Microsoft doubles net profit in Australia, tops $100M

Microsoft doubles net profit in Australia, tops $100M

Revenue also jumped from $1.1 billion to $2.3 billion

Steven Worrall (Managing director - Microsoft Australia)

Steven Worrall (Managing director - Microsoft Australia)

Credit: Microsoft

Microsoft Australia has reported a net profit after tax of $100 million for the year ended 30 June 2018, more than doubling the $47 million posted in 2017.

The software giant paid $53.3 million in taxes for FY18, as previously reported.

In the previous reporting year, Microsoft paid a total of $87.3 million, however according to the Australian Taxation Office's Tax Transparency Report, the vendor had previously paid only $42 million, later paying the difference.

Microsoft reached a new tax arrangement with the ATO on the same day it fronted up the public hearing for the Government's inquiry into Corporate Tax Avoidance on 22 August 2017.

"Microsoft sells products and services directly to local partners and customers in Australia, and all revenue from those sales and expenses are reported locally,” a spokesperson told ARN.

As of 1 July 2017, Microsoft adopted a new revenue recognition standard, which had a direct impact on how it accounts for its software revenue.

"Specifically, for Windows 10, we recognise revenue predominately at the time of billing and delivery than rateably over the life of the related device," the company stated in the financial report.

According to the documents filed with the Australian Securities and Investment Commission (ASIC), revenue recognition related to the vendor's hardware, cloud offerings and professional services remained unchanged.

Microsoft's total revenue for FY18 was $2.3 billion, also slightly more than twice the revenue recorded in the previous year, which amounted to $1.1 billion.

In 2018, most of Microsoft Australia's revenue came from products with a total of $1.5 billion, while services and others accounted for $192 million and commission revenue from related entity was $603 million.

The company had 1,404 employees at the time it lodged the financial results in December 2018.

Globally, Microsoft posted US$110.4 billion in revenue and US$35.1 billion in operating income, returning US$21.5 billion to shareholders through dividends and share repurchases.

"Our commercial cloud business delivered more than US$23 billion in revenue, exceeding the ambitious goal we had set to achieve US$20 billion in annualised commercial cloud revenue by the end of fiscal 2018, nine months ahead of schedule," Microsoft CEO Satya Nadella said in the company's annual report.

"In addition, we expanded our commercial cloud gross margin to 57 per cent, up seven points year-over-year."

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