FY18 Q2 - More Personal Computing Performance- Investor Relations - Microsoft

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Earnings Release FY18 Q2

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More Personal Computing

Revenue increased $281 million or 2%, primarily due to higher revenue from Gaming and Search advertising, offset in part by lower revenue from phones.

• Windows revenue increased 1%, driven by Windows OEM revenue growth, offset in part by a decline in Windows Commercial revenue. Windows OEM revenue increased 4%. Windows OEM Pro revenue grew 11%, outperforming the commercial PC market, primarily due to a higher mix of premium licenses sold and timing of license purchases. Windows OEM non-Pro revenue declined 5%, below the consumer PC market, primarily due to lower volumes of entry-level price devices sold. Windows Commercial revenue decreased 4%, primarily due to the impact of a prior year large deal.

• Gaming revenue increased $303 million or 8%, driven by higher revenue from Xbox hardware and Xbox software and services. Xbox hardware revenue increased 14%, primarily due to the launch of Xbox One X. Xbox software and services revenue increased 4%, primarily due to Xbox Live revenue growth, offset in part by a decrease in revenue from the prior year launch of video games.

• Search advertising revenue increased $215 million or 13%. Search advertising revenue, excluding traffic acquisition costs, increased 15%, driven by growth in Bing, primarily due to higher revenue per search and search volume.

• Surface revenue increased 1%, driven by a higher mix of premium devices sold, offset in part by a decrease in volume of devices sold.

• Phone revenue decreased $204 million.

Operating income decreased $51 million or 2%, primarily due to an increase in operating expenses.

• Gross margin was relatively unchanged, driven by a decline in Gaming, offset by an increase in Search advertising and Surface. Gross margin percentage decreased, primarily due to a gross margin percentage decline in Gaming.

• Operating expenses increased $49 million or 2%, driven by investments in engineering and the benefit of a legal settlement in the prior year, offset in part by a decrease in Windows marketing and phone expenses.

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

FY18 Earnings Release Schedule

  • Q3-Thursday, April 26
  • Q4-Thursday, July 19

Microsoft Corp (MSFT)

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2018 ANNUAL REPORT