Productivity and Business Processes

Revenue increased $2.8 billion or 10%.

• Microsoft 365 Commercial products and cloud services revenue increased $2.2 billion or 11%. Microsoft 365 Commercial cloud revenue grew 12% with Microsoft 365 Commercial seat growth of 7% driven by small and medium business and frontline worker offerings, as well as growth in revenue per user. Microsoft 365 Commercial products revenue grew 5% driven by the Windows Commercial on-premises components of Microsoft 365 suite sales and an increase in Office transactional purchasing.

• Microsoft 365 Consumer products and cloud services revenue increased $173 million or 10%. Microsoft 365 Consumer cloud revenue grew 10% driven by Microsoft 365 Consumer subscriber growth of 9% to 87.7 million, as well as growth in revenue per user from the price increase announced in January 2025, offset in part by continued mix shift to Microsoft 365 Basic.

• LinkedIn revenue increased $298 million or 7% with growth across all lines of business.

• Dynamics products and cloud services revenue increased $189 million or 11% driven by growth in Dynamics 365, offset in part by a decline in Dynamics on-premises products. Dynamics 365 revenue grew 16% with growth across all workloads.

Operating income increased $2.2 billion or 15%.

• Gross margin increased $2.3 billion or 10% driven by growth in Microsoft 365 Commercial cloud. Gross margin percentage was relatively unchanged inclusive of the impact of scaling our AI infrastructure.

• Operating expenses increased $53 million or 1% primarily driven by investments in cloud and AI engineering.

Revenue, gross margin, and operating income each included an unfavorable foreign currency impact of 3%.