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Microsoft’s Fiscal 2Q16 Earnings Beat Expectations

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Microsoft’s fiscal 2Q16 results beat analyst expectations

On January 28, 2016, Microsoft (MSFT) announced its fiscal 2Q16 earnings. IBM (IBM), Intel (INTC), and SAP (SAP) are some leading players in the tech space that had already announced their earnings.

Microsoft reported non-GAAP revenues of $25.7 billion and non-GAAP (generally accepted accounting principles) EPS (earnings per share) of $0.78 in fiscal 2Q16, which beat analyst expectations by $440 million and $0.07 per share, respectively. Microsoft’s fiscal 2Q16 results were expected to beat analyst expectations, as we stated in our Microsoft’s fiscal 2Q16 pre-earnings series. However, on a YoY basis, Microsoft’s fiscal 2Q16 revenues of $25.7 billion fell by 1.7%.

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Rising dollar and sluggishness in the PC space continued to impact Microsoft’s performance

The above chart shows the contribution of various operating segments towards the company’s overall revenues. Though Microsoft is taking every possible step to reduce its dependency on the PC market and march towards rapidly growing areas like cloud and mobile, the above chart shows that the company is still dependent on the PC market. Microsoft gets close to ~50% of its revenues from the PC market.

As we have highlighted in MSFT’s fiscal 2Q16 pre-earnings series, sluggishness in the PC space coupled with the strong dollar (VTVT) impacted the company’s growth. In the later part of the series, we will discuss how the company’s operating segments performed.

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