Microsoft Q1 FY19 earnings

Discussion in 'Console Industry' started by Shortbread, Oct 24, 2018.

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  1. Shortbread

    Shortbread Island Hopper
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    Per ResetEra,

    Earnings Link
     
    #1 Shortbread, Oct 24, 2018
    Last edited: Oct 24, 2018
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  2. Cyan

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    surprisingly enough the Xbox division has had record earnings, in a year without enough exclusives. This paints an intriguing landscape for the next generation, specially now that uncle Phil is purchasing studios like Obsidian, and some others.

    did I get it wrong..., or hasn't Nadella mentioned that Xbox Game Pass is going to be on PCs, too?
     
  3. BRiT

    BRiT Verified (╯°□°)╯
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    He did talk about that, but there are many Xbox Play Anywhere games that are part of Xbox Game Pass that you can play on PC too if you have XGP. Maybe he means they plan on having more PC games in the service?
     
  4. lefantome

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    it's including all gaming, Xbox One X is very profitable and keeps revenue high because of its price and FH4 had a great launch.
     
  5. iroboto

    iroboto Daft Funk
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    Mouse and Keyboard coming to Xbox; so expect to see a lot more PC based games showing up on XGP as they want to cater to that market (PC based XGP) but not leave the console owners out by offering M/KB support. It’s a good idea imo and further unifies the 2 platforms.

    If their successful here with making a PC centric XGP it’s creates a foundation of in roads into countries (like JPN, CHN, KOR) other than those found within NA. Let other people join Xbox through the PC/Mobile space.
     
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  6. DrJay24

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    I see lots of revenue talk, what are the profits in the gaming division?
     
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  7. Goodtwin

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    They conveniently leave out the operating income for that division. My guess is that its not very impressive.
     
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  8. Shortbread

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    Although XB1 hardware sales are lagging behind XB360, however, 42-45 million some XB1 units will (does) generate tons of money from game software, Xbox Live, and accessories sales. And operating income and any other overhead cost, are more than likely within reasonable ranges (not hurting profits), which Microsoft see's no worries for. Microsoft being coy about XB1 specifics or unit sales, has more to do with brand image and current PR towards showing healthy sales through other means (player engagement, Xbox Live sales, etc...). In the end, the Xbox division is healthy from all indications.
     
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  9. Silent_Buddha

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    It isn't highlighted due to covering up for the less than stellar performance of Windows OS revenue.

    More Personal Computing highlights
    • Revenue Grew 15%
    • Gross Margin grew 10%
    • Operating expenses decreased 1%
    • Operating income grew 23%
    A closer look
    • Windows OEM grew by 3%
      • Windows OEM Pro revenue grew 8%
      • Windows OEM Non-Pro revenue declined 5%
    • Windows commercial products and cloud grew 12%
    • Surface grew 14%
    • Gaming revenue grew 44%
    • Xbox software and services grew by 36%
    • Xbox hardware grew by 94%
    • Xbox live monthly users grew by 8%.
    • Surface grew by 14%
    • Search grew by 17%
    Some numbers (revenue)
    • Revenue for More Personal computing was 10.75 million billion USD
    • Gaming generated ~2.74 million billion USD
    • Surface generated ~1.18 million billion USD
    • The rest (~6.38 million USD) is split between Windows OEM, Windows cloud services (not to be confused with Azure), Windows Commercial products, and Search Advertising.
    Notice how revenue is obfuscated for Windows OEM, Commercial services and cloud, and Search. Those are the numbers MS doesn't want people to know about.

    Meanwhile they are quick to point out how much revenue was generated by Surface and Gaming as those are highlights of the More Personal Computing division.

    Take a moment to think about how big that is. The gaming division whose major revenue generator is Xbox is generating about half as much revenue as Windows generates (in this Division).

    Regards,
    SB
     
    #9 Silent_Buddha, Nov 3, 2018
    Last edited: Nov 3, 2018
  10. TheAlSpark

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  11. Shortbread

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  12. DrJay24

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    But numbers like HW revenue don't mean that much when the XBX is 100% more expensive that the previous year's selection.
     
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  13. Silent_Buddha

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    OOOOPS! <pinkie finger>

    So what you are saying is that close to 100% of XBO sales are now XBO-X? Because if it's only 20% of XBO sales, it's certainly not going to account for the 94% YoY increase. :) Especially when you consider that there were 399 and 499 USD XBO-S SKUs back then.

    Regards,
    SB
     
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  14. Goodtwin

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    Maybe I am misunderstanding, but there is no way there were $399 and $499 Xbox One S SKU's in 2017, or even 2016. So if the Xbox division has been seeing big year over year reductions in revenue/profit, one year of big increases year over year might just signal better than the shitty year over year they have had over the past few years. Xbox One X being so much more expensive is going to make an impact, even if it is only 20% of new Xbox One sales are the X model, it takes nearly 2.5 S models to match the revenue for every X model sold. Meaning that 20% of the units could account for nearly 50% of the revenue.
     
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  15. DrJay24

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    I'm asking a simple question, what is the profit on the revenue? Revenue numbers are muddy at best, you can be spending money to generate revenue. What if every $60 game pass sub costs MS $70? under current agreements? Netflix had this issue for years. The numbers are even harder to parse because they released a $500 console that they didn't have last year (XB1S was $200-$300 last year). They are also showing a drop in XBL subs for the last three quarters, but that isn't captured in YoY I guess.
     
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  16. beyondtest

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    Is that the 59m to 57m figure?

    Btw, is there a report on pure proft minus everything else?
     
  17. DuckThor Evil

    DuckThor Evil Anas platyrhynchos
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    No Drjay24 is mistaken, MS doesn't specify the gold subs. That information isn't available. Instead it shows an "active user base" definition that is quite obscure. I think it's something like how many users have logged into Xbox Live on any device in a period of one month, whether they are paying for the service/products or not.
     
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  18. Silent_Buddha

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    The 2 TB XBO-S launched at 399 USD.

    The Minecraft XBO-S special edition launched at 399 USD when the XBO-X came out.

    There was always a 399 USD XBO or XBO-S SKU up until the XBO-X launched. And some special editions hit 499 USD (XBO Elite Edition, for example).

    Regards,
    SB
     
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  19. Silent_Buddha

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    Noone outside of Microsoft will ever know. Not when there are products other than Xbox in the More Personal Computing division that MS doesn't want people to know exactly how well they are or aren't doing. If the profit margin for the Gaming division was revealed it could give people (investors) an idea of what the Windows OS operating income is. We already know it's not doing stellar as they aren't willing to even share revenue numbers for it at this time.

    The only thing we can take out of the report is that out of More Personal Computing, the gaming sector of which Xbox is the largest component is doing the best. Followed by Surface a distant second. Gaming doesn't generate the most revenue, but it's likely generating by far the most operating income relative to revenue generated (profit margin) with Surface generating the next most operating income relative to revenue generated (profit margin).

    Windows OS can't be dropped even if it isn't a strong profit generator anymore as much of Microsoft's Business still revolves around software and services for the Windows platform. Hence not wanting to disclose any financial information related to it that could incite investors to want to drop it.

    Regards,
    SB
     
    #19 Silent_Buddha, Nov 8, 2018
    Last edited: Nov 8, 2018
  20. Goodtwin

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    When looking at year over year sales, was there a $399-499 Xbox One S model in 2016 that had any sore or market share? That is why I think the Xbox One X might have offered a pretty big boost to revenue year over year. If there were any $399-499 SKU's in 2017(prior to X releasing) or even 2016, i seriously doubt they were selling nearly as well as the Xbox One X has done this year.
     
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