Y/Y

13%

23%

17%

Constant Currency Impact

$228

$182

$139

Percentage Change Y/Y Constant Currency

10%

20%

16%

 


 

Selected Product and Service Revenue Constant Currency Reconciliation           

 

Three Months Ended June 30, 2018

Percentage Change Y/Y (GAAP)

Constant Currency Impact

Percentage Change Y/Y Constant Currency

Office commercial products and cloud services

10%

(2)%

8%

Office 365 commercial

38%

(3)%

35%

Office consumer products and cloud services

8%

(2)%

6%

LinkedIn

37%

(3)%

34%

Dynamics products and cloud services

11%

(3)%

8%

Dynamics 365

61%

(5)%

56%

Server products and cloud services

26%

(2)%

24%

Azure

89%

(4)%

85%

Enterprise Services

8%

(1)%

7%

Windows OEM

7%

0%

7%

Windows commercial products and cloud services

23%

(4)%

19%

Search advertising excluding traffic acquisition costs

17%

(1)%

16%

Surface

25%

(4)%

21%

Gaming

39%

(1)%

38%

Xbox software and services

36%

(1)%

35%


 

About Microsoft

Microsoft (Nasdaq “MSFT” @microsoft) enables digital transformation for the era of an intelligent cloud and an intelligent edge. Its mission is to empower every person and every organization on the planet to achieve more.

Forward-Looking Statements

Statements in this release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors such as:

·        intense competition in all of our markets that may lead to lower revenue or operating margins;

·        increasing focus on cloud-based services presenting execution and competitive risks;

·        significant investments in new products and services that may not achieve expected returns;

·        acquisitions, joint ventures, and strategic alliances that may have an adverse effect on our business;

·        impairment of goodwill or amortizable intangible assets causing a significant charge to earnings;

·        a change in our ability to earn expected revenues from our intellectual property rights;

·        claims that Microsoft has infringed the intellectual property rights of others;

·        the possibility that we may fail to protect our source code;

·        cyberattacks and security vulnerabilities that could lead to reduced revenue, increased costs, liability claims, or harm to our reputation or competitive position;

·        disclosure and misuse of personal data that could cause liability and harm to our reputation;

·        the possibility that we may not be able to protect information stored in our products and services from use by others;

·        abuse of our advertising or social platforms that may harm our reputation or user engagement;

·        excessive outages, data losses, and disruptions of our online services if we fail to maintain an adequate operations infrastructure;

·        government litigation and regulatory activity relating to competition rules that may limit how we design and market our products;

·        potential liability under trade protection, anti-corruption, and other laws resulting from our global operations;

·        laws and regulations relating to the handling of personal data that may impede the adoption of our services or result in increased costs, legal claims, fines, or reputational damage;

·        the dependence of our business on our ability to attract and retain talented employees;

·        claims against us that may result in adverse outcomes in legal disputes;

·        additional tax liabilities;

·        quality or supply problems;

·        exposure to increased economic and operational uncertainties from operating a global business, including the effects of foreign currency exchange;

·        catastrophic events or geo-political conditions that may disrupt our business;

·        adverse economic or market conditions that may harm our business;

·        changes in our sales organization that may impact revenues;

·        the development of the internet of things presenting security, privacy, and execution risks;

·        issues about the use of artificial intelligence in our offerings that may result in competitive harm, legal liability, or reputational harm; and

·        damage to our reputation or our brands that may harm our business and operating results.

For more information about risks and uncertainties associated with Microsoft’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of Microsoft’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Microsoft’s Investor Relations department at (800) 285-7772 or at Microsoft’s Investor Relations website at http://www.microsoft.com/en-us/investor.

All information in this release is as of June 30, 2018. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.

For more information, press only:

Microsoft Media Relations, WE Communications for Microsoft, (425) 638-7777,[email protected]

For more information, financial analysts and investors only:

Michael Spencer, general manager, Investor Relations, (425) 706-4400

Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://www.microsoft.com/news. Web links, telephone numbers, and titles were correct at time of publication, but may since have changed. Shareholder and financial information, as well as today’s 2:30 p.m. Pacific time conference call with investors and analysts, is available at http://www.microsoft.com/en-us/investor.


