Microsoft Conference Call Summary

Microsoft MSFT reported its fourth-quarter earnings Tuesday. Shares of the company are up 0.48 percent.

Below are some key takeaways from its conference call:

Financial and Sector highlights:

• As I think about our strong execution this quarter, there are three things that stand out to me:
• Significant momentum with our cloud services;
• Progress in a number of our consumer businesses;
• And continued cost discipline.
• Our total fourth quarter revenue was $23 billion, including $2 billion from the Phone Hardware segment.
• As you know, our Q4 guidance did not include the impact of the acquisition of Nokia's Devices and Services business.
• Excluding that, we grew revenue 10 percent, exceeding the high end of our guidance range.
• EPS grew 12 percent to $0.66.
• Our commercial cloud revenue grew 147 percent this quarter, driven by both Office 365 and Azure.
• We feel good about the progress we're making with Windows.
• Developed markets continue to show stability.
• In Bing, we continue to see growth in both usage and monetization. This quarter, U.S. search query share exceeded 19 percent and RPS grew double digits again.
• As we saw in prior quarters, display revenue remained soft. In late June, we launched Surface Pro 3.
• During the quarter, we reassessed our product roadmap and decided not to ship a new form factor that was under development.
• At E3 we reasserted our focus on games, with blockbuster titles and key exclusives coming this holiday.
• With the progress we are making in channel inventories, the new markets for Xbox One, and our exciting game lineup, we feel well positioned heading into the holiday season.
• Across the company, we grew gross margin by $1 billion or 7 percent.
• In Q4, we returned $3.4 billion in cash to shareholders through buybacks and dividends to finish this fiscal year at $15.7 billion, an increase of 28 percent over the prior year.
• Our effective tax rate was higher this quarter.

Satya Nadella:

• In Q4, on an operating basis, we grew revenue 10 percent and operating income 12 percent.
• We accelerated our commercial cloud business to a $4.4 billion annual run rate.
• We made bold and disciplined decisions to define our core as a productivity and a platform company for the mobile-first cloud-first world.
• Mobility for us goes beyond just devices.
• While we are certainly focused on building great phones and tablets, we think of mobility more expansively.
• Our mobile and cloud opportunity views informs our decisions on what to build and where to invest.
• More specifically, we use the following three principles to guide our investments
• First, focus investments on the core.
• Second, consolidate overlapping efforts.
• Third, run all businesses in an economically sound way.
• This is why we brought Office to the iPad, and now there are more than 35 million downloads of Word, Excel, PowerPoint, and OneNote.
• We believe productivity experiences will go beyond individual applications to deliver ambient intelligence that spans applications.
• Additionally, I'm pleased to see the progress with Bing, now more than 19 percent U.S. query share and strong RPS growth.

Amy Hood:
• In addition to the expense guidance I just provided and as we announced on July 17, we expect to incur between $1.1 billion and $1.6 billion in restructuring expense.
• In licensing, we expect revenue to be $4.1 billion to $4.2 billion.
• In computing and gaming hardware, we expect revenue to be $1.7 billion to $2 billion.
• Moving on to Commercial, we expect revenue across our two segments to be $12.0 billion to $12.2 billion.
• We expect our full-year tax rate to be between 21 percent and 23 percent.
• This is in line with the fourth quarter excluding the prior-period tax adjustment.