Microsoft has announced the results of its fiscal 2018 Q4 financials and things are looking very good over in Redmond. The software giant saw its gaming revenue grow a massive 39% year over year thanks to big Xbox software sales and services. This fiscal Q4 spanned April 1 through June 30 for Microsoft.
Microsoft had 57 million active Xbox Live members for the quarter, which is down from the past two quarters where there were 59 million active users, but up year-over-year compared to the 53 million in fiscal Q4 2017. Microsoft racked up an increase in gaming revenue for the quarter of $643 million representing a 39% gain. That growth was driven by higher revenue from Xbox software and services.
Microsoft lumps its Xbox division into the "More Personal Computing" segment and that also includes revenue from Windows, Surface, and search advertising. Overall revenue for the entire segment increased by $1.6 billion or 17% for the quarter. Microsoft's Windows OEM Pro revenue growth was 14% for the quarter. Surface revenue was certainly a bright spot for Microsoft with revenue in that segment increasing $237 million, or 25%, in the quarter thanks to strong performance of the latest Surface devices compared to a low prior year. The new Surface Go should help with profits in the next quarter.
Microsoft also had strong growth in its search advertising with revenue growth of $183 million or 12%, with advertising revenue excluding traffic acquisition costs increasing 17%. Microsoft says that is thanks primarily to higher revenue per search and volume in Bing. Gross margin increased $1.1 billion or 21% and was driven by growth in Windows, Surface, and Gaming. Operating expenses increased 9% to $252 million in the quarter driven by increased in Surface and Gaming advertising along with investments in Search and AI engineering.