 

MICROSOFT CORPORATION

INCOME STATEMENTS

(In millions, except per share amounts)(Unaudited)

Three Months Ended

 June 30,

Twelve Months Ended

 June 30,

 

2018

 

2017

 

2018

 

2017

Revenue:

   Product

 $17,159

 $16,057

 $64,497

 $63,811

   Service and other

 12,926

 9,548

 45,863

 32,760

      Total revenue

 30,085

 25,605

 110,360

 96,571

Cost of revenue:

   Product

 3,517

 3,141

 15,420

 15,175

   Service and other

 6,225

 5,315

 22,933

 19,086

      Total cost of revenue

 9,742

 8,456

 38,353

 34,261

      Gross margin

 20,343

 17,149

 72,007

 62,310

Research and development

 3,933

 3,514

 14,726

 13,037

Sales and marketing

 4,760

 4,292

 17,469

 15,461

General and administrative

 1,271

 1,355

 4,754

 4,481

Restructuring

0

 

 306

 

0

 

 306

Operating income

 10,379

 7,682

 35,058

 29,025

Other income, net

 301

 276

 1,416

 876

Income before income taxes

 10,680

 7,958

 36,474

 29,901

Provision for (benefit from) income taxes

 1,807

 (111)

 19,903

 4,412

Net income

 $8,873

 $8,069

 $16,571

 $25,489

Earnings per share:

   Basic

 $1.15

 $1.05

 $2.15

 $3.29

   Diluted

 $1.14

 $1.03

 $2.13

 $3.25

Weighted average shares outstanding:

   Basic

7,683

7,715

7,700

7,746

   Diluted

7,775

7,806

7,794

7,832

Cash dividends declared per common share

 $0.42

 

 $0.39

 

 $1.68

 

 $1.56


 

COMPREHENSIVE INCOME STATEMENTS

(In millions)(Unaudited)

Three Months Ended

 June 30,

Twelve Months Ended

 June 30,

 

2018

 

2017

 

2018

 

2017

Net income

 $8,873

 $8,069

 $16,571

 $25,489

Other comprehensive income (loss),
  net of tax:

  Net change related to derivatives

145

(236)

39

(218)

  Net change related to investments

(535)

(270)

(2,717)

(1,116)

  Translation adjustments and other

(686)

292

(178)

167

   Other comprehensive loss

(1,076)

(214)

(2,856)

(1,167)

Comprehensive income

 $7,797

 $7,855

 $13,715

 $24,322


 

BALANCE SHEETS

(In millions)(Unaudited)

 

June 30,
2018

 

June 30,

 2017

Assets

Current assets:

   Cash and cash equivalents

 $11,946

 $7,663

   Short-term investments

 121,822

125,318

      Total cash, cash equivalents, and short-term investments

 133,768

132,981

   Accounts receivable, net of allowance for doubtful
      accounts of $377 and $345

 26,481

22,431

   Inventories

 2,662

2,181

   Other

 6,751

5,103

      Total current assets

 169,662

162,696

Property and equipment, net of accumulated
   depreciation of $29,223 and $24,179

 29,460

23,734

Operating lease right-of-use assets

 6,686

6,555

Equity and other investments

 1,862

6,023

Goodwill

 35,683

35,122

Intangible assets, net

 8,053

10,106

Other long-term assets

 7,442

6,076

            Total assets

 $258,848

 $250,312

Liabilities and stockholders’ equity

Current liabilities:

   Accounts payable

 $8,617

 $7,390

   Short-term debt

 0

9,072

   Current portion of long-term debt

 3,998

1,049

   Accrued compensation

 6,103

5,819

   Short-term income taxes

 2,121

718

   Short-term unearned revenue

 28,905

24,013

   Other

 8,744

7,684

      Total current liabilities

 58,488

55,745

Long-term debt

 72,242

76,073

Long-term income taxes

 30,265

13,485

Long-term unearned revenue

 3,815

2,643

Deferred income taxes

 541

5,734

Operating lease liabilities

 5,568

5,372

Other long-term liabilities

 5,211

 

3,549

         Total liabilities

 176,130

162,601

Commitments and contingencies

Stockholders’ equity:

   Common stock and paid-in capital shares
      authorized 24,000; outstanding 7,677 and 7,708

 71,223

69,315

   Retained earnings

 13,682

17,769

   Accumulated other comprehensive income (loss)

 (2,187)

627

         Total stockholders’ equity

 82,718

87,711

            Total liabilities and stockholders’ equity

 $258,848

 $250,312


 

CASH FLOWS STATEMENTS

(In millions)(Unaudited)

