News

Record First-Quarter Revenue for Microsoft

• By Chris Paoli
• October 28, 2010

According to a Microsoft financial report released today, the first fiscal quarter of 2011, ending on Sept. 30, brought in 16.20 billion in revenue. The 25 percent jump over last year's Q1 earnings was due, in part, to the success of new software and consumer goods.

"This was an exceptional quarter, combining solid enterprise growth and continued strong consumer demand for Office 2010, Windows 7 and Xbox 360 consoles and games," said Peter Klein, chief financial officer at Microsoft, in a press release. "Our ability to grow revenue while continuing to control costs allowed us to deliver another quarter of year-over-year margin expansion."

Microsoft reported that the company saw year-over-year growth in all of its business segments, including the recently released Office 2010, which gained 15 percent over the previous quarter's revenue based strictly on early license purchases.  

Windows 7, which brought in $4.79 billion dollars in the first quarter, saw a slight increase over the previous quarter and a 10 percent increase, year-over-year, thanks, in part, to strong enterprise adoption rates, the company said.

PC sales continue to see a slow recovery, with an increase of 9 to 11 percent over the previous quarter. Again, this is due to stronger-than-expected purchases in the enterprise market countering weaker-than-expected consumer sales.

Tools and servers sales rose 12 percent, and its online services business increased by 8.2 percent over last year. In a conference call, Klein said that these sectors benefited greatly by the upcoming consumer release of Lync, strong cloud focus with Azure and its cloud-based Office suite, and the doubling of usage of Bing compared to last year.

"Customer demand and excitement for our cloud and commercial online services continue to grow as demonstrated by major new customer wins this quarter for Windows Azure and by the significant customer interest in our recently announced Office 365 service," said Klein.

On the consumer side, Xbox 360 console sales rose 38 percent over Q1 FY 2010 and has outsold both Sony's and Nintendo's systems in the past four months. Klein pointed to the system's redesign as one of the factors of the growth. Microsoft's Halo: Reach also contributed, generating $350 million in just the final 17 days of the quarter.

Microsoft is hoping the streak of positive-growing quarters continues for 2Q, which sees the release of Windows Phone 7 and the Kinect. The company has already stated that it will be investing $1 billion in advertisement of these two new products.

A complete breakdown of Micrisoft's 1Q FY 2011 numbers can be found here.