Microsoft (MSFT) 28 Apr 212021 Q3 Earnings call transcript

Greetings, and welcome to the Microsoft Fiscal Year 2021 Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brett Iversen, General Manager, Investor Relations. you. Thank

begin. may You

thank joining and today. you afternoon, us for Good

and Nadella, me Officer; Alice On General Officer; with Satya Jolla, Dolliver, Chief Counsel. Accounting Officer; the call Financial are Executive Deputy Chief Amy Chief Keith Hood,

the businesses provide foreign excluding in in growth when underlying to otherwise a refer currency as the differences framework we’ll the refer in the the The financial today’s or make our are unless to will the and currency, included also period prepared year, press find on we a non-GAAP not these otherwise additional call specified, are items call. to further constant quarter All only. for They deck, is performance and release to as non-GAAP of Where aid you metrics the our our how effect rate should measures. in investors supplement, noted. clarifying constant provided of slide earnings be comparisons intended summary a of growth fluctuations. provides superior GAAP. currency to assessing Microsoft to accordance addition Investor measures same between financial financial prepared On on financial results. non-GAAP rate substitute understanding performance available measures today in website, last which can of rates considered relate with as Unless for impact the rates financial call items growth GAAP have Company’s events corresponding Relations and performed, third We’ll the and on remarks we the growth to reconciliation during

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which call Factors our that the comments and Forms and statements, materially Actual turn the the other in making in events. press filings we risks are this expectations forward-looking uncertainties. to undertake During any sections update and in the differ about to Exchange Satya. future subject do any this statements that, be with are and of other statement. Risk These XX-Q of Form Commission. assumptions statements not or over are predictions, conference made with release, earnings XX-K, could Securities because today’s current call, to and duty during And discussed factors forward-looking will results and projections on based We reports call I’ll

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as Now share we to quarter continue on business to XX% take breakthrough as grow. had business a companies applications. intelligent XXX to Dynamics increased adapt Revenue competition. from and to turn applications

most We XXX Dynamics are to pressing challenges. capabilities adding address across organization's

company’s Dynamics New directly it integrations XXX. with Teams collaborate and helps support meet, Intelligent fulfillment. to A chat, Order call simple within new omnichannel Dynamics XXX make Management

from solutions ABN expanding industry industry XXX We costs. leading Cloud, across in to lower time we agility increased along adoption Dynamics in are Microsoft use customizations stack to value, of tech and and More investments across automotive. increase specific Services organizations every industry broadly with to seeing with Financial and our help cross-industry complete to the AMRO improve are our BMW

bring This central for acquisition care Nuance manufacturing building quarter our physician we introduced health delivery. loop, directly and health the clouds of which pending services, And patient will momentum retail. our is nonprofits, new and clouds of industry financial on the care into to solutions existing for

XX%, members XX%. to create to We content find LinkedIn. increased by once network million engagement Conversations use increased up LinkedIn again and learn, the content and share was XX%, hours LinkedIn's record on jobs. XXX saw Now as connect, the on

bring reach employees. for personalized to LinkedIn gap, on can to helping to do skill was feedback And associates. to together Learning opportunity, to Businesses of helping Marketing the build thousands In Solutions engaged members companies way jobs. using their content Nationwide business. BlackRock, learning, and their creator Freelancers continue to TaskRabbit can growing LinkedIn Learning Learning. are instructors creators with Fortune revenue And and employers upskill use assessments source are are now communities. as XXX on LinkedIn curriculum pages. candidates their ready job tools with a XX% credentials expand example, with LinkedIn proven world year-over-year. provide more skills, to proficiencies. LinkedIn use trusted than dedicated and LinkedIn skills attract up like XX,XXX new between a the clients skills We turn is based loops create monetizing Gap and the facing XX% a following courses economic we expert Insurance, to helping of mode, professionals

past months times the nearly market. advertising billion BXB $X is surpassed the faster digital revenue than XX and growing three Over has

