Revenue increased $1.4 billion or 22%, driven by the acquisition of LinkedIn and higher revenue from Office 365.
• LinkedIn revenue was $975 million, primarily comprised of revenue from Talent Solutions.
• Office Commercial revenue increased $347 million or 7%, driven by higher revenue from Office 365 commercial, mainly due to growth in subscribers, offset in part by lower revenue from products licensed on-premises, reflecting a continued shift to Office 365 commercial.
• Office Consumer revenue increased $112 million or 15%, driven by higher revenue from Office 365 consumer, mainly due to growth in subscribers.
• Dynamics revenue increased 10%, due to higher revenue from Dynamics 365.
Operating income decreased $198 million or 7%, primarily due to higher operating expenses, offset in part by an increase in gross margin. Operating income included an unfavorable foreign currency impact of 3%.
• Operating expenses increased $993 million or 44%, mainly due to LinkedIn expenses. Operating expenses included $965 million related to our acquisition of LinkedIn, including $153 million of amortization of acquired intangible assets. Sales and marketing expenses increased $522 million or 44%, research and development expenses increased $363 million or 53%, and general and administrative expenses increased $108 million or 28%.
• Gross margin increased $795 million or 15%, driven by higher revenue, offset in part by higher cost of revenue. Gross margin included an unfavorable foreign currency impact of 2%. Cost of revenue increased $642 million or 50%, driven by our acquisition of LinkedIn and an increased mix of cloud offerings. Cost of revenue included $396 million related to our acquisition of LinkedIn, including $218 million of amortization of acquired intangible assets.