Microsoft FY17 Q4 earnings: $24.7 billion in revenue on cloud strength

Microsoft HQ (Image credit: Windows Central)

The earnings report for FY17 Q4 (opens in new tab) shows a total of $24.7 billion in revenue (non-GAAP) and $7.7 billion in net income. That's up from the same period a year ago, during which Microsoft brought in $22.6 billion in revenue and $5.5 billion in net income.

Here are some of the highlights from this quarter's release:

Revenue was $23.3 billion GAAP, and $24.7 billion non-GAAP
Operating income was $5.3 billion GAAP, and $7.0 billion non-GAAP
Net income was $6.5 billion GAAP, and $7.7 billion non-GAAP
Diluted earnings per share was $0.83 GAAP, and $0.98 non-GAAP

In what has become a trend in recent quarters, Microsoft touts the strength of its cloud business as a driver of growth for this quarter. Intelligent Cloud revenue increased by 11 percent to $7.4 billion, driven largely by a 15 percent increase in cloud services revenue. Office was also a strong performer for the quarter, with Office commercial products and Office consumer products increasing by 5 percent and 13 percent, respectively.

Revenue in Microsoft's "More Personal Computing" category, which counts Windows OEM revenue, Surface, gaming and more, was actually down by 2 percent to $8.8 billion. Microsoft blames that decrease largely on lower phone revenue, which it says was "immaterial and declined $361 million." Here are the highlights:

Windows OEM revenue increased 1% (up 1% in constant currency), slightly ahead of the overall PC market
Windows commercial products and cloud services revenue increased 8% (up 8% in constant currency) driven by annuity revenue growth
Surface revenue decreased 2% (down 1% in constant currency) mainly due to product lifecycle transitions
Search advertising revenue excluding traffic acquisition costs increased 10% (up 11% in constant currency) driven by higher revenue per search and search volume
Gaming revenue increased 3% (up 4% in constant currency) as strength in Xbox software and services offset lower hardware revenue

On top of its Q4 results, Microsoft also reported results for the full 2017 fiscal year. For the twelve months ending on June 30, the company brought in (non-GAAP) revenues of $96.7 billion and net income of $25.9 billion. That's up from the previous year, in which the company reported (non-GAAP) revenues of $91.9 billion and a net income of $22.3 billion.

As usual, Microsoft will hold a conference call and webcast at 2:30 p.m. PT / 5:30 p.m. ET on its investor site (opens in new tab) to discuss the earnings.

Dan Thorp-Lancaster is the Editor in Chief for Windows Central. He began working with Windows Central as a news writer in 2014 and is obsessed with tech of all sorts. You can follow Dan on Twitter @DthorpL and Instagram @heyitsdtl. Got a hot tip? Send it to daniel.thorp-lancaster@futurenet.com.