Three Months Ended

 June 30,

Twelve Months Ended

 June 30,

 

2018

 

2017

 

2018

 

2017

Operations

Net income

 $8,873

 $8,069

 $16,571

 $25,489

Adjustments to reconcile net income
   to net cash from operations:

   Depreciation, amortization, and other

2,516

2,343

10,261

8,778

   Stock-based compensation expense

1,012

913

3,940

3,266

   Net recognized gains on
      investments and derivatives

(567)

(520)

(2,212)

(2,073)

   Deferred income taxes

(2,389)

(1,090)

(5,143)

(829)

   Changes in operating assets and
      liabilities:

      Accounts receivable

(9,188)

(7,029)

(3,862)

(1,216)

      Inventories

(572)

(199)

(465)

50

      Other current assets

(839)

724

(952)

1,028

      Other long-term assets

550

(237)

(285)

(917)

      Accounts payable

1,010

850

1,148

81

      Unearned revenue

8,702

6,749

5,922

3,820

      Income taxes

903

(862)

18,183

1,792

      Other current liabilities

1,773

1,412

798

356

      Other long-term liabilities

(366)

(118)

(20)

(118)

         Net cash from operations

11,418

11,005

43,884

39,507

Financing

Proceeds from issuance (repayments) of short-term debt, maturities of 90 days or less, net

0

3,484

(7,324)

(4,963)

Proceeds from issuance of debt

0

1,751

7,183

44,344

Repayments of debt

(681)

(3,368)

(10,060)

(7,922)

Common stock issued

255

221

1,002

772

Common stock repurchased

(2,362)

(1,765)

(10,721)

(11,788)

Common stock cash dividends paid

(3,226)

(3,009)

(12,699)

(11,845)

Other, net

(25)

(15)

(971)

(190)

         Net cash from (used in) financing

(6,039)

(2,701)

(33,590)

8,408

Investing

Additions to property and equipment

(3,980)

(2,283)

(11,632)

(8,129)

Acquisition of companies, net of
   cash acquired, and purchases of
   intangible and other assets

(434)

(358)

(888)

(25,944)

Purchases of investments

(32,380)

(29,031)

(137,380)

(176,905)

Maturities of investments

7,108

5,810

26,360

28,044

Sales of investments

27,024

18,596

117,577

136,350

Securities lending payable

(8)

(103)

(98)

(197)

         Net cash used in investing

(2,670)

(7,369)

(6,061)

(46,781)

Effect of foreign exchange rates on
   cash and cash equivalents

16

15

50

19

Net change in cash and cash equivalents

2,725

950

4,283

1,153

Cash and cash equivalents,
   beginning of period

9,221

6,713

7,663

6,510

Cash and cash equivalents, end of period

 $11,946

 $7,663

 $11,946

 $7,663


 


SEGMENT REVENUE AND OPERATING INCOME

(In millions)(Unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended

 June 30,

 

Twelve Months Ended

 June 30,

 

 

 

2018

 

2017

 

2018

 

2017

Revenue

 

 

 

 

 

 

 

Productivity and Business Processes

 $9,668

 

 $8,548

 

 $35,865

 

 $29,870

Intelligent Cloud

 9,606

 

 7,822

 

32,219

 

 27,407

More Personal Computing

 10,811

 

 9,235

 

42,276

 

 39,294

  Total

 $30,085

 

$25,605

 

$110,360

 

$96,571

 

 

 

 

 

 

 

 

Operating Income (Loss)

 

 

 

 

 

 

 

Productivity and Business Processes

 $3,466

 

 $2,891

 

 $12,924

 

 $11,389

Intelligent Cloud

 3,901

 

 2,911

 

 11,524

 

 9,127

More Personal Computing

 3,012

 

 2,186

 

 10,610

 

 8,815

Corporate and Other

0

 

 (306)

 

0

 

 (306)

  Total

$10,379

 

 $7,682

 

$35,058

 

$29,025

 

 

MICROSOFT CORPORATION

FOURTH QUARTER FINANCIAL HIGHLIGHTS

All growth comparisons relate to the corresponding period in the last fiscal year. Please refer to the reconciliation of our GAAP and non-GAAP financial results in the table provided above for additional information.

SUMMARY

Revenue was $30.1 billion and increased 17%, driven by growth across each of our segments. Revenue included a favorable foreign currency impact of 2%.

