Earnings Release FY20 Q3

Productivity and Business Processes

Revenue increased $1.5 billion or 15%.

• Office Commercial revenue increased $878 million or 13%, driven by Office 365 Commercial, offset in part by lower revenue from products licensed on-premises, reflecting a continued shift to cloud offerings and a slowdown in transactional licensing, primarily in small and medium businesses. Office 365 Commercial revenue grew 25%, due to seat growth of 20% and higher revenue per user.

• Office Consumer revenue increased $160 million or 15%, driven by Office 365 subscription revenue and strength in Office 2019, primarily in Japan.

• LinkedIn revenue increased $354 million or 21%, driven by growth across all businesses.

• Dynamics revenue increased 17%, driven by Dynamics 365 growth of 47%.

Operating income increased $809 million or 20%.

• Gross margin increased $1.3 billion or 16%, driven by growth in Office Commercial and LinkedIn. Gross margin percentage increased, due to gross margin percentage improvement in Office 365 Commercial and LinkedIn, offset in part by an increased mix of cloud offerings.

• Operating expenses increased $473 million or 12%, driven by investments in LinkedIn and cloud engineering.

Gross margin and operating income included an unfavorable foreign currency impact of 2% and 3%, respectively.

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.