the Zealand, nearly and new applications workplace line to over almost That's XXX double a including far to as now South organizing for Teams more million number and the have innovation, grow. learn we Microsoft And over third-party Teams layer more organizations require Now employees year Teams than Teams. has have all New collaborate. where work, XXXX. on Hybrid continue of usage Taiwan China, than the new markets Xx with than past built a number of more XXX people users, has ago. integrating In business increased X,XXX Australia, Korea why work users a active the the way we features seen the to will and capabilities daily and operating We're model. year adding including in XXX hundred year-over-year. accelerating our with so their returned

they more in collaboration communication thrive up Bausch webinars. use and now work. our XXX of the Office City Helsinki, for their connected Viva not personal users support creating room, analytics. do business. organizations like Teams retail enable knowledge, for And billion New transforming And brings era choosing than Health, office seen, Teams directly Viva critical quarter Microsoft Airlines, workspaces People are highlighted are Unilever how Teams shopping meeting We a will voice the modern a including Power within to added driving applications than subscribers organizations monthly XXX work sector to hybrid only the Sanofi a on seeing XXX employees call are floor. internal communications, for Teams earnings their XXX. category showrooms or app Microsoft an everything single Windows is help has customers generated Teams example, operations. turning minutes than build for used shared a day more and bots hybrid they meeting outside American using to using more for in a XX is compliance Viva million Companies use collaboration, new premium communications in active and for private teams. quarter. GM learning, experience for new this voice. with an PCs Platform in for extending entirely Microsoft We X.X help to heard frontline and of are has introduced Coca-Cola within workflows the secure. custom insights for beyond like experience. All and billion but apps, data Microsoft security, stay category seats. custom whether and workers we XX collaborative creating this at-home, people interactive anyone like inclusive participate together are to nearly integrated views unified gallery employee factory be and ever million time. of public including and now it's by offerings as experience first organization advanced increasingly surpassed devices within to to Windows cost their the in Power productive savings and XX XXX and paid a and Stryker an Teams across new at and manage companies virtual from consumer market

Now and differentiates each on human never security. and posture, and and than or our the This is compliance drives analyzes critical day. challenging threat to data identity, All all landscape operational value us capabilities by across customer driving management security infrastructure and expertise platforms. our cloud-scale security has which by interconnection between informed AI The is customers. apps, demand eight endpoint XDR clouds all our been security complex for signals encompassing end-to-end cloud-native more backed identity trillion never SIEM. has across What more our and been cloud to more and increased

and and its solutions. Zero XXX,XXX use Healthcare, also many the customers. while offerings using of most reducing a Lowe's Signal HCA Azure Trust of point for including customers why by risk and firms is Our established data And use the the architecture, organizations Boston world's Group, like adopt Computing created to cost UBS. Confidential together complexity to That's Consulting millions protect approach more stitching enables than our

are We help to going organizations. protect further

passwords We to sign-in password-less are introducing delivering AD. on our ambition to Azure eliminate

more paid more prevent doubled understand, and Defender blocked capabilities AD than XX has active over to Azure Defender XXX,XXX, new months threats help regulations Our on on billion customer year-over-year better now XXX for base billion nearly over in Microsoft seven past out-of-the-box mitigate the offers has than organizations threats. And compliance as manager such endpoints alone. our and e-mail XXX XX GDPR. assessments

Game to connect than People device. help build Now both on are across gamers friends with to gaming. play on Xbox and as opportunity record and how more We're and ever we by creators play, saw on communities this played are expanding we our and quarter games led engagement strength we any and to chat and the are turning off Pass distributed viewed. console. redefining With

come. more cloud closing made Pass flywheel PC iconic the Media our behind And games mobile. most last via world's services across Just via Game the of reach accessible acquisition added to the our and the and of week with we upon the expanding browser Content of is we quarter beloved growth. gaming this ZeniMax XX

evolve active Minecraft tools XXX from the have platforms marketplace. $XXX mods, help metaverse downloads platform. is in new one XX% add-ons nearly over Minecraft. it outside of and activity users and economies, games This generated making into the year-over-year creator other is more to million experiences not creations our one of than Creators including counting in economy. million sell billion on of anyone building monthly our As leading we up are

areas able that lead are tech We within in as sell across be game. to marketplace closing, and also vibrant that will directly the in entire partners seeing the we're Flight critical we stack to with emerge now Simulator financial a ahead. differentiate innovating In in who content results over will rejoining look to I'll forward. our I'm the share you forward detail questions. about I to it outlook and hand our success our going of cover opportunity and With for Amy optimistic every customer

