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Microsoft Q1: Surface, Xbox Revenues Up, Phones Down

Redmond, Wash. – Microsoft’s computing and gaming hardware sales jumped 74 percent to $2.45 billion in the first quarter of the company’s 2015 fiscal year, thanks to higher Surface tablet and Xbox console sales, the company announced.

The company posted $2.61 billion in cellphone sales, up sequentially but down on a year-over-year basis. Sales grew sequentially by 31.8 percent from $1.98 billion but were down about 29 percent on a year-ago basis, based on sales reported by Nokia before it sold its handset business to Microsoft. In the year-ago quarter, Nokia’s handset sales were 2.9 billion Euros, or $3.67 billion at today’s exchange rate.

Microsoft said it sold 9.3 million Lumia smartphones in the first quarter, posting “modest growth” over the previous year because of European sales. Microsoft said it gained share in lower priced smartphones.

The company didn’t disclose non-Lumia handset sales other than to say non-Lumia unit sales “performed in line with the market for feature phones.”

Separately, Windows Phone licensing revenue fell 46 percent on a year-over-year basis “due primarily to higher mix of low-royalty devices,” the company said.

In the computing and gaming hardware segment, Surface tablet sales hit $908 million, up 127 percent from the year-ago $400 million and up sequentially from $409 million. Microsoft cited “strong interest from students, professionals and increasingly enterprises for Surface Pro 3.”

Xbox platform revenue grew 58 percent on a year-over-year basis, driven by higher console sales, the company said without specifying a dollar level. Xbox console sales hit 2.4 million, up 102 percent from the previous year and up sequentially from the previous quarter’s 1.1 million.  Sales grew in part because the console was launched in 28 more markets.

In fiscal 2014, sales in the computing and gaming hardware segment grew 49 percent to $9.63 billion.