110 Comments

Now spend some of that cash on an effective mobile strategy!
Nah, there's probably another 26 billion dollar website somewhere that needs buying.
Hahahahaha
Nice one!
Microsoft made half of that (12 billion) on WP alone.. Seriously. The article fails to mention this.
Because it never happened...
That's exactly right. It never happened.
They made $1.8 billion from Windows phone this quarter. Not quite half.
They made 79 trillion this month so far, so shut it.🤓🤓🤓
I am serious. They reported $1.8 billion in revenue from writing off the losses from Windows phones. It explains why they have been seemingly sabotaging the mobile business. They needed to make sure it failed so they could write it off. That seems to be what happened at least.
Apparently you have absolutely no idea about accounting and taxes.
I don't. It did seem to make sense though. I assume they could write off more the harder it failed? Correct me. http://www.financialnewsusa.com/c34-financial-news/marketwatch-first-tak...
Apparently the both of you have absolutely no idea about Sarcasm🤓🤓🤓
I understood the sarcasm. Just thought it was interesting that they did make a ton of money off Windows phones this quarter. They didn't seem to think it was relevant for this article there.
We'll let you know on the mobile strategy by Jan 2018...and if by that time you're no longer with us that's fine...We make plenty of profit on other things and can survive without mobile!
Are you a Microsoft employee?
@rodneyej you were sarcastic, he wasn't and so I responded to him. You on the other hand completely missed sarcasm from netmann... @bleached if you buy something for $1m and you can't sell it you can't write it off, which basically means: you lost $1m so you can add that amount to your costs on other business and thanks to that your tax bill will be lower. But you still lost $1m. In non-business terms, imagine that you go and buy a TV for $1k and a VCR for $500 plus 10% sales tax or VAT depending where you live. Total: $1650. Turns out that VCR is useless because it's 2017 and you somehow missed DVD/BlueRay revolution. But not all is lost. You can write your brand new VCR off and treat this $500 as a loss to lower your sales tax. Since your tax was $150, so that's your write-off. Effectively you bought your TV for $1500. Did you lose money? Of course you did. But at the same time you can say that you saved $150. Now, in business it's more complicated because you have future and current income, you have assets that you bought that is supposed to be depreciated within the next X years (Nokia company), you have unsold merchandise (Windows Phones) and you have all sorts of regulations that tell you how much of your loss can be counted towards your future income, for instance 50% or so. But in principle it's exactly the same type of lowering your tax bill as with your TV and VCR. Microsoft burnt enormous amount of money on their Windows phone/Nokia adventure. Never made any profit of it and now they're simply trying to salvage as much as possible through lowering their taxes. But they still lost LOTS of money.
Ok, ok. I see.
Well I guess they are right, Nadella has no clue what he is doing, Microsoft is a failure without a phone, they will be declaring bankruptcy any time now, everyone has switched to a Mac, and a whole lot of other crap that makes absolutely no sense. But there are a lot of people here who know better.
Mac - are you kidding? May be in US but I am sure - not anywhere else. They will prefer Linux if they are not going for Windows instead of Mac.
Nobody will prefer Linux except a handful of socially awkward Network admins. Trust me: I've worked in IT 20 years and BEEN the Linux advocate. In 1995, after Windows 95 came out and we all hated it, I was adamant that Linux's then 1% would soon be 95%. 22 years later, it's still 1%. It's never, EVER going to be the dominant desktop OS. It missed the boat.
I have tried hard to embrace Linux, but anytime I put it on a machine, I rarely ever boot it again! It just isn't that useful. There is nothing I want to do on Linux that my phone does not do better.
Ive tried ubuntu for a while on a old machine. Windows Vista locked me out as I didn't know the password anymore. So wiping the disk with a completely different OS, was my only option, so I tried it for a while. Wasn't that useful. The moment Windows 10 TP came out I used the machine for that. And a good friend of mine still uses that old Vista era laptop with a activated Windows 10 license (after the TP, Microsoft recognized the devices don't really know why and don't really care as I thought it was awesome that I got 10 on my Vista device that got wiped by installing Ubuntu, for free ^^)
His entire post was being sarcastic because people on here keep on ******** about Nadella not knowing what he is doing when in fact, they're doing quite well.