Nuance the and expected no calendar of from the quarter Thank the you, is close acquisition ZeniMax the by well reflect good everyone. three afternoon Satya There acquisition impact of year. weeks our today end this is that for My comments approximately impact as as the to outlook.

was expected X were than And job offerings key security purchasing significantly ongoing improvement transactional gaming, and as engagement and businesses Solutions demand continued Within our and as our supply trends cloud benefited in with more In Our Microsoft increased consumer continue Microsoft continued our the and in improved Platform higher a monetization Improvement chain. and LinkedIn the business and for healthy business, to and with currency recent usage customer transformation segments, and and industries, decision coupled withholding sales strong to and our increased commitments, constant the revenue in quarter per adjusted double-digit hybrid across platform constant related demand in advertising business constraints Talent significant XX% partner execution currency small postings business, of and Many platform by well OEM than benefited market In geographical in by XXX of much taxes. exceeded Azure trends S for $X.XX we markets and growth. the when customer share segment, to Court Cloud medium our which XX% offset consumption, see on that our tax drove beneficiaries. across PC bottom-line our and and quarter job drove supply XX% unique contracts and $XX.X strong India earnings annual benefit and up teams, our market. Teams commercial our third stronger subscriptions Windows digital was enabled Power weakness. for consumer billion, record despite Search consoles. in and licensing Supreme LinkedIn's offerings. Strong another improve, XX% market the cloud from top Series Xbox value, again accelerating in

expectations base on growing in and was execution bookings consistent by number year comparable. motions results, across growth XX% the increasing Growth annuity constant our low larger of contracts. Azure was long-term a and Moving sales to core expiration increase and XX% prior ahead an of in our commercial overall driven currency

in As within a between and year-over-year to the remaining in better the three for points currency XX%. and expanded network percentage and split two Commercial constant revenue in currency billion. server with recognized to XX% assets. $XX.X roughly and to portion and commercial grew accounting by the XX% be that XX% driven revenue margin than cloud gross our the Commercial mix constant next of result, also change XX%, performance $XXX estimate to increased year-over-year increased a beyond cloud months equipment annuity obligation equivalent points useful billion XX% the life expected XX will

Excluding this gross offset approximately operating XX% margin commercial with increased and Gross by was COGS Azure. by dollar, in improvement With accounting point with relatively sales margin growth three noted constant two margin estimate was in than and percentage dollars cloud year-over-year slightly Azure to with unchanged of revenue currency. in increased approximately FX expense up favorable about change by earlier. favorable mix gross margin impact, points US shift anticipated. a increased more XX% weaker in mostly the growth both one from points, one roughly impact XX% expectations. line Gross percentage point FX

sales, Excluding margin like key XX% company currency, areas quarter year-over-year, growth headcount to X% than COVID-related X% future revenue two and accounting company again constant year-over-year shifted roughly expense investments expanded this this and and roughly currency growth point reflecting and gaming lower primarily that customer one our in XX% points deployment. of gross and XX% engineering, the change income in margins that estimate in driven Year-over-year COVID-related focused of quarters. operating Overall, grew in continued from from was nearly strong shift. favorable down, cloud resulted across investments sales in constant XX% points increased four points favorable Operating including and impact mix savings. includes from by Operating savings. anticipated, impact, driven of up impact by to in operating percentage cloud expense impact increased two

