FY17 Q3 - More Personal Computing Performance- Investor Relations - Microsoft

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Earnings Release FY17 Q3

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More Personal Computing

Revenue decreased $703 million or 7%, mainly due to lower revenue from Devices, offset in part by higher revenue from Windows, Search advertising, and Gaming.

• Surface revenue decreased $285 million or 26%, primarily due to a reduction in volumes sold.

• Windows revenue increased $177 million or 4%, mainly due to higher revenue from Windows OEM and Windows Commercial, offset in part by lower revenue from patent licensing. Windows OEM revenue increased 5%. Windows OEM Pro revenue grew 10%, outperforming the commercial PC market, primarily due to a higher mix of premium licenses sold. Windows OEM non-Pro revenue declined 1%, outperforming the consumer PC market due to a higher mix of premium devices sold. Windows Commercial revenue grew 6%, driven by multi-year agreement revenue. Patent licensing revenue decreased 19%, mainly due to a decline in license revenue per unit.

• Search advertising revenue increased $81 million or 5%. Search advertising revenue, excluding traffic acquisition costs, increased 8%, primarily driven by growth in Bing, due to higher revenue per search and search volume.

• Gaming revenue increased $78 million or 4%, primarily due to higher revenue from Xbox software and services. Xbox software and services revenue increased 7%, driven by a higher volume of Xbox Live transactions.

• Phone revenue decreased $730 million.

Operating income increased $346 million or 20%, due to lower operating expenses and slightly higher gross margin. Operating income included an unfavorable foreign currency impact of 3%.

• Operating expenses decreased $324 million or 11%, primarily due to a reduction in phone expenses and Surface launch-related expenses in the prior year. Sales and marketing expenses decreased $188 million or 16%, research and development expenses decreased $86 million or 6%, and general and administrative expenses decreased $50 million or 13%.

• Gross margin increased slightly, driven by lower cost of revenue, offset in part by lower revenue. Gross margin included an unfavorable foreign currency impact of 2%. Cost of revenue decreased $725 million or 15%, driven by a reduction in phone sales and lower Surface cost of revenue, offset in part by an increase in Xbox software and services cost of revenue.

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

FY17 Earnings Release Schedule

  • Q4-Thursday, July 20

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2017 ANNUAL REPORT