Earnings Release FY23 Q2

Productivity and Business Processes

Revenue increased $1.1 billion or 7%.

• Office Commercial products and cloud services revenue increased $627 million or 7%. Office 365 Commercial revenue grew 11% with seat growth of 12%, driven by small and medium business and frontline worker offerings, as well as growth in revenue per user. Office Commercial products revenue declined 30% driven by continued customer shift to cloud offerings.

• Office Consumer products and cloud services revenue decreased $39 million or 2%. Microsoft 365 Consumer subscribers grew 12% to 63.2 million.

• LinkedIn revenue increased $345 million or 10% driven by Talent Solutions.

• Dynamics products and cloud services revenue increased 13% driven by Dynamics 365 growth of 21%.

Operating income increased $487 million or 6%.

• Gross margin increased $1.0 billion or 8% driven by growth in Office 365 Commercial. Gross margin percentage increased. Excluding the impact of the change in accounting estimate, gross margin percentage decreased slightly driven by sales mix shift to cloud offerings.

• Operating expenses increased $554 million or 12% driven by investment in LinkedIn and employee severance expenses.

Revenue, gross margin, and operating income included an unfavorable foreign currency impact of 6%, 8%, and 11%, respectively. Operating expenses included a favorable foreign currency impact of 2%.

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.