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MICROSOFT

The following table reconciles our financial results reported in accordance with generally accepted accounting principles (“GAAP”) to non-GAAP financial results. Microsoft has provided this non-GAAP financial information to aid investors in better understanding the company’s performance. 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 December 31,

 ($ in millions, except per share amounts)

Revenue

Operating Income

Net Income

Diluted Earnings per Share

2015 As Reported (GAAP)

$23,796

$6,026

$5,018

$0.62

  Net Impact from Windows 10 Revenue Deferrals

1,710

1,710

1,128

0.14

2015 As Adjusted for Windows 10 Revenue Deferrals (non-GAAP)

$25,506

$7,736

$6,146

$0.76

2016 As Reported (GAAP)

$24,090

$6,177

$5,200

$0.66

  Net Impact from Windows 10 Revenue Deferrals

1,976

1,976

1,315

0.17

2016 As Adjusted for Windows 10 Revenue Deferrals (non-GAAP)

$26,066

$8,153

$6,515

$0.83

Percentage Change Y/Y (GAAP)

1%

3%

4%

6%

Percentage Change Y/Y (non-GAAP)

2%

5%

6%

9%

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

4%

8%

10%

13%

 

 

Microsoft is providing the following table to help investors compare results for the second quarter of fiscal year 2017 to the guidance previously provided for the quarter, which excluded LinkedIn.

 

Three Months Ended December 31,

 ($ in millions, except per share amounts)

Revenue

Operating Income

Net Income

Diluted Earnings per Share

2015 As Adjusted for Windows 10 Revenue Deferrals (non-GAAP) from Table Above

$25,506

$7,736

$6,146

$0.76

2016 As Adjusted for Windows 10 Revenue Deferrals (non-GAAP) from Table Above

$26,066

$8,153

$6,515

$0.83

  LinkedIn Results Including Amortization of Acquired Intangible Assets

228

(201)

(100)

(0.01)

2016 As Further Adjusted for Windows 10 Revenue Deferrals, Excluding LinkedIn Results (non-GAAP)

$25,838

$8,354

$6,615

$0.84

Percentage Change Y/Y Excluding LinkedIn Results (non-GAAP)

1%

8%

8%

11%

Percentage Change Y/Y Excluding LinkedIn Results (non-GAAP) Constant Currency

3%

11%

12%

15%

Microsoft returned $6.5 billion to shareholders in the form of share repurchases and dividends in the second quarter of fiscal year 2017.

“I am pleased with our results this quarter. We see strong demand for our cloud-based services and are executing well on our long-term growth strategy,” said Amy Hood, executive vice president and chief financial officer at Microsoft.

Revenue in Productivity and Business Processes was $7.4 billion and increased 10% (up 12% in constant currency), with the following business highlights:

  • Office commercial products and cloud services revenue increased 5% (up 7% in constant currency) driven by Office 365 commercial revenue growth of 47% (up 49% in constant currency)
  • Office consumer products and cloud services revenue increased 22% (up 21% in constant currency) and Office 365 consumer subscribers increased to 24.9 million
  • Dynamics products and cloud services revenue increased 7% (up 9% in constant currency) driven by Dynamics 365 revenue growth
  • LinkedIn contributed revenue of $228 million for the period beginning on December 8, 2016

Revenue in Intelligent Cloud was $6.9 billion and increased 8% (up 10% in constant currency), with the following business highlights:

  • Server products and cloud services revenue increased 12% (up 14% in constant currency) driven by double-digit annuity revenue growth
  • Azure revenue increased 93% (up 95% in constant currency) with Azure compute usage more than doubling year-over-year
  • Enterprise Services revenue decreased 4% (down 2% in constant currency) with declines in custom support agreements offset by growth in Premier Support Services and consulting

Revenue in More Personal Computing was $11.8 billion and decreased 5% (down 4% in constant currency) driven primarily by lower phone revenue, with the following business highlights:

  • Windows OEM revenue increased 5% (up 5% in constant currency)
  • Windows commercial products and cloud services revenue increased 5% (up 6% in constant currency) driven by annuity revenue growth
  • Search advertising revenue excluding traffic acquisition costs increased 10% (up 11% in constant currency) driven by increased revenue per search and search volume
  • Gaming revenue decreased 3% (down 1% in constant currency) with lower Xbox console revenue offset by Xbox software and services revenue growth
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