Item 7

  

More Personal Computing

Metrics related to our More Personal Computing segment assess the performance of our key consumer businesses.

> **Windows OEM and Devices revenue growth / Revenue from sales of Windows Pro and non-Pro licenses sold through the OEM channel and sales of first-party Devices, including Surface and PC accessories**
>
> Xbox content and services revenue growth ... Revenue from Xbox content and services, comprising first- and third-party content (including games and in-game content), Xbox Game Pass and other subscriptions, Xbox Cloud Gaming, advertising, and other cloud services
> Search and news advertising revenue (ex TAC) growth ... Revenue from search and news advertising excluding traffic acquisition costs (“TAC”) paid to Bing Ads network publishers and news partners

SUMMARY RESULTS OF OPERATIONS

> **(In millions, except percentages and per share amounts)**
>
> 2025 / 2025 / 2024 / 2024 / PercentageChange / PercentageChange
>
> Revenue ................................. $ / 281,724 / $ / 245,122 / 15%
> Gross margin ............................ 193,893 / 171,008 / 13%
> Operating income ........................ 128,528 / 109,433 / 17%
> Net income .............................. 101,832 / 88,136 / 16%
> Diluted earnings per share .............. 13.64 / 11.80 / 16%

Fiscal Year 2025 Compared with Fiscal Year 2024

Revenue increased $36.6 billion or 15% with growth across each of our segments. Intelligent Cloud revenue increased driven by Azure. Productivity and Business Processes revenue increased driven by Microsoft 365 Commercial cloud. More Personal Computing revenue increased driven by Gaming and Search and news advertising.

Cost of revenue increased $13.7 billion or 19% driven by growth in Microsoft Cloud.

Gross margin increased $22.9 billion or 13% with growth across each of our segments.

  •  Gross margin percentage decreased slightly driven by Intelligent Cloud, offset in part by More Personal Computing.

  •  Microsoft Cloud gross margin percentage decreased to 69% driven by the impact of scaling our AI infrastructure, offset in part by efficiency gains in Azure.

Operating expenses increased $3.8 billion or 6% driven by investments in cloud and AI engineering and Gaming, including the impact of the Activision Blizzard acquisition.

Operating income increased $19.1 billion or 17% with growth across each of our segments.

  

38

---

  

PART II