Thank you, Satya, and good afternoon everyone.
This quarter, revenue was $38 billion, up 13% and 15% in constant currency. Gross margin dollars increased 10% and 12% in constant currency. Operating income increased 8% and 12% in constant currency. And earnings per share was $1.46, increasing 7% and 9% in constant currency when adjusting for the net tax benefit related to the transfer of intangible properties from the fourth quarter of fiscal year ‘19. In our largest quarter of the year, our sales teams and partners again delivered strong results, with many similar trends to the end of the third quarter. In our commercial business, increased usage, consistent execution, and continued demand for our differentiated, high-value cloud services drove another strong quarter. And in our consumer business, increased demand from work, learn, and play from home scenarios again benefitted our Gaming, Surface, and Windows OEM non-Pro businesses.
We also saw weakness in small and medium business purchasing, which primarily impacted our transactional Office and Windows OEM-Pro businesses, and drove some moderation to our Office 365 commercial paid seat growth. And in our Search business, though rates stabilized through the quarter, we saw a continued reduction in advertising spend on our platform.
Moving to our overall results. Customer commitment to our cloud continues to grow. In FY20, we closed a record number of multi-million dollar commercial cloud agreements, with material growth in the number of $10-million-plus Azure contracts. And on a strong prior year comparable, commercial bookings growth was ahead of expectations, increasing 12% year-over-year driven by consistent renewal execution and an increase in the number of large, long-term Azure contracts.
As a result, commercial remaining performance obligation increased 23% to $107 billion. Approximately 50% of this balance will be recognized in revenue in the next 12 months, up 21% year-over-year, reflecting consistent execution across our core annuity sales motions. The remaining 50%, which will be recognized beyond the next 12 months, increased 25% year-over-year, highlighting the growing long-term customer commitment to our cloud platform. And this quarter, our annuity mix increased 4 points year-over-year to 94%. Commercial cloud revenue grew 30% and 32% in constant currency to $14.3 billion, surpassing $50 billion for the fiscal year. And commercial cloud gross margin percentage expanded 1 point to 66%, despite revenue mix shift to Azure and significant customer engagement and usage to support remote work scenarios. In line with expectations, FX reduced revenue growth by approximately 2 points and COGS growth by approximately 1 point. FX had no impact on operating expense growth, slightly less favorable than expected.
Our margins this quarter reflect investments to deliver greater customer value in this challenging environment and therefore strengthen our long-term competitive position. We invested in capacity for cloud infrastructure usage, free trial offers for critical remote work scenarios, and flexible financing options across the ecosystem.
Additionally, we re-envisioned our retail stores strategy as we stayed focused on growing our investments in the strategic, high growth opportunities of the future.
As a result, Company gross margin percentage was down 2 points year-over-year to 68%, with additional impact from lower margin sales mix. Operating expense grew 13%, including a $450 million charge related to the realignment of our retail stores strategy. And operating margins declined 2 points year-over-year to 35%.
Now to our segment results. Revenue from Productivity and Business Processes was $11.8 billion, increasing 6% and 8% in constant currency. Commercial -- office commercial revenue grew 5% and 7% in constant currency, impacted by the small and medium business slowdown noted earlier, as well as a strong prior year comparable where 4 points of growth were from a greater mix of contracts with higher in-period recognition. Office 365 commercial revenue grew 19% and 22% in constant currency, in-line with expectations, and was again driven by installed base growth across all workloads and customer segments as well as higher ARPU. Demand for our high value security and voice components drove strong upsell to Office 365 and Microsoft 365 E5. Paid Office 365 commercial seats increased 15% year-over-year, slightly below prior quarter trends. This reflects the strong adoption of free trial offers we made to enable customers to quickly adapt to needed remote work scenarios, as well as some growth moderation in first-line worker and small and medium business offerings. Office consumer revenue grew 6% and 7% in constant currency, as stronger than expected growth in Office 365 consumer subscriptions was partially offset by transactional weakness.
As a result, we saw a significant quarter-over-quarter increase in Office 365 consumer subscribers, up more than 3 million to 42.7 million. Dynamics revenue grew 13% and 15% in constant currency, driven by Dynamics 365 growth of 38% and 40% in constant currency. This fiscal year, total Dynamics revenue surpassed $3 billion, with over 60% from Dynamics 365. LinkedIn revenue increased 10% and 11% in constant currency as a weak job market materially impacted annual bookings in our Talent Solutions business even as usage remained high. Segment gross margin dollars were relatively unchanged and increased 3% in constant currency and gross margin percentage decreased 4 points year-over-year. Operating expense increased 10% and 11% in constant currency, and operating income decreased 9% and 5% in constant currency.
