Research Desk Line-up: Black Knight Financial Services Post Earnings Coverage

LONDON, UK / ACCESSWIRE / July 25, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on Microsoft Corp. (NASDAQ: MSFT), which can be viewed by registering at http://protraderdaily.com/optin/?symbol=MSFT, following the Company's posting of its fourth quarter and fiscal 2017 earnings results on July 20, 2017. The software maker outperformed top- and bottom-line expectations, while its free cash flow surged 50% on a y-o-y basis. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member's account at:

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Get more of our free earnings reports coverage from other constituents of the Business Software & Services industry. Pro-TD has currently selected Black Knight Financial Services, Inc. (NYSE: BKFS) for due-diligence and potential coverage as the Company announced on July 19, 2017, its financial results for Q2 2017 which ended on June 30, 2017. Register for a free membership today, and be among the early birds that get access to our report on Black Knight Financial Services when we publish it.

At Pro-TD, we make it our mission to bring you news that matter about the stock you follow. Today, our research desk covers a blog story on MSFT; also brushing on BKFS. With the links below you can directly download the report of your stock of interest-free of charge at:

http://protraderdaily.com/optin/?symbol=MSFT

http://protraderdaily.com/optin/?symbol=BKFS

Earnings Reviewed

Microsoft posted revenue of $23.31 billion on GAAP basis for Q4 FY17, up 13% compared to revenue of $20.61 billion in Q4 FY16. The increase in revenue was driven by growth in Productivity and Business Processes and Intelligent Cloud, and a decrease in net revenue deferral from Windows 10. On a non-GAAP basis, the Company's revenue totaled $24.7 billion, up 9% or 10%, with stronger than expected performance across all segments. Microsoft's revenue numbers surpassed analysts' expectations of $24.19 billion.

For Q4 FY17, Microsoft's gross margin was $14.86 billion, up 18% compared to gross margin of $12.64 billion, driven by growth across each of the Company's segments, driven by higher revenue and margin expansion. Microsoft's operating income surged 73% on a y-o-y basis to $5.33 billion compared to $3.08 billion. The increase in operating income was driven by higher gross margin and a reduction in impairment and restructuring expenses, offset in part by operating expenses related to the Company's acquisition of LinkedIn.

Microsoft's diluted earnings per share ("EPS") were $0.83 for Q4 FY17, up 112.8% compared to $0.39 in Q4 FY16. The Company's reported quarter diluted EPS was negatively impacted by net revenue deferral from Windows 10 and restructuring expenses, which resulted in a decrease in diluted EPS of $0.15, while Q4 FY16 diluted EPS was negatively impacted by net revenue deferral from Windows 10 and impairment and restructuring expenses, which resulted in a decrease to diluted EPS of $0.30. The Company's non-GAAP EPS was $0.98 for Q4 FY17, and grew 42% on a y-o-y basis, beating Wall Street's expectations of $0.71 per share

Productivity and Business Processes

During Q4 FY17, Microsoft's Productivity and Business Processes segment revenue surged 21% to $8.45 billion, driven by the acquisition of LinkedIn and higher revenue from Office. Revenue included an unfavorable foreign currency impact of 2%.

During the reported quarter, Productivity and Business Processes segment's LinkedIn revenue was $1.1 billion, driven by revenue from Talent Solutions. Office Commercial revenue grew 5% on a y-o-y basis, driven by higher revenue from Office 365 commercial, primarily due to growth in subscribers. The segment's Office Consumer revenue rose 13%, driven by higher revenue from Office 365 consumer, mainly due to growth in subscribers.

For Q4 FY17, Productivity and Business Processes segment's operating income fell 8% on a y-o-y basis, primarily due to higher operating expenses, but was offset in part by an increase in gross margin. Operating expenses increased $1.0 billion, or 41% mainly due to LinkedIn expenses.

