FY19 Q3 - More Personal Computing Performance- Investor Relations - Microsoft

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Earnings Release FY19 Q3

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More Personal Computing

Revenue increased $763 million or 8%.

Windows revenue increased $332 million or 7%, driven by growth in Windows OEM and Windows Commercial, offset in part by a decrease in patent licensing. Windows OEM revenue increased 9%. Windows OEM Pro revenue increased 15%, driven by improved chip supply that met both unfulfilled second quarter and better than expected third quarter commercial PC demand. Windows OEM non-Pro revenue declined 1%, ahead of the consumer PC market, driven by improved chip supply for premium devices that met both unfulfilled second quarter and third quarter demand. Windows Commercial revenue increased 18%, driven by an increased mix of multi-year agreements that carry higher in-quarter revenue recognition.

Surface revenue increased $235 million or 21%, with strong growth across commercial and consumer.

Search advertising revenue increased $127 million or 7%. Search advertising revenue, excluding traffic acquisition costs, increased 12%, driven by growth in Bing, due to higher revenue per search.

Gaming revenue increased $112 million or 5%, driven by Xbox software and services growth of 12%, primarily due to third-party title strength and subscriptions growth, offset in part by a decline in Xbox hardware of 33% primarily due to a decrease in volume of consoles sold.

Operating income increased $631 million or 25%, including an unfavorable foreign currency impact of 3%.

Gross margin increased $673 million or 13%, driven by growth in Windows, Gaming, and Search. Gross margin percentage increased, due to a sales mix shift to higher gross margin businesses in Gaming and Windows. Gross margin included an unfavorable foreign currency impact of 2%.

Operating expenses increased $42 million or 1%, driven by an increase in Surface advertising.

IMPORTANT NOTICE TO USERS (summary only, click here  for full text of notice); All information is unaudited unless otherwise noted or accompanied by an audit opinion and is subject to the more comprehensive information contained in our SEC reports and filings. We do not endorse third-party information. All information speaks as of the last fiscal quarter or year for which we have filed a Form 10-K or 10-Q, or for historical information the date or period expressly indicated in or with such information. We undertake no duty to update the information. Forward-looking statements are subject to risks and uncertainties described in our  Forms 10-Q and 10-K.

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