FY19 Q2 - More Personal Computing Performance- Investor Relations - Microsoft

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Earnings Release FY19 Q2

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More Personal Computing

Revenue increased $823 million or 7%.

Windows revenue decreased $81 million or 2%, driven by a decrease in Windows OEM and patent licensing, offset in part by growth in Windows Commercial. Windows OEM revenue decreased 5%. Windows OEM non-Pro revenue declined 11%, below the consumer PC market, with continued pressure in the entry-level category. Windows OEM Pro revenue declined 2%, in line with the commercial PC market. Windows Commercial revenue increased 13%, with continued customer adoption of premium offerings.

Surface revenue increased $525 million or 39%, with strong growth across consumer and commercial.

Gaming revenue increased $312 million or 8%, driven by Xbox software and services growth of 31%, primarily due to third-party title strength, offset in part by a decline in Xbox hardware of 19% due to the launch of Xbox One X in the second quarter of fiscal year 2018.

Search advertising revenue increased $156 million or 9%. Search advertising revenue, excluding traffic acquisition costs, increased 14%, driven by growth in Bing, due to higher revenue per search and search volume.

Operating income increased $454 million or 18%.

Gross margin increased $323 million or 6%, driven by growth in Gaming and Search. Gross margin percentage decreased slightly, due to sales mix shift to our lower margin Surface and Gaming businesses.

Operating expenses decreased $131 million or 4%, driven by a decline in Windows and Gaming marketing.

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Information contained in these documents is current as of the earnings date, and not restated for new accounting standards