Gross margin was $20.3 billion and increased 19%, due to growth across each of our segments. Gross margin included a favorable foreign currency impact of 3%. Gross margin percentage increased slightly, driven by gross margin percentage improvement in More Personal Computing. Gross margin included a 6 percentage point improvement in commercial cloud gross margin percentage, primarily from Azure, offset in part by increased Azure sales mix.

Operating income was $10.4 billion and increased 35%, driven by growth across each of our segments and a reduction in restructuring expenses. Operating income included a favorable foreign currency impact of 6%. Non-GAAP operating income was $10.4 billion and increased 30%, excluding restructuring expenses of $306 million in the prior year.

Net income was $8.9 billion and increased 10%. Non-GAAP net income was $8.8 billion and increased 5%, excluding the net benefit related to TCJA of $104 million in the current year and restructuring expenses of $243 million in the prior year.

Diluted EPS was $1.14 and increased 11%. Non-GAAP diluted EPS was $1.13 and increased 7%, excluding the net benefit related to TCJA of $0.01 in the current year and restructuring expenses of $0.03 in the prior year.

SEGMENT INFORMATION

Productivity and Business Processes

Revenue increased $1.1 billion or 13%, including a favorable foreign currency impact of 3%.

·        Office Commercial revenue increased $598 million or 10%, driven by Office 365 commercial revenue growth, mainly due to growth in subscribers and average revenue per user, offset in part by lower revenue from products licensed on-premises, reflecting a continued shift to Office 365 commercial.

·        Office Consumer revenue increased $74 million or 8%, driven by Office 365 consumer revenue growth, mainly due to growth in subscribers.

·        LinkedIn revenue increased $397 million or 37%, driven by strong momentum across all businesses.

·        Dynamics revenue increased 11%, driven by Dynamics 365 revenue growth.

Operating income increased $575 million or 20%, including a favorable foreign currency impact of 7%.

·        Gross margin increased $834 million or 13%, driven by growth in Office 365 commercial and LinkedIn. Gross margin percentage was relatively unchanged, primarily due to an increased mix of cloud offerings, offset in part by gross margin percentage improvement in Office 365 commercial and LinkedIn. Gross margin included a favorable foreign currency impact of 3%.

·        Operating expenses increased $259 million or 7%, driven by investments in LinkedIn, cloud engineering, and commercial sales capacity.

Intelligent Cloud

Revenue increased $1.8 billion or 23%, including a favorable foreign currency impact of 3%.

·        Server products and cloud services revenue increased $1.7 billion or 26%driven by Azure and server products licensed on-premises revenue growth. Azure revenue increased 89%, due to growth from consumed and SaaS revenue. Server products licensed on-premises revenue increased 8%, mainly due to a higher mix of premium licenses for SQL Server and Windows Server.

·        Enterprise Services revenue increased $118 million or 8%, driven by higher revenue from Premier Support Services and Microsoft Consulting Services, offset in part by a decline in revenue from custom support agreements.

Operating income increased $990 million or 34%, including a favorable foreign currency impact of 4%.

·        Gross margin increased $1.3 billion or 23%, driven by growth in server products and cloud services revenue and cloud services scale and efficiencies. Gross margin percentage was relatively unchanged, primarily due to gross margin percentage improvement in Azure, offset in part by an increased mix of cloud offerings. Gross margin included a favorable foreign currency impact of 3%.

·        Operating expenses increased $292 million or 11%, driven by investments in cloud engineering and commercial sales capacity.

More Personal Computing

Revenue increased $1.6 billion or 17%.

·        Windows revenue increased $532 million or 11%, driven by Windows Commercial and Windows OEM revenue growth. Windows Commercial revenue increased 23%, driven by an increased volume of multi-year agreements and the mix of products that carry higher in-quarter revenue recognition. Windows OEM revenue increased 7%. Windows OEM Pro revenue grew 14%, ahead of a strengthening commercial PC market, driven by a higher mix of premium licenses. Windows OEM non-Pro revenue declined 3%, slightly below the consumer PC market, driven by continued pressure in the entry-level price category.

·        Gaming revenue increased $643 million or 39%, driven by higher revenue from Xbox software and services. Xbox software and services revenue increased 36%mainly from third-party title strength.

·        Surface revenue increased $237 million or 25%, driven by strong performance of the latest editions of Surface against a low prior year comparable.

·        Search advertising revenue increased $183 million or 12%. Search advertising revenue, excluding traffic acquisition costs, increased 17%, driven by growth in Bing, primarily due to higher revenue per search and search volume.