Dont worry, I sensed your sarcasm. Haha
Nadella has been great for cloud, decent for desktop, but absolutely CLUELESS about mobile. Believe it or not, this isn't a "one or the other" scenario. He can be good in some areas and idiotic in others. And that's what the evidence bears out.
Correct Jason....He is ok at somethings, but clueless when it comes to a mobile strategy. As for Linux, I am using elementaryOS, and it is really good...
I'm not saying Linux isn't good, though. I'm saying it's not ready for the average user, and with almost 30 years of development under its belt, it probably never will be.
Wait for a consumer focused, cellular PC announcement before you think he's cluseless about mobile. There is a strategy baking inside Redmond. Windows Central's own Jason Ward has eluded to a more focused mobile strategy in many of his articles. You'll see. We'll all see. Then, the future will be Soon™.
"Cellular PC" is just another name for PC with LTE. Dont expect any magical mobile comeback from these devices. And Jason Ward's articles are based in fantasy, not fact. Not remotely close to an indicator of what may come in the future.
If whatever this "mobile strategy" might be doesn't bring devs and apps back it will be doomed from the start anyway..
That's all we have right now is fantasy. Until MS gives us a solid piece of information, that's all we can do is dream to keep hope alive.
Jason Ward's articles are absolute dreck.
true
Lol, you're quoting Jason Ward. His articles are all fantasies, and there's not even a shred of evidence of what he says.
a cellular pc is just another name for MOBILE PHONE. stop being blinded by symantics. He's proven he's clueless about mobile since taking over. seeing as any traction that windows phone/mobile had completely dissapeared. There will be no MAGICAL device. It will be a phone. Nothing more. And probably a HUGE phone that's no good as a mobile deivce...just like the x3. More like a deivce that you can take and dock...which is useless as a truly mobile device.
Sadly I think this is what's going to happen. For me, 5.5 inches is the largest I can comfortably use for a phone.
That is what's going to happen. The apps will not come. You will still have to use a web browser to use the phone as anything other than a phone.
He came from the Cloud division. Imagine if Elop had become CEO? Mobile would have been great.
Nobody wants a Trojan Horse
Hahahaha
Are you saying, there is no purpose on pursuing mobile then? Because I hear iphones alone destroys these numbers from MS....
I would say that the areas MS decided to focus on have experienced growth and proved they can sustain that growth in the face of strong competition. MS needed to get those services and strategy locked down. Now whether or not this means they now have the capacity to focus on Mobile computing/phones is anyone's guess.
Well put! :)
Lol
Bankruptcy?
The OSX market share in 2017 is 5%. Windows is 89%. MAC has decreased over the last 6 years.
It is amazing how many people are not getting the joke aimed at those who visit this site proclaiming nothing but doom and gloom for MS.
Oh yeah making 7 billion dollars is really going to destroy Microsoft. Ah, ha,ha. How much did you make last year?
I haven't seen anyone that says his moves are not good for short-term quarterly results. The layoffs alone will produce better quarterly profits. What people have been saying is exactly what these results show, again. The cloud growth and layoffs are covering up all the other failures (see list below).
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Nadella is losing a generation (or two) by failing on the consumer space. That will cost the company in the long run in both the consumer and eventually in the enterprise space.
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Under Nadella:
- Microsoft lost the browser lead to Google Chrome
- Microsoft lost the OS lead to Google Android
- Microsoft lost everything in Mobile (mostly to Google)
- Microsoft lost everything in wearables (mostly to Google)
- Microsoft doesn't run any Smart TVs, but Google Android does.
- Microsoft is getting killed in automotive sound systems and integrations
- Microsoft's home automation IOT is all pending still (speaker running on Linux, thermostat just announced)
- Microsoft is losing in schools to Chromebooks
- Nadella's 'retrenchment' abandoned millions of consumers, even Microsoft loyalists.
- Nadella's 'retrenchment' abandoned developers, and wasted the time and money the spent on the Microsoft's ecosystem. Once bitten, twice shy.
- Nadella's 'retrenchment' also abandoned their partners. One of Microsoft's greatest strengths was their partner ecosystem, but those partners have been burned by building hardware for systems Microsoft (and it's CEO) never enthusiastically supported or advertised. Now, if given a chance to build a new device for Android or Windows, those hardware vendors choose to partner with Google.