Next, the Intelligent Cloud segment. Revenue was $13.4 billion, increasing 17% and 19% in constant currency, slightly ahead of expectations, driven by continued customer demand for our differentiated hybrid offerings. On a significant base, server products and cloud services revenue increased 19% and 21% in constant currency. Azure revenue grew 47% and 50% in constant currency, in line with expectations, driven by continued strong growth in our consumption-based business. In our per-user business, growth continued to moderate, given the size of our enterprise mobility installed base, which grew 26% to over 147 million seats. And our on-premise server business was relatively unchanged and grew 1% in constant currency, ahead of expectations, driven by strong renewal execution and continued demand for our hybrid and premium solutions. Enterprise Services revenue was relatively unchanged and grew 2% in constant currency as growth in Premier Support Services offset consulting delays. Segment gross margin dollars increased 19% and 21% in constant currency and gross margin percentage increased 1 point year-over-year. Operating expense increased 19%, and operating income grew 19% and 22% in constant currency.
Now to More Personal Computing. Revenue was $12.9 billion, increasing 14% and 16% in constant currency with better than expected performance across all businesses as we continued to benefit from work, learn, and play from home scenarios. In Windows, overall OEM revenue grew 7%, benefitting from improved supply in April that met unfulfilled Q3 demand. In OEM Pro, this benefit was more than offset by the impact from small and medium businesses in May and June. And in OEM non-Pro, the benefit from work and learn from home scenarios continued but did moderate through the quarter. Inventory levels ended the quarter in the normal range. Windows Commercial products and cloud services revenue grew 9% and 11% in constant currency, driven by Microsoft 365 and the continued demand for our advanced security solutions. In Surface, revenue grew 28% and 30% in constant currency, with strength across consumer and commercial segments. Search revenue ex TAC declined 18% and 17% in constant currency, driven by the trends noted earlier. And in Gaming, revenue increased 64% and 66% in constant currency, significantly ahead of expectations, with the continued benefit from play-at-home scenarios driving record levels of engagement and monetization across the platform, as well as a significant increase in console sales. Xbox content and services revenue increased 65% and 68% in constant currency, with strong growth in third party transactions, GamePass subscribers, and Minecraft. Segment gross margin dollars increased 12% and 15% in constant currency and gross margin percentage decreased 1 point year-over-year with the mix shift to Gaming. Operating expense increased 10%, including the retail stores charge. And operating income grew 15% and 19% in constant currency.
Now back to total Company results. In line with expectations, capital expenditures including finance leases were $5.8 billion, up 8% year-over-year to support growing usage and demand for cloud services. Cash paid for PP&E was $4.7 billion. Cash flow from operations was $18.7 billion and increased 16% year-over-year driven by healthy cloud billings and collections. And free cash flow was $13.9 billion, up 16%.
For the fiscal year, we generated over $60 billion in operating cash flow and over $45 billion in free cash flow, driven by a year of improving margins and operating leverage across our businesses. In other income and expense, interest income, net gains on derivatives, investments, and foreign currency remeasurement were mostly offset by interest expense.
Our effective tax rate was slightly below 17%, lower than expected, due to the geographic mix of revenue. And finally, we returned $8.9 billion to shareholders through share repurchases and dividends, an increase of 16% year-over-year, bringing our total cash returned to shareholders to over $35 billion for the full fiscal year.
Now, before we turn to our outlook, I'd like to update you on a change in accounting estimate to the useful life of server and network equipment assets in our cloud infrastructure. Effective at the start of fiscal year ‘21, we are extending the depreciable life for these assets to four years, which will apply to the asset balances on our balance sheet as of June 30, 2020 as well as future asset purchases. This change will not impact historical depreciation expense, the total depreciation expense over the life of the asset, or cash flow, but it will impact the timing of depreciation expense in the future for these assets.
As a result, based on the outstanding balances as of June 30, we expect fiscal year ‘21 operating income to be favorably impacted by approximately $900 million in the first quarter and approximately $2.7 billion for the full fiscal year. This has been included in the guidance we will provide on today’s call, and you will find additional details on the mechanics of the change in our earnings materials.