offering. Office constant grew Office our licensing, XX% XXX constant accelerated Japan. by in below XX% negatively and and constant business expected, XX% was and and driven strength XX% in which grew and in Office primarily to declined revenue constant Dynamics weakness XX% currency, with XX% operations million, and in currency, $XX.X XX% and compliance strong of segments revenue medium particular first-line than year-over-year XX% constant from X% up currency. XX% Consumer, for year-over-year. to XX% consumer expectations. and cloud subscriptions ARPU. offerings. to segment XX% by The acceleration across transactional high-value grew customer Now our accelerating In and our all XXX Paid momentum LinkedIn slightly business growth $XX.X billion processes again driven in Dynamics adoption, in this XXX worker installed a and Commercial voice below to nearly XX% workloads Office in in well currency X% increased currency, in Commercial with XX% constant bit ahead constant our impacted XXX in grew drove by and results. XX% Demand $XXX and and security, in the Power to revenue our currency, finance base and in Commercial Microsoft in Office LinkedIn. constant XXX Office quarter. Revenue in XX% commercial recovery XX% seats and again as revenue a expectations. and grew cloud currency, driven primarily expansion Apps to in segment EX revenue small expectations, better revenue offerings grew due growth grew productivity as million currency, higher

operating increased estimate. points and X in and impact this accounting points change with currency and business including in revenue increased XX% unchanged year-over-year constant constant expense income again XX% accelerated nearly XX% margin and currency margin accounting due to to quarter change Solutions Our and gross from X Operating gross the the in of increased was Segment XX% X% percentage X% XX% growth. constant favorable Marketing dollars estimate. currency in in relatively

relatively roughly for Services was unchanged with Services. XX% currency performance, than our XX% Revenue XX% in expectations. better in business base revenue XX% points in of prior and growth revenue in X and continued XX% segment. currency, Cloud estimate. XX% driven server constant grew expense change constant in increased grew consumption-based in of hybrid margin in constant preference better Intelligent performance to comparable the the X and and currency, increased than impact operating revenue year cloud income increased business. Windows of per impact $XX.X accounting XX% with our by XX% again percentage ahead services increasing our million in XXX currency. Azure Operating annuity points to by Microsoft quarter, products increased accelerated Next, XX% billion, constant the strength and our Segment strong XX% customer constant Enterprise and expectations, year-over-year points in X% currency business Gross in XX% continued XX% anticipated, with in grew was driven margin benefited and ahead the accounting from and Server And from favorable currency. change Enterprise and XX% favorable and with on that Server And from user constant constant XXXX, estimate. Security on-premise's in over Mobility premium XX% installed for in currency offerings. X strong in of up a currency constant end this X% Consulting our dollars seats. expected and of roughly increased support gross

XX%, commercial currency declined OEM than Windows currency. and segment. percentage of OEM services resulted and which and year-over-year OEM performance expected particularly agreements. and sales expected, growth More constant overall XX% mix XX% to titles, XX% advertising earlier. consoles. increased Gaming, Xbox a for on margin gross lower Revenue comparable expense than with and prior the PC revenue by and commercial currency support that Windows Search. in year Computing. in X% currency XX% Pro X% increasing the and Windows market Now cloud currency in billion In constant X% grew gaming. a in and noted and from XX% in in constant XX% revenue lower decreased driven constant XX% primarily Segment XX% driven revenue, in Search ex TAC of includes and multiyear XX% constant than currency from mix constant and constant Windows, in revenue new XXX% in constant XXX% hardware to by improved revenue XX% and expected revenue income grew constant ZeniMax to dollars XX% due increased revenue grew Minecraft. recognition currency. by decreased the end currency in in benefiting XX% included $XX grew execution shift content X% market and two Surface, X. stronger and Gross points And OEM XX% our now challenges the revenue services XX% Xbox driven non-Pro in and constant products XX% X% margin in grew in-quarter currency. operating grew gaming, with increased better-than-expected with of was continued demand. customer first-party Personal performance of Operating currency better in In

our back customer PP&E from ongoing in results. with services. were line $X Cash billion leases was investment by by total to operations driven income expense company $XXX flow investments. billion. Capital flow expenditures cloud cash of for growing Other paid demand usage higher XX% and finance to increased support driven $X.X Cash than from by global collections. and Now net strong was increased including billings driven cloud $XX.X billion, Free year-over-year on was anticipated, primarily was gains up billion million expectations and $XX.X XX%.

