Microsoft reports 30% growth in revenue – Online Services with $1.1bn of costs in Q2

Microsoft just announced its financial results for the last quarter, with record figures being given for the company as a whole. Overall its 30% revenue growth that’s the big gain, giving record second quarter results and this coming straight after an equally impressive first quarter. While the Online Services Business (MSN + Windows Live) reports a $245million operating loss for the quarter, this is down slightly from the $265million loss repoted in Q1.

As we have said previously, there are reasons for these numbers, and it doesn’t spell doom and gloom just yet for Microsoft’s internet forays. You only have to look at the Entertainment and Devices division (Xbox360, Zune, Windows Media Center) whose operating profit has just increased from $164million in Q1 to $357million in Q2, to see that sometimes you have to invest heavily to succeed. For reference, E&D reported an operating loss of $1.2billion in Q4 2007, OSB a $239million loss.

For those who like pictures more than numbers, here’s a comparison of revenue growth to costs growth for the last few quarters. Click through for the numbers used and note that although operating loss seems to have stabilished in the previous few quarters, costs in Q2 2008 were a record high of $1.1bn. The large version of the graph start when Windows Live was announced and shows that the recent revenue growth has been tracking that of cost growth. Like we said above, not all doom and gloom just yet.

growth%20small News

Notes from the conference call:

  • Windows Live Suite has been downloaded 45million times since the Wave 2 launch in November
  • Costs went up in Q2 due to the aQuantive post-acquisition transition, which also contributed $154m in revenues. Anybody seen them give an aQuantive costs figure to go with that? If so drop us a comment below!

Joe Wilcox has some good analysis of the other parts of the business.