Operating income increased $826 million or 38%, including a favorable foreign currency impact of 6%.

·        Gross margin increased $1.1 billion or 21%, driven by growth in Windows, Surface, and Gaming. Gross margin percentage increased, primarily due to gross margin percentage improvement in Surface, offset in part by a decrease in sales mix. Gross margin included a favorable foreign currency impact of 3%.

·        Operating expenses increased $252 million or 9%, driven by an increase in Surface and Gaming advertising and investments in Search and AI engineering.

EXPENSES

·        Cost of revenue increased $1.3 billion or 15%, mainly due to growth in commercial cloud and Gaming.

·        Sales and marketing expenses increased $468 million or 11%, primarily due to investments in commercial sales capacity, an increase in advertising, and investments in LinkedIn.

·        Research and development expenses increased $419 million or 12%, primarily due to investments in cloud engineering and LinkedIn.

·        General and administrative expenses decreased $84 million or 6%.

·        Restructuring expenses were $306 million in the prior year. During the fourth quarter of fiscal year 2017, we recorded $306 million of employee severance expenses primarily related to our sales and marketing restructuring plan.

INCOME TAXES

The effective tax rate was 17% for the current quarter, compared to (1)% in the prior year. The current quarter effective tax rate reflected the reduction of the U.S. federal statutory tax rate as a result of the TCJA. The prior quarter effective tax rate reflected a $1.8 billion benefit related to the utilization of prior years’ losses from Microsoft’s phone business that were not deductible in the years incurredNon-GAAP effective tax rate was 18%, excluding the net benefit related to TCJA in the current year.

OTHER INCOME, NET

Other income, net, increased $25 milliondriven by an increase in dividends and interest income and higher net recognized gains on derivatives, offset in part by higher recognized losses from foreign currency remeasurement and lower net recognized gains from sales of investments.

 

National Oilwell Varco selects Microsoft Dynamics 365 to enhance sales and service operations | Stories

REDMOND, Wash. — July 18, 2018 — On Wednesday, National Oilwell Varco, a leading provider of technology, equipment and services to the global oil and gas industry, and Microsoft Corp. announced an agreement to collaborate on digitally enhancing NOV’s sales platform and field service operations to deliver premier experiences, including project management and drilling operations, to the oil and gas industry.

As oil and gas producers continue to push to optimize productivity and minimize downtime, NOV is leveraging Microsoft Dynamics 365 to streamline business processes, access real-time data and insights, and revolutionize field service operations with a digital, mobile-first approach. With Microsoft cloud-powered solutions, NOV is enriching legacy systems and processes to drive consistency and visibility across platforms. The goal is to increase revenue generation while reducing revenue leakage and improve service margins through greater efficiencies, higher levels of customer satisfaction, and better retention rates. Using Microsoft Dynamics 365 is enabling employees across NOV’s departments to be more adaptable, reliable and efficient.

“At NOV, we’re passionate about delivering the highest level of customer service,” said Clay Williams, chairman, president, and CEO. “Field service is the link between our customers and manufacturing, and with Microsoft Dynamics 365 and Power BI, we’re able to better understand our customers’ needs, identify the appropriate resources for each task, and effectively address the issue, creating a seamless experience.”

Microsoft Dynamics 365 unifies customer relationship management and enterprise resource planning solutions, allowing NOV’s sales and commercial teams to effectively identify and capture field service opportunities and service managers to better allocate jobs and resources. Field technicians can also access detailed job descriptions complete with customer information, service needs, and the equipment necessary to accurately and efficiently complete the task.

“NOV continues to invest in state-of-the-art technology and innovations to support the goal of delivering premier customer service,” said Judson Althoff, executive vice president, Worldwide Commercial Business, Microsoft. “Today, NOV is doubling down on its commitment to customers with Microsoft’s intelligent cloud and business applications by enabling customer- and data-driven insights and actions.”

About NOV

National Oilwell Varco, Inc. (NYSE: NOV) is a leading provider of technology, equipment, and services to the global oil and gas industry. NOV has been pioneering innovations that improve the cost-effectiveness, efficiency, safety, and environmental impact of oil and gas operations since 1862. The depth and breadth of NOV’s offerings support customers’ full-field, drilling, completion, and production needs. NOV powers the industry that powers the world. Visit www.nov.com for more information.

