Microsoft's 2014 Revs Up 8%, Expects To Improve Ad Game In 2015

Citing a crummy holiday season, softening Windows sales and slower-than-expected international growth, Microsoft narrowly beat fiscal second-quarter earnings expectations, on Monday.

Revenue for the quarter ended December 31, 2014 totaled $26.5 billion — up 8% year-over-year — yet net income of $5.9 billion was down from $6.6 billion last year.

Microsoft CEO Satya Nadella remained optimistic about the company’s future. “Microsoft is continuing to transform,” he told analysts on an earnings call, on Monday. “We are taking bold steps forward across our business.”

Devices and consumer revenue grew 8% to $12.9 billion during the period. In particular, Surface revenue of $1.1 billion was up 24%, which Microsoft attributed to strong sales of Surface Pro 3 and related accessories.



Search advertising revenue grew 23% during the period, with Bing U.S. market share at 19.7% — up 150 basis points year-over-year.

While Microsoft doesn’t break out digital ad revenue numbers, it has been open about related challenges. “Consistent with prior quarters, display revenue remained under pressure,” Amy Hood, the company’s CFO, said on an earnings call in late October, referring to the quarter ended September 30, 2014.

Despite a challenging 2014, Microsoft executives have vowed to improve their ad game in 2015. Among other efforts, ad executives at the software giant are excited about multiscreen engagements, better data analysis and increasingly contextual ad campaigns.

2014 wasn’t entirely a bust for Microsoft’s ad operations. According to eMarketer, the software giant actually surpassed Yahoo in global digital advertising share — taking a 2.72% share, last year — although Google and Facebook continued to dominate the field with a 31.1% share and a 7.75% share, respectively.

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