Earnings Release FY22 Q3

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Revenue increased $1.5 billion or 11%.

• Windows revenue increased $614 million or 11% driven by growth in Windows OEM and Windows Commercial. Windows OEM revenue increased 11% driven by continued strength in the commercial PC market, which has higher revenue per license. Windows Commercial products and cloud services revenue increased 14% driven by demand for Microsoft 365.

• Search and news advertising revenue increased $544 million or 23%. Search and news advertising revenue excluding traffic acquisition costs increased 23% driven by higher revenue per search and search volume.

• Gaming revenue increased $207 million or 6% on a strong prior year comparable that benefited from Xbox Series X|S launches, driven by growth in Xbox content and services and Xbox Hardware. Xbox content and services revenue increased 4% driven by growth in Xbox Game Pass subscriptions and first-party titles, offset in part by a decline in third-party titles. Xbox hardware revenue increased 14% due to continued demand for Xbox Series X|S.

• Surface revenue increased $195 million or 13%.

Operating income increased $305 million or 7%.

• Gross margin increased $755 million or 10% driven by growth in Windows and Search and news advertising. Gross margin percentage decreased slightly.

• Operating expenses increased $450 million or 17% driven by investments in Gaming, Search and news advertising, and Windows marketing.

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.