Now, let’s move to our next quarter outlook. In our commercial business, given our differentiated position in growth markets, we expect continued commitment to our cloud platform, as well as strong usage and consumption growth. In our consumer business, we expect some continued benefit from work, learn, and play from home scenarios in Gaming and Surface, though at a more moderated rate as stay-at-home guidelines ease in many places around the world.
However, we expect the small and medium business weakness we saw in Q4 to continue, which will impact transactional sales, primarily in Office and Windows OEM. In commercial bookings, growth should again be healthy, but will be impacted by the strong prior year comparable and low growth in the Q1 expiry base. Commercial cloud gross margin percentage will increase approximately 4 points year-over-year from the accounting estimate change noted earlier.
Excluding this impact, continued improvement in Azure IaaS and PaaS gross margin percentage will be mostly offset by revenue mix shift to Azure. And on a dollar basis, we expect capital expenditures to be roughly in line with last quarter to support the growing usage and demand for our cloud services.
Next to FX. Based on current rates, FX should decrease total Company, Productivity and Business Process, and Intelligent Cloud revenue growth by approximately 1 point and have no impact on More Personal Computing revenue, total Company COGS, and operating expense growth.
Now to segment guidance. In Productivity and Business Processes, we expect revenue between $11.65 billion and $11.9 billion. In Office commercial, on a strong prior year comparable, revenue growth will again be driven by Office 365, with continued upsell opportunity to E5.
However, growth will be impacted by a decline of approximately 30% in our on-premises business, driven by the transactional weakness in small and medium businesses noted earlier. In Office consumer, we expect revenue to be relatively unchanged year-over-year as subscription growth will be offset by a decline in our transactional business. In LinkedIn, we expect low to mid-single-digit revenue growth, primarily from weak bookings, and therefore revenue growth, in the Talent Solutions business. And in Dynamics, continued Dynamics 365 momentum from our modern and intelligent solutions will drive revenue growth in the low-double-digits.
For Intelligent Cloud, we expect revenue between $12.55 and $12.8 billion. In Azure, revenue growth will again be driven by our consumption-based business. And in our per-user business, we expect continued benefit from Microsoft 365 suite momentum, though growth will again be impacted by the increasing size of the installed base. In our on-premises server business, on a strong prior year comparable, we expect revenue to be up slightly year-over-year, driven by the durable value of our hybrid and premium annuity offerings. And in Enterprise Services, we expect revenue to be relatively unchanged year-over-year similar to last quarter. In More Personal Computing, we expect revenue between $10.95 billion and $11.35 billion. In our Windows OEM business, we expect revenue to decline in the low teens range, impacted by the strong prior year comparable that benefited from the end of support for Windows 7, as well as the continued slowdown in small and medium businesses. In Windows commercial products and cloud services, we expect healthy double-digit growth from continued Microsoft 365 momentum and the value of our advanced security offerings. In Surface, solid demand against a low prior year comparable that was impacted by product lifecycle transitions should drive growth in the mid teens. In Search ex-TAC, we expect revenue to decline in the low 20% range. And in Gaming, we expect revenue growth in the high teens with continued strong user engagement across the platform.
Now back to overall Company guidance.
We expect COGS of $10.75 billion to $10.95 billion and operating expense of $10.7 billion to $10.8 billion, with continued investment against our significant long-term ambition. Other income and expense should be negative $50 million as interest expense is expected to more than offset interest income. And finally, we expect our Q1 tax rate to be approximately 16%, lower than our expected full year rate, given the volume of equity vests in our first quarter. In closing, we are committed to our customer’s success in these challenging times and to managing the Company for long-term growth and profitability.
We will continue to expand our cloud infrastructure to support the growing customer usage and demand across our differentiated cloud offerings. And, given our strong execution and growing competitive advantage in high growth areas, we remain committed to investing against the long-term opportunity ahead of us.
Now, before turning to Q&A, I have one special thank you. Frank Brod, our Chief Accounting Officer, will soon be retiring. And on behalf of the entire company, thank you for your significant impact and close partnership over the years.
You’ve played a key role in our success. And I’d like to welcome Alice Jolla, who has been working alongside Frank and I for many years, as our new Chief Accounting Officer. Alice, we look forward to having you in this position. With that Mike, let’s go to Q&A