Microsoft Corp announced Q2 revenue of $26.5 billion for the quarter ended December 31, 2014. Gross margin, operating income, and diluted earnings per share (EPS) for the quarter were $16.3 billion, $7.8 billion, and $0.71 per share, respectively.
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These financial results include $243 million of integration and restructuring expenses, or a $0.02 per share negative impact, related to both Microsoft’s restructuring plan announced in July 2014 and the ongoing integration of the Nokia Devices and Services (NDS) business.
There is also a $0.04 per share negative impact related to income tax expense resulting from an IRS audit adjustment.
Microsoft also announced its intention to complete the existing $40 billion share repurchase authorization by December 31, 2016.
Devices and Consumer revenue grew 8% to $12.9 billion, with the following business highlights:
Surface revenue of $1.1 billion, up 24%, driven by Surface Pro 3 and accessories
Office 365 Home and Personal subscribers increased to over 9.2 million, up 30% sequentially over prior quarter
Search advertising revenue grew 23%, with Bing U.S. market share at 19.7%, up 150 basis points over prior year
Xbox console sales totaled 6.6 million units, with strong holiday season performance
Phone Hardware revenue of $2.3 billion, with 10.5 million Lumia units sold driven by growth in affordable smartphones
Windows OEM Pro revenue declined 13%; revenue was impacted by the business PC market and Pro mix returning to pre-Windows XP end of support levels and by new lower-priced licenses for devices sold to academic customers
Windows OEM non-Pro revenue declined 13%, with license growth from opening price point devices
Commercial revenue grew 5% to $13.3 billion, with the following business highlights:
Commercial cloud revenue grew 114% driven by Office 365, Azure and Dynamic CRM Online, and is now on an annualized revenue run rate of $5.5 billion
Office Commercial products and services revenue declined 1%; transactional revenue was impacted by the continued transition to Office 365 and declines in commercial PCs following the XP refresh cycle
Server products and services revenue grew 9%, with double-digit growth of SQL Server and System Center
Windows volume licensing revenue increased by 3%, with annuity revenue growth partially offset by declining transactional revenue ■