About Microsoft

Microsoft (Nasdaq “MSFT” @microsoft) enables digital transformation for the era of an intelligent cloud and an intelligent edge. Its mission is to empower every person and every organization on the planet to achieve more.

For more information, press only:

Microsoft Media Relations, WE Communications for Microsoft, (425) 638-7777, [email protected]

Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://news.microsoft.com. Web links, telephone numbers and titles were correct at time of publication, but may have changed. For additional assistance, journalists and analysts may contact Microsoft’s Rapid Response Team or other appropriate contacts listed at http://news.microsoft.com/microsoft-public-relations-contacts.

National Oilwell Varco selects Microsoft Dynamics 365 to enhance sales and service operations | Stories

REDMOND, Wash. — July 18, 2018 — On Wednesday, National Oilwell Varco, a leading provider of technology, equipment and services to the global oil and gas industry, and Microsoft Corp. announced an agreement to collaborate on digitally enhancing NOV’s sales platform and field service operations to deliver premier experiences, including project management and drilling operations, to the oil and gas industry.

As oil and gas producers continue to push to optimize productivity and minimize downtime, NOV is leveraging Microsoft Dynamics 365 to streamline business processes, access real-time data and insights, and revolutionize field service operations with a digital, mobile-first approach. With Microsoft cloud-powered solutions, NOV is enriching legacy systems and processes to drive consistency and visibility across platforms. The goal is to increase revenue generation while reducing revenue leakage and improve service margins through greater efficiencies, higher levels of customer satisfaction, and better retention rates. Using Microsoft Dynamics 365 is enabling employees across NOV’s departments to be more adaptable, reliable and efficient.

“At NOV, we’re passionate about delivering the highest level of customer service,” said Clay Williams, chairman, president, and CEO. “Field service is the link between our customers and manufacturing, and with Microsoft Dynamics 365 and Power BI, we’re able to better understand our customers’ needs, identify the appropriate resources for each task, and effectively address the issue, creating a seamless experience.”

Microsoft Dynamics 365 unifies customer relationship management and enterprise resource planning solutions, allowing NOV’s sales and commercial teams to effectively identify and capture field service opportunities and service managers to better allocate jobs and resources. Field technicians can also access detailed job descriptions complete with customer information, service needs, and the equipment necessary to accurately and efficiently complete the task.

“NOV continues to invest in state-of-the-art technology and innovations to support the goal of delivering premier customer service,” said Judson Althoff, executive vice president, Worldwide Commercial Business, Microsoft. “Today, NOV is doubling down on its commitment to customers with Microsoft’s intelligent cloud and business applications by enabling customer- and data-driven insights and actions.”

About NOV

National Oilwell Varco, Inc. (NYSE: NOV) is a leading provider of technology, equipment, and services to the global oil and gas industry. NOV has been pioneering innovations that improve the cost-effectiveness, efficiency, safety, and environmental impact of oil and gas operations since 1862. The depth and breadth of NOV’s offerings support customers’ full-field, drilling, completion, and production needs. NOV powers the industry that powers the world. Visit www.nov.com for more information.

About Microsoft

Microsoft (Nasdaq “MSFT” @microsoft) enables digital transformation for the era of an intelligent cloud and an intelligent edge. Its mission is to empower every person and every organization on the planet to achieve more.

For more information, press only:

Microsoft Media Relations, WE Communications for Microsoft, (425) 638-7777, [email protected]

Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://news.microsoft.com. Web links, telephone numbers and titles were correct at time of publication, but may have changed. For additional assistance, journalists and analysts may contact Microsoft’s Rapid Response Team or other appropriate contacts listed at http://news.microsoft.com/microsoft-public-relations-contacts.

Microsoft announces partnership with Campbell to drive IT transformation on Azure | Stories

REDMOND, Wash. — July 16, 2018 — On Monday, Microsoft Corp. and Campbell Soup Co. announced a partnership to modernize Campbell’s information technology (IT) platform through the Azure cloud by streamlining workflows and driving efficiencies.

The migration to Azure is designed to improve the responsiveness of Campbell’s IT infrastructure, enabling it to be faster and more agile. Azure will provide Campbell with a global, hybrid cloud solution that will deliver new capabilities and provide near-real-time access to information and insights that will inform business decisions. The platform will streamline operations across the enterprise and provide additional flexibility for Campbell employees through customized reporting and analytics.