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Two things will happen in the near future.
1. The doubling of Cloud revenue growth will eventually end. The crazy cloud growth is across AWS, Azure, and even Google, so it is not some magic that Nadella pulled off. Regardless, those growth rates are not sustainable.
2. Once Google has pushed Nadella into his last corner, the cloud. They will come for Microsoft's throat to end the fight. The generation of IT leaders at that time, will have spent their entire lives in the Google ecosystem.
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Enjoy the quarterly results, they are exactly that.
This is just perfect. Sadly, most people dont realize this. Even Microsoft last hope (Hololens) looks kinda doomed right now with a 2019 release... Seriously, presenting a Hololens and then selling an Oculus instead?
Perfect comment!!
100% correct infosage. The fangirls cannot see the forest for the trees. You nailed every failure spot on. and there are alot of them!!
This is exactly what I'm thinking. Once you surrender the platform to Google or whoever else...there will be no real compelling reason to use their services.
I'm going to let you guys in on a secret you don't have to be #1 to be successful. Being the #2 most used browser is not a bad thing still have millions of customers. Same with cars, AR, hardware, etc. As long as it is going and making money at a good rate it is successful.
Whatever... If MS can make 24B doing what they do now they can make even more in mobile..... They have what it takes to make mobile work,,, minus balls.
They just earned 24.7 BILLION dollars and you're calling them a failure?!? LOL!!! Guys, it's just a phone. It isn't the end of the world. I get it, I really do. I LOVE Windows Mobile. It's the only Mobile OS that I actually like. But it didn't work out (hopefully just for now) so I moved on. I've got a decent Android phone with all the apps I want and a passable Windows Phone launcher. It isn't anywhere near as good as an actual Windows Phone but you get used to it.
Which one did you get?
ZTE ZMax Pro. It was the cheapest and largest phone T-Mobile had, which worked out well because it doubles as my car stereo. It's not a bad phone, far better than I was expecting. It got a little glitchy at around the one year mark but a factory reset took care of that. I'm looking to update to LG's upcoming phone. The V30 I believe. Don't quote me on that though. I HIGHLY recommend any LG phone. That is a criminally underrated company.
Or were you asking about the launcher I use? It's called "Launcher 8 WP style." There's a Windows 10 Mobile launcher that I liked better aesthetically but they made it unnecessarily complicated to setup and changed so I switched back to the WP 8 one.
I would not be suprised if MS goes the route of IBM but instead of mainframes it will be cloud computing, and will eventually be largely out of the public eye. They will continue to have a consumer OS presence but only on desktop and will be a distant earner for them moving forward. It is just my opinion, but in some ways this may be a smart move for them. They will not be riding and predicting consumer trends anymore as that is probably their least successful aspect.
IBM has lost money in the last 21 quarters and only just recently recorded a net gain preventing it from going 0 - 22. IBM has no clue and Watson will no save it.
Yes, IBM is losing money but in the 90s and early 2000s they were doing what MS is doing right now - abandoning any consumer products, "retrenching" from PC markets and focusing on highly specialized enterprise solutions and consulting. They did try OS/2 like MS was trying Windows Mobile/Phone/Mobile/on ARM/'whatever the next name is' but quickly abandoned that too. In 2000s they figured the next big thing will be AI and so they focused on Watson. Sure, amazing thing but they didn't know how to utilize that and it never really earned its place in the market and remains extremely expensive, niche solution that is losing market in comparison to Google, MS and others. Basically in the long term IBM is done and I bet they will be bought by some young and vibrant company within 10 years. They missed everything in the past 25-30 years. Now, Microsoft is following the same steps, just 15 years after IBM. So they will not perish, they will thrive in cloud, enterprise for a while, become more and more specialized, forgotten by consumers and eventually losing slowly everything piece by piece. Since Nadella came, there was this hype about how MS became open and so innovative. What a BS! Open sourcing often in reality means: "we're abandoning this project, do whatever you want with this". Example: WinJS. And what's the point of being innovative if your innovations stay in the lab and your competition is bringing that to the market way ahead of you? Like Hololens. This product is already finished, they will bring it to enterprise in 2 years, when Google glass, Apple whatever they will make AR/VR, Oculus and countless still nonexistent products will come and grab everything there is to grab. Nadella is a tasty poison pill.
