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Earnings Release FY21 Q3

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Revenue increased $2.0 billion or 19%.

Windows revenue increased $426 million or 8%, driven by growth in Windows OEM and Windows Commercial. Windows OEM revenue increased 10%, driven by consumer PC demand. Windows OEM Pro revenue decreased 2% and Windows OEM non-Pro revenue grew 44%. Windows Commercial products and cloud services revenue increased 10%, driven by demand for Microsoft 365.

Gaming revenue increased $1.2 billion or 50%, driven by growth in Xbox content and services and Xbox hardware. Xbox content and services revenue increased $739 million or 34%, driven by growth in third-party titles, Xbox Game Pass subscriptions, and first-party titles. Xbox hardware revenue increased 232%, driven by higher price and volume of consoles sold due to the Xbox Series X|S launches.

Search advertising revenue increased $232 million or 12%. Search advertising revenue, excluding traffic acquisition costs, increased 17%, driven by higher search volume and revenue per search.

Surface revenue increased $164 million or 12%.

Operating income increased $967 million or 27%.

Gross margin increased $892 million or 14%, driven by growth in Windows, Gaming, and Search advertising. Gross margin percentage decreased, driven by sales mix shift to Gaming.

Operating expenses decreased $75 million or 3%, driven by reductions in retail store expenses and marketing.

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