“Campbell’s migration to Azure will increase our flexibility, agility and resiliency,” said Francisco Fraga, CIO, Campbell Soup. “Azure will give us the ability to respond quickly to evolving business needs, introduce new solutions, and support our 24/7, always-on architecture. The Microsoft cloud is a proven, reliable and highly secure platform.”

“We are honored that Campbell chose to modernize its IT platforms and evolve its digital strategies with Azure,” said Judson Althoff, executive vice president, Worldwide Commercial Business, Microsoft. “We are looking forward to working with Campbell as it transitions to the cloud, helping them optimize operations, extract insights from data and advance their business.”

The Microsoft solution will provide additional benefits, including increased security, compliance and information protection. The move to Azure will allow Campbell to re-architect its data warehousing capabilities to be able to support the company’s data and analytics needs.

About Campbell Soup Company

Campbell (NYSE:CPB) is driven and inspired by our Purpose, “Real food that matters for life’s moments.” We make a range of high-quality soups and simple meals, beverages, snacks and packaged fresh foods. For generations, people have trusted Campbell to provide authentic, flavorful and readily available foods and beverages that connect them to each other, to warm memories and to what’s important today. Led by our iconic Campbell’s brand, our portfolio includes Pepperidge Farm, Bolthouse Farms, Arnott’s, V8, Swanson, Pace, Prego, Plum, Royal Dansk, KjeldsensGarden Fresh Gourmet, Pacific Foods, Snyder’s of Hanover, Lance, Kettle Brand, KETTLE Chips, Cape Cod, Snack Factory Pretzel Crisps, Pop Secret, Emerald, Late July and other brand names. Founded in 1869, Campbell has a heritage of giving back and acting as a good steward of the planet’s natural resources. The company is a member of the Standard and Poor’s 500 and the Dow Jones Sustainability Indexes. For more information, visit www.campbellsoupcompany.com or follow company news on Twitter via @CampbellSoupCo. To learn more about how we make our food and the choices behind the ingredients we use, visit www.whatsinmyfood.com.

About Microsoft

Microsoft (Nasdaq “MSFT” @microsoft) enables digital transformation for the era of an intelligent cloud and an intelligent edge. Its mission is to empower every person and every organization on the planet to achieve more.

For more information, press only:
Microsoft Media Relations, WE Communications for Microsoft, (425) 638-7777, [email protected]

Medius Media Relations for The Campbell Soup Company, Fredrik André, VP Global Marketing, +46 709 23 93 81, [email protected]

The Campbell Soup Company media relations contact: Corporate Communications, (800) 257-8443

Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://news.microsoft.com. Web links, telephone numbers and titles were correct at time of publication but may have changed. For additional assistance, journalists and analysts may contact Microsoft’s Rapid Response Team or other appropriate contacts listed at http://news.microsoft.com/microsoft-public-relations-contacts.

Microsoft announces design and construction teams for Redmond campus modernization | Stories

REDMOND, Wash. — July 3, 2018 On Tuesday, Microsoft Corp. announced the consortium of architects and general contractors it has selected to work together to design and build almost 3 million square feet of new workspace on 72 acres of its Redmond campus. This is part of a multiyear campus modernization project announced in 2017, which will create new office space, public amenities and infrastructure.

The team includes architecture firms LMN, NBBJ, WRNS Studio and ZGF Architects; general contractors Skanska, Balfour Beatty, GLY and Sellen; and lead landscape architect Berger Partnership with OLIN. Project management for the redevelopment was awarded to CBRE, JLL and OAC Services Inc. Construction of the new buildings is expected to commence later this year and be completed in 2022.

“Our new campus will be more open and modern, focused on sustainability, connectedness and accessibility. The workplaces will feature more natural light and foster the type of creativity that will lead to ongoing innovation, advance the industry and benefit our customers,” said Rob Towne, regional director of Puget Sound, Global Real Estate & Facilities at Microsoft. “The firms we selected for this project will bring our vision to life.”