There is ZERO chance of that happening anytime soon. Mobile aside, they are doing very well.
Just imagine what they can do when they have a Mobile Device Business running and stable and unlike what most peoples said, they will do it, it's just it won't be a smartphone, that's all. Smartphones will die anyway...
Smartphones won't die. Maybe transcend to pocket PCs.
That's his point. MS seem best positioned on this with ARM processor work.
Please tell me the difference in a Smartphone and pocket pc?
Ahhhhhh the fanbabies can't tell me the difference between a smartphone and pc. why? because there is none. It is still JUST A PHONE that runs windows. Running x86/EXE on a phone is useless to being mobile, so why bother to have it.... So, to all the fanbabies...downvoting me, step up...put on a pair of big boy pants and discuss.....WHAT IS THE DIFFERENCE BETWEEN A SMART PHONE AND POCKET PC....**** pressing down vote...whiney little crybabies....please!!!! lets talk!
1. chill. 2. there still is a difference, but it's shrinking.
Tell me the difference
Did you ever use a legacy USB printer from a phone while using a monitor, keyboard and mouse? Our did you ever try to code while on a phone?
I would not want to write code on a tiny screen like that....2....I don't need to use USB printers since most every printer today is wireless. so two pointless applications. Did you ever try to unlock a hotel room with your laptop? what about board a flight using your laptop? what about, while using your desktop walking around a new city, find directions, or a cool place to eat? What about, while using your desktop in a store, scan a barcode, and get all the information on that product. and then pay for it while using your desktop IN THE STORE? NO? exactly...the concept is massively flawed. A desktop OS, is useless for mobile applications...just as a mobile device is dumb for desktop applicaitons. A pig and elephant DNA just don't match....Just ask Chef!
Yes, and pigs will fly.
and finally we will understand what the cartoons of NINJACAT ON FLYING UNICORN meant all along... said nobody ever.
It seems like MS is relying heavily upon cloud services to carry the company. The rest of the company is just seems to be doing so-so. I think they are putting all their eggs into once basket.
Actually, that basket you saying has a lot of sub-baskets to put eggs, and there's still a lot of other sub-baskets to be open.
it's more that MS is focusing on Cloud for new areas of growth. most of their other offerings like Servers, Windows, Office, Xbox are pretty mature at this point and won't any large growth that will move the needle. They missed mobile for growth, but seem to be capitilzing at the right time on Cloud for future growth. Also expect AR/VR as the next platform for growth in the coming years.
^ yup I agree
MSFT is moving too slowly on VR/AR/MR stuff as many of the other competitors are actually coming out with better quality stuff this year (ex. HTC Vive, Ocuclus Rift, Apple AR)
Apple ar is a joke against hololens (look at hololens partners) also microsoft is miles ahead apple and google in vr with windows mixed reality platform, also oculus and htc vive work on windows
Did you miss the stories on Google glass for enterprise this week? Boeing, GE, Dignity Health, etc. all using Google's enterprise AR when everyone thought that project was dead...
we will see in the fall. I am guessing apple will have a very sleek pair of glasses to run their AR on...unlike the monstrosity called hololens...plus, it will be available to the public consumer base this fall.....oppps I mean autumn......Unlike the MAGICAL hololens which will be avaliable to the public around 20comingsoon.
You obviously never used a HoloLens, otherwise you wouldn't do that statement. AR and VR mass market are 10 to 15 years from now, no need to rush things.
Says you......I am betting apple is less than a year from mass marketing AR. There is a very real need to rush things...plus hololens is like wearing a 5 gallon bucket on your head...apple is going to have something sleeker than google glasses. plus, google has the glasses already developed. you obviously have the same mentality as MS. Wait........the others will release first, gather up all the users, and then ms will release theirs for public use, and no one will buy.
How is Samsung Galaxy C9 Pro , should I buy it
