Microsoft’s Q3 earnings show steady Office gains, sharp drop in Surface revenue

Michael Cottuli

The earnings are in for Quarter 3 of fiscal year 2017, offering investors and fans alike a look at how things are going for Microsoft as they move forward with their business plans. There are some ups and downs this quarter, with Office and gaming revenue on the rise and Surface revenue taking a considerable dip.

Here’s a look at the highlights:

· Windows OEM revenue increased 5% (up 5% in constant currency)
· Windows commercial products and cloud services revenue increased 6% (up 6% in constant currency)
· Surface revenue decreased 26% (down 25% in constant currency)
· Search advertising revenue excluding traffic acquisition costs increased 8% (up 9% in constant currency)
· Gaming revenue increased 4% (up 6% in constant currency)

Increases from ad revenue, gaming, cloud services, and OEM revenue all show signs of gradual improvement. On the other hand, a sharp drop in revenue hit the Surface line, tanking numbers down 26%. That’s a pretty huge loss of revenue for any one period of time, and might prove as some reasonable cause for alarm for investors looking at the hardware as possible inroad into the company encroaching Apple-like territory. That being said, it may also be a by-product of the fact that we haven’t had a big announcement regarding the Surface Pro line in quite a while.

The Q3 earnings report leaves investors with a split impression, with numbers doing exceptionally well for everything besides Surface products. We’ll be getting a better idea of how things shake out as investors take the time to digest some of the information in the Q3 report.