An overarching goal of the campus modernization is creating a healthy, inspiring workplace that supports the needs of Microsoft employees. The project will include:

  • 18 new buildings, ranging from 180,000 to 220,000 square feet, clustered into four distinct villages that will be blended together to create a unified campus.
  • Accessibility features to enhance mobility and ease of access for all employees.
  • Buildings that are four to five stories in height, encouraging physical activity and interaction between employees.
  • Spacious atriums and courtyards for improved daylighting and direct connections to the outdoors.
  • Thoughtful sustainable design strategies to support the symbiosis of people and place, while respecting the unique ecology of the region.
  • Fronting 156th Avenue Northeast, the primary corridor of access to East Campus, a future gateway to serve those arriving via Sound Transit’s Redmond Technology Center light rail station. It will also welcome arrivals from a pedestrian-and-cyclist-only bridge over State Route 520, which will connect to the west campus.
  • To emphasize the importance of health, movement and easy access to a variety of amenities, the campus will be organized around the experience of pedestrians and cyclists. Vehicular traffic — including drop-off and parking areas — will be relegated to the campus periphery and underground structured parking.

For more information, visit https://news.microsoft.com/modern-campus/.

About Microsoft

Microsoft (Nasdaq “MSFT” @microsoft) enables digital transformation for the era of an intelligent cloud and an intelligent edge. Its mission is to empower every person and every organization on the planet to achieve more.

For more information, press only:

Microsoft Media Relations, WE Communications for Microsoft, (425) 638-7777,

[email protected]

Microsoft Office gets a makeover | Stories

New user experience updates rolling out to customers globally over the next few months

REDMOND, Wash. — June 13, 2018 — Starting Wednesday, the most-used productivity product in the world is getting a makeover.

Whether you’re writing a letter in Word, managing a budget in Excel or sending an email in Outlook, Microsoft Office is the go-to place to get stuff done for people around the world.

Beginning today, millions of people who use Office at home and work will begin to see some welcome changes designed to deliver a balance of power and simplicity. These updates are exclusive to Office.com and Office 365 — the always up-to-date versions of our apps and services:

  • Simplified ribbon. A new, updated version of the ribbon is designed to help users focus on their work and collaborate naturally with others. People who prefer to dedicate more screen space to the commands will still be able to expand the ribbon to the classic three-line view.
  • New icons and color. Across the apps you’ll start to see new icons and colors built as scalable graphics — so they render with crisp, clean lines on screens of any size. These changes are designed to both modernize Office design and make it more inclusive and accessible.
  • Search. Search will become a much more important element of the user experience, providing access to commands, content and people. With “zero query search” simply placing your cursor in the search box will bring up recommendations powered by AI and the Microsoft Graph.

These design changes are focused on the following:

  • Customers. We’re using a customer-driven innovation process to co-create the design of the Office apps. That process consists of three phases: initial customer research and analysis; concepting and co-creation; and validation and refinement.  
  • Context. Customers love the power of Office, but they don’t need every feature at the same time. We want our new designs to understand the context that you are working in so that you can focus on your content. That means both surfacing the most relevant commands based on the work you are doing and making it easy to connect and collaborate with others.
  • Control. We recognize that established skills and routines are powerful — and that the way someone uses the apps often depends on specific parts of the user interface. So we want to give end users control, allowing them to toggle significant changes to the user experience on and off.

Over the last year, Microsoft completed extensive customer research and spent many months working side-by-side with customers to guide design changes. As a result, customers will benefit from a more simplified experience while maintaining the full power of Office and a design ethos that is more inclusive — empowering everyone to create, communicate and collaborate. The team also increased its focus not just on what people think of the product, but how they feel using it.

“Through gathering feedback from thousands of people, we’ve found that people react most positively to feeling in control, productive and secure,” said Trish Miner, principal design researcher, Microsoft.

And to ensure that we continue to listen, learn and respond quickly to customer feedback, the company is including an in-product survey to ascertain how features make people feel. “The good news is that as we better understand these correlations between the design of features and how people feel while using them, we can develop technologies that are more empathetic,” Miner said.

The design refresh will start rolling out to business and consumer customers beginning in June. More information on the new Office design can be found at https://www.microsoft.com/en-us/microsoft-365/blog/2018/06/13/power-and-simplicity-updates-to-the-office-365-user-experience/.

Microsoft (Nasdaq “MSFT” @microsoft) enables digital transformation for the era of an intelligent cloud and an intelligent edge. Its mission is to empower every person and every organization on the planet to achieve more.

For more information, press only:

Microsoft Media Relations, WE Communications, (425) 638-7777, [email protected]

Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://news.microsoft.com. Web links, telephone numbers and titles were correct at time of publication, but may have changed. For additional assistance, journalists and analysts may contact Microsoft’s Rapid Response Team or other appropriate contacts listed at http://news.microsoft.com/microsoft-public-relations-contacts.