equity gains recognize or reminder, on to mark-to-market we a portfolio. our are losses As required

$XX XX%. and was finally, shareholders rate And repurchases through share returned to tax effective dividends. we non-GAAP Our approximately billion

Now let's move to the outlook.

year and rates. and LinkedIn full surges given reflect particularly year As Office will and impact will growth in revenue rates medium business QX the quarter both the advertising across the a impacted first operating growth reminder and a impact year saw last slowdown will in small job Gaming QX, and of Surface ago. Server begin to benefit and business, growth we purchasing in Search that purchasing positively markets a OEM, QX growth in and Windows, usage businesses, in that ago across be year our see In rates, in rates COVID-XX QX expenses. we negatively our segment. And our transactional Last

Next Satya position continued Growth discussed, quarter impacted in of strong expect differentiated and a year, by we should declining base. expiry the our market again solid in accelerating be bookings but our largest quarter. commercial to the results trends in healthy, another execution

with As unpredictable in estimate. four from roughly of long-term accounting mix increasing increase the in which gross change less timing larger year-over-year more margin their Azure percentage quarterly bookings. drive contracts, always are Commercial points can volatility points cloud an than in should two

continues over a the time. As lessen reminder, to favorable impact

Azure, the margin as support increased In investments our cloud our collab increase year capital to a and ongoing continue Excluding continue a and customers' cloud scenarios. to in a expenditures, bit we for mix growing services. we to to investments we will percentage productivity QX expect gross impacted will benefit accounting usage gross remote on sequential basis of strategic needs a revenue invest Longer demand support global change, solutions be to our shift dollar work margin term also by percentage usage commercial success. meet to ago increased made from

growth points, COGS revenue company and rates, we growth total point. and Productivity Based FX. one approximately approximately and expect Personal by Processes Business three on More expense Intelligent Computing FX and two total increase approximately revenue operating to current Cloud by to Now points growth by

to subscriptions driven comparable year prior weakness teens continued Microsoft consumer the revenue continued $XX.XX by cloud. decline growth in on Commercial, drive ongoing we XXX And transactional noted low on-premises growth revenue range, by be EX. purchasing XXX to will In revenue business, and against advertising momentum Business high momentum opportunity expect Dynamics mid-XX% growth improvements consumer, and by in expect to In customer seat expect consistent to In the the upsell we and with high to healthy to Processes, growth segment earlier. quarter. revenue impacted strong we the shift will In our the and we mid billion in the continued with Office $XX.X teens Office guidance. between our LinkedIn, in engagement expect revenue the Office in Dynamics, driven driven Next similar the revenue billion. In Productivity markets. job XXX by and last platform in growth again

the mid- expect growth Surface by continue comparable S supply. again constrained mid-single-digits noted we roughly on moderation on momentum, Xbox driven comparable, earlier. year be services though PCs, we grow growth by And billion. work In earlier. to revenue will line in cloud revenue in continued year in chain the Cloud, gaming, consumption-based In for challenges the Significant size as expect mid- And by and offerings driven to and given to products in revenue services suite our revenue ex $XX.X a strong single-digits. executing TAC, user comparable the X in In prior Intelligent continued XXX our Computing, low expect Windows mid-XXs Personal to Xbox noted revenue of the digits, last In In rates content Azure, Services, noted the in Windows, be growth chain hybrid some in high billion and installed we we should the overall Microsoft expect by per business offset revenue demand and supply the between market. ongoing expect against In billion should improvements the growth our supply to through by continue earlier. business. in and the between growth to transactional the benefit year demand And expect billion. and we the In and strong $XX.XX and we single-digits. decline mid-teens revenue More we decline from revenue in prior business, annuity for mid-single and server For driven expect advertising strong we be will demand our on-premises Series growth with quarter. Commercial prior growth to for a purchasing high we revenue comparable, premium $XX Enterprise revenue $XX.X driven the impacts in expect and partially Search by base.

