Earnings Release FY24 Q2

More Personal Computing

Revenue increased $2.7 billion or 19%.

• Windows revenue increased $454 million or 9% driven by growth in Windows OEM and Windows Commercial. Windows OEM revenue increased 11%. Windows Commercial products and cloud services revenue increased 9% driven by demand for Microsoft 365.

• Gaming revenue increased $2.4 billion or 49% driven by growth in Xbox content and services. Xbox content and services revenue increased 61% driven by 55 points of net impact from the Activision Blizzard acquisition. Xbox hardware revenue increased 3% driven by sales mix shift to higher-priced consoles.

• Search and news advertising revenue increased slightly. Search and news advertising revenue excluding traffic acquisition costs increased 8% driven by higher search volume.

• Devices revenue decreased $132 million or 9%.

Operating income increased $967 million or 29%.

• Gross margin increased $2.2 billion or 34% driven by growth in Gaming, with 17 points of net impact from the Activision Blizzard acquisition, as well as growth in Devices and Windows. Gross margin percentage increased driven by improvement in Devices, including the impact from prior year impairment charges resulting from changes to our hardware portfolio, and sales mix shift to higher margin businesses.

• Operating expenses increased $1.3 billion or 38% driven by Gaming, with 48 points of growth from the Activision Blizzard acquisition, offset in part by 6 points of favorable impact from the prior year Q2 charge.

Gross margin and operating income included a favorable 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.