Intelligent Cloud

During Q4 FY17, Microsoft's Intelligent Cloud division revenue advanced 11% to $7.43 billion, primarily due to higher revenue from server products and cloud services. The segment's Server products and cloud services revenue surged 15%, driven by Azure revenue growth of 97% and server products licensed on-premises revenue growth of 4%. Enterprise Services revenue decreased 3%, driven by a decline in revenue from custom support agreements, but was offset in part by higher revenue from Premier Support Services.

Microsoft stated that during the reported quarter, it closed the highest number of multi-million-dollar Azure deals to date, and improved its annuity mix to 86%, up 3 points on a y-o-y basis. As a result, Microsoft's commercial bookings grew 30% on a y-o-y basis, and commercial unearned revenue was $27.8 billion. The Company's contracted not billed balance increased to more than $31.5 billion. Microsoft's commercial cloud annualized revenue run rate exceeded $18.9 billion in the reported quarter, growing 56% on a y-o-y basis.

Personal Computing Segment

During Q4 FY17, Microsoft's More Personal Computing segment revenue totaled $8.82 billion, down 2% on a y-o-y basis, driven by lower revenue from Devices, and offset in part by higher revenue from Windows, Search advertising, and Gaming.

For Q4 FY17, the segment's Windows revenue increased $103 million, or 2%, mainly due to higher revenue from Windows Commercial and Windows OEM. Windows Commercial revenue grew 8%, driven by multi-year agreement revenue. Windows OEM revenue increased 1%. Windows OEM Pro revenue grew 3%, outperforming the commercial PC market, primarily due to a higher mix of premium licenses sold. The Personal Computing segment's search advertising revenue, excluding traffic acquisition costs, increased 10%, primarily driven by growth in Bing, due to higher revenue per search and search volume.

In the reported quarter, the Personal Computing segment's Gaming revenue increased 3%, driven by higher revenue from Xbox software and services, and offset in part by lower revenue from Xbox hardware. Xbox software and services revenue increased 11%, primarily due to a higher volume of Xbox Live transactions. Xbox hardware revenue decreased 29%, driven by lower prices and a decline in the volume of consoles sold.

Cash Matters

During Q4 FY17, Microsoft invested approximately $3.3 billion in capital expenditures, including capital leases, up sequentially in part due to planned Q3 FY17 data center spend pushed into the reported quarter. This CapEx comprised of approximately $2.3 billion of cash paid for property and equipment. The Company's free cash flow grew 50% on a y-o-y basis, driven primarily by operating cash flow growth of 30%. Operating cash flow increased due to higher collections from customers following strong billings growth, as well as working capital improvements in Microsoft's hardware business.

Outlook

For FY18, Microsoft is forecasting that increasing demand for cloud services and healthy renewals will continue to drive a higher annuity mix. The Company expects gross margin percentage to decline about a point in FY18 with increasing cloud revenue mix, a full year of LinkedIn amortization, and hardware launches including the Company's new console, Xbox One X.

For Q1 FY18, Microsoft is anticipating commercial unearned revenue to be within the range of $24.85 billion to $25.05 billion, while for Productivity and Business Processes, the Company estimates revenue between $8.1 billion and $8.3 billion. Microsoft is forecasting approximately $1.1 billion of revenue from LinkedIn, adjusted for the impact of purchase accounting.

For Intelligent Cloud, Microsoft is forecasting revenue between $6.9 billion and $7.1 billion. The Company expects Customer demand for Azure and hybrid cloud offerings to remain strong, and it is projecting another quarter of double-digit revenue growth across server products and cloud services. In the upcoming quarter, Microsoft is expecting More Personal Computing revenue to be between $8.6 billion and $8.9 billion.

Stock Performance

On Monday, July 24, 2017, the stock closed the trading session at $73.60, slightly down 0.26% from its previous closing price of $73.79. A total volume of 21.07 million shares has exchanged hands. Microsoft's stock price soared 8.99% in the last three months, 16.90% in the past six months, and 30.10% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have rallied 18.44%. The stock is trading at a PE ratio of 27.18 and has a dividend yield of 2.12%. At Monday's closing price, the stock's net capitalization stands at $571.54 billion.

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