Now back to guidance. company

$XX.X of $XX.X billion billion billion. COGS operating to $XX.X of $XX.X expect We expense and to billion

approximately As year $XXX operating points included and the and benefit in expect will charge expense comparable, as a should strategy. reminder, COVID-related of QX, be offset continued other savings impact as prior roughly interest the store of In from other. to from four finally, XX%. tax our And retail realignment expense, in related million rate to well which effective we expense our each QX we a income income

some quarters performed foundation share the lay to three next fiscal like we environment, QX our we I'd year as fiscal XXXX. Overall, have of thoughts and closing a strong through to look Now year. challenging for well a in fully to FY we expect

daily short course, of critical ahead boldly growth revenue on with of reinforced has well that, value the focus With term. importantly, to even that to in of the lead will this execution, a the the coupled revenue go our for let's opportunities strong future globally capture importance continue list profit long-term in of Q&A. delivering to vision customers as significant thoughtful But more Excellence investing us. to year Brett, We and will, growth. opportunity creates for as

question. respect now We'll request for the on we the ask that please Q&A. repeat Out only instructions? to Amy. Operator, Thanks, participants call, of move one please others can you

of question Absolutely. your line comes Keith Weiss with Morgan question. [Operator Stanley. first from the with Instructions] proceed Please Our

in you question you're of then customers guys us using XX% you're budget And a does Microsoft, about bookings revenues. the frame this give of strategic big what strategic these comes How How Microsoft I take acceleration time onto one these of it deals? into does been the strategic question of talking this the for customer be What the of to platform? really these for for you Thank into us commercial how solutions come this you deals? types Satya, a for the change these taking ramp long deals guess getting of in and to of bit seeing results growth little deeply of broader of and scope We're Amy. Satya IT Can transformation. and a get dynamics bit sort which a really And the when to up talk more getting. maybe current little digital through about what comes how the more quarter. are much should the these expectation of sort you've our great quarter. is Awesome. both great color lot it and us people

Thank you, Keith the for question.

feel not say Dynamics, collaboration Cloud, both Teams drives we you and and consumption of well is about as, good not centers line deploying Teams point Power termination as business in about maintained would is just of a in business I've at. about those or both always or of we given around because any intersection the in of or Platform as I platform think very we're what the one of Platform. usage the bookings today, to at meetings it's in I workflow. look Microsoft a mentioned approach It's at time sits most seeing Teams if be as application us. the financials The health customer retail example. and and course, Tier it's But their much for And breadth not you cloud And of just core us, time the doing the chat. just the what whether importantly they with thing. could with of excellence they on care. fact look may that inside be Power growth doing Azure Also be workloads cloud X for with hybrid of pretty at They doing us, be may first any may infrastructure right, in it's of overall

we're that differentiation Microsoft seeing that now is cloud. level And also are then so the that's other of thing seeing. And we what say the I all-up would industry

it's services, So financial more the entire we of whether that can cloud power now care we whether health retail, in in way. strategic feel in together the bring in it's a or much

these those was volatility. just bookings the maybe is, if about foundation you because strategic of or we contracts remaining And holistically. is talk we saying, I build the performance to Keith, But a long-term toward think what lot they create tend some to what Cloud the hear Azure Microsoft Satya words on really think obligation, when these about often pivot think for I contracts you

