“We expect our Q4 effective tax rate to be in line with our full year rate of approximately 19%.”

In context

“nd news advertising revenue, driven by growth in first-party revenue is similar to Q3. And in Gaming, we expect revenue growth in the mid- to high single digits. We expect Xbox content services revenue growth in the low to mid-teens, driven by third-party and first-party content as well as Xbox Game Pass. Now back to company guidance. We expect COGS to grow between 3% and 4% in constant currency or $16.8 billion to $17 billion and operating expense to grow approximately 2% in constant currency or $15.1 billion to $15.2 billion. Other income and expense should be roughly $300 million as interest income is expected to more than offset interest expense. As a reminder, we are required to recognize mark-to-market gains or losses on our equity portfolio, which can increase quarterly volatility. We expect our Q4 effective tax rate to be in line with our full year rate of approximately 19%. And finally, as a reminder, for Q4 cash flow, we expect to make a $1.3 billion cash tax payment related to the R&D capitalization provision. Now I'd like to share some closing thoughts as we look to the next fiscal year. With our leadership position as we begin this AI era, we remain focused on strategically managing the company to deliver differentiated customer value as well as long-term financial growth and profitability. As with any significant platform shift, it starts with innovation. And we are excited about the early feedback and demand signals for the AI capabilities we have announced to date. We will continue to invest in our cloud infrastructure, particularly AI-related spend as we scale with the growing demand, driven by customer transformation. And we expect the resulting rev”