Want the truth ? It's a piece of junk
yes buy it cause it will be just like the Samsung Note 7 phones that caught fire.
Didn't Surface Laptop launch this quarter and Surface Pro? How can revenue be down?
Yes but still not present everywhere. A lot of countries and stores still on pre-sale.
it launched on June 15. That would only leave it 15 days to make up revenue for the quarter. Expect next quarter surface sales to be more relfective of the Surface laptop and the new Surface Pro
I would think two weeks is plenty of time for preorders and initial sales to at least have some effect.
Preorders don't count. Money not in the pocket.
The new devices will only show up next quarter (but don't expect a massive increase in sales. They apparently are not selling that well).
plus not everyone is as happy about what the current Surface devices offer.
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Oh and lets not forget Surface-type copycats are everywhere now.
Don't you think the new generation who opened their eyes to Android and iOS will never get to know Windows and how to deal with it, if Microsoft did not work on developing their mobile operating system?
It's about time for Microsoft to throw a billion or two at developers and get the mobile apps that they lack . Let alone support and improve those already released . I don't mind paying a few bucks for a good app , no advertising please . The future is in mobile at least in the consumer market .
After being hidden in a dark cave, it's not about apps anymore. There ARE NO Windows phones to even sell. We need 4 phones (2 from Microsoft and 2 from OEMs) and market heavily in all countries!
Apple market cap: $782.5 billion, 5-year stock growth: 95.7%
Google market cap: $686.7 billion, 5-year stock growth: 224.76%
Microsoft market cap: $570.2 billion, 5-year stock growth: 170.65% The cloud is definitely giving Microsoft a second life. Imagine if they hadn't missed mobile.
Yes, lack of a meaningful mobile product offering leaves a huge hole in Microsoft's market presence and mindshare. Given that they've largely attributed their failure to reach their 1 billion Windows 10 deployments goal to their effective withdrawal from the mobile market, there potentially could have been up to half a billion Windows phones in use around the world by now.
Apple is increasingly dependent on sales of two products for the bulk of its revenue. Google is entirely dependent on advertising for the vast bulk of its revenue and has failed repeatedly to find a new reliable revenue source. Microsoft screwed up mobile to be sure, but has cloud and productivity products that are all doing well and still gets the bulk of revenue generated from PCs and gaming of any other vendor despite the continuing decline of that sector as the consumer market has broadened beyond desktop computers. Xbox Live is now at 53 million AMU, Windows 10 is over 500 million installs, Surface was never intended to sell in iDevice type numbers but is exceeding expectations. Besides the quarterly numbers, the full year numbers were stellar.
and again start, people complain about mobile / I wish someday some people understand that mobile strategy for Microsoft is not just windows mobile, they can make software and experiences for other phone os (android & ios) and so far Microsoft (Nadella) strategy for these 2 os is great
Microsoft was focusing on the cloud long before Nadella took over, so I hardly give him credit for that. It would've been malpractice to squander the cloud (something Ballmer had already started). Besides, Microsoft hasn't won the cloud war yet--they're simply riding the wave. The "winners" have yet to shakeout.
Yeah the real winners in the cloud business is Amazon, IBM, and Beidu.
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MSFT is just riding the wave and hoping people come to them instead.
Lol dude microsoft and amazon are the real ones, ibm and ... are just ... / look at azure and microsoft revenue
Please, point us to Baidu's cloud offerings so we can take a look (in English).
Everything looks great...
Now, MS needs Phone, Mobile, and Marketing... Developer, Carrier, and OEM Support.. And, MS needs Auto Industry support with infotainment integration... Then, they will be in the 21st century.
How much of the gross income is subject to US taxation?
How much is in storage overseas?
Those Are the questions...
The hard facts are that MS are not interested in developing phone devices. Everyone needs to accept this and move on. MS can do whatever they want as a company. They feel that they can make more revenue with cloud services, so that is what they are concentrating on.....
Phew...nearly recouped that $8B blown on stupid Nokia...will be able to start properly funding mobile again soon...

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