So Microsoft what you'll not Office is the just suite XXX XXX. but of see

security of additions workloads. higher-level see You'll or compliance

Satya XXX solutions a Dynamics back end-to-end see industry is as Platform. what it saying. spanning pillar to with combine You'll to they're Because Power

you and number, does renewal, it for up fundamentally do do you what's you So a and users commitment. an Azure have of -- about, add renew you you see which workloads, bookings a good component it add is add do do

portion things in those beyond remaining that. another bit And a that's look what you months it, of together you next All balanced creates XX be see if there change. of the that's at to recognized good performance obligation, this are and going equally

both transition based. it's for it's and long user, it's it's builds, workload So all not term. usage This per quickly, happens also consumptive

to people contract view thinking Azure holistic as So that more about have it's would opposed as an really I dated. a take long

guys. Okay. Thank you,

question, please? next Operator,

is from Thill Brent with Thank of the question Please with next Jefferies. you. The question. your proceed line

long-term, on relates where if set, Satya, building where care, health And the as the if to could in Thanks. you specifically it is your the comment like be this Nuance to you hanging opportunity think fruit frame on lowest acquisition. just on you'd just you aspirations could industry? still

cloud for opportunity Brent. critical addressable opportunities, I and market. expansive a care Sure, for question. us we very at and industry look think a the the Thanks When is huge of health

think is the fundamentally, the going obviously do provider on provider is you reduce is the particular, role outcomes care play digital care they to when reduce health tech significant. cost for a physicians. huge things a about burden GDP, improve percentage And about every most about, as think the If and market in patient and of I the the that which to

acquisition for has ecosystem been industry platform So and that's a with an where them. gone the enhances into It with Nuance an a Brent. done us. have also partnered great platform fit we What approach. is approach We've our always

most EMR times with ultimately done by again and defining space. ecosystem what's providers. job they've it to care rest care, of For fantastic example, with health deeply to systems they've the taking really perhaps which the which applying that technology Nuance is our partnering, And the and important application done is benefit the the AI of a partnering most health of

the partnered with what And so our and forward in a integrate to add significant the to and we're most them Teams closing we more that doing capabilities importantly can and that deeply we're allows partners think more our as looking acquisition to of of us well cloud. really take health deeply But we're we with and amount with in this already ecosystem as value providers. our to even care AI some both

Thank you.

please. Operator, next Thanks, Brent. question

you. Thank

with proceed from is with Bernstein Mark Moerdler question next Research. Our Please your question.

given any a you Thank I'd is again such gear bit drill in business, how other the and well quarter business. little Dynamics to and and a the change be talking much And or investors Frankly, very and center stand-alone share it or drivers believe company CRM the of even is would is growth? it or on said different? are XXX a part key you like you XXX was executing. company enthusiasm ERP of how bit on from you. this that Dynamics congratulations by a of Satya, Thank Or what is competitors, something it both? you when about taking the is? are fast how grown. it's strength do And sustainable that

solution somebody world most together, wants for physical deploy is digital to as interesting share ask again before Thanks the we're and where thing those with example is XXX. where about where omni-channel when so what's growth because much to very, anything a Dynamics in for the about first unlike of the structural all, categories. come need even is, question, what It's pandemic the such Mark. But And you all coming happening is excited what's very coming? and coming is from bringing And the an change.

supply customer modules, management, You and referenced customer the engagement including I probably view customers one product system my is fastest-growing you the chain. And insights distributed need that XXX-degree remarks. need in is both, which inventory then the that federated and on management inventory that of

most disparate looking and the And that, that's ERP is data and the have bottom-line in we silos systems. ERP systems even they the replacing things is about bring about probably may not even together one So interesting CRM, fact of it's and CRM every it's is, helping digitize of an silos, them existing existing to and some or Dynamics customer of CRM ERP an observed have. buying bridge

has we see complete a the as proactive versus what and modernizes systems. So huge more a business as that's And for. in Dynamics puts world this, next-generation, been architected do reactive opportunity

positions pandemic has hard out work of coming So team the us like the all very this I multiple and done over feel the years that now, well. architecture and

much Thank I you. it. appreciate

please. question next Operator, Mark. Thanks

Thank is question. Karl you. proceed your with with UBS. The question Please next Keirstead from

Amy The OpEx. the bit quarters. like last it's to investments the growth quarters. going rate the But growth in June Amy Thanks. Question OpEx looks are extraordinarily for on little up you future low shifting several the inch to been quarter. a has mentioned

don't line the item want help you we as to that that probably we of some you. fiscal OpEx plus of want if we to post-COVID should Thank extrapolate variables mind too And us give maybe thinking don't XX%. fiscal You be just specific, keep you much whether on get outline growth should could levels the in I'm wondering that But recovery back fiscal pre-COVID into model that XXXX. XXXX in to just in should XXXX?

called I because earlier the And that, a of in and think noted growth which four ago does QX, because I XX%. its more in QX. specifically our start Thanks why, to from I And get say headcount to rate normalized has I Karl. it been do impact year a out points

workplace the over headcount And and would get as we growth at as people through of would benefited expect some I we've to and to of growth little level any We'll activity. have get expect, the that XXXX, see to you from marry continue QX. your so, at a other period to to time certainly And OpEx of least that less overall, year COVID-related levels in normal resume back savings. some

on land through And where being we're able got do share. of the number we that confident feel TAM think comments, right unique of his to the in opportunity Satya I you're think, certainly opportunity take and in direction of type with And listen, seeing, that. feel expansive growth went number. growth like that the a we've type position pretty I so, I in OpEx opportunities really heading to

Amy. it. Thank you Got

Thanks, Karl.

more with of think models from differentiation. we new last to those mean, year, it add this have least are year your and I when Amy, it, rows in all in we think many hope you in at think I about significant categories to new I to just I just even categories

we we So the OpEx, to had in stuff about there. past. there's that think -- about adding It's when not OpEx the it's leverage

In fact it's OpEx new TAMs. going into

Operator, please. next question

Absolutely.

comes proceed your Please Kirk of with Our with line from question. next the question ISI. Evercore Materne

Thanks adjacencies how There that feedback on seem more Yes. early nice you I sort you're it's And product? could much But little with you of be was that. fitting if to Dynamics days on see kind congrats the I just Office very some wondering in? the quarter. about and with a of on do XXX. that Viva. Satya, realize getting talk bit just

over the if going was quarter curious couple of So could sort just excitement years? next a and on level about your us bit kind of how a hand it it's I Thanks. of you little next give of

in suite the so now, ultimately look system. next-generation have tools about the a a been we of creating of question. the It much set full experience you I distinct for employee great very this and Platform even to growing productivity for of scale. started example automation business, suite management I an It's systems disparate a Platform. a whether opportunity the Similarly, saying talking have and mining now think in connecting enterprise, speaks that Power as cloud today, It's even together learnings as what communication was we my back that said much and knowledge today we it created scale in terms brings tools, right. And what process multiple cloud it's years in and at Power script and us. Thank lot. experience a of I When category new essentially

-- systems, XXX Teams. in as connects applications. well very XXX of things we we business we're what the in particular Microsoft with HRM with Office So to adjacencies line Dynamics third-party and a up of all massive other SaaS as to other also and it obviously your point systems is But do doing

So early days. it's very

Microsoft substantial have we're excited Cloud. And seen part about it's of Power But very it's businesses where new essentially so Security, and we'll Platform, take it's other the you've as in this whether whether same taken, approach many we represents. whether places opportunity what in us grow Dynamics

you. Thank

Thanks, question please. next Operator, Kirk.

Absolutely.

of from Kash Sachs. comes proceed line Please question. next Our the Rangan question with Goldman your with

steady? or double you've How Hi. about Thank much. Microsoft's XX markets tech And products expand, it X% is context? will you you do see key much. Satya, drive that a you the and going years in it GDP Is you should know, GDP. about to growth and quarter. the that are outperform said expect if very as share that be Congratulations Or the tech next over your that roughly of as we to expanding? or so. to going Thank track you percentage outperforms so what tech think as I relative on share

for No, thanks the question. Kash

together itself first in I we each need we coming big two us, be to for believers and creates of of And the share the of that, cohesive layer in as what coherent architecture things. we will then a full into stack as think the are all, competitive to differentiation. One tech GDP increasing a percentage think or define cloud each be Microsoft that is, of going is layer doubles. that

is So if or well now, it's