Earnings Release FY21 Q3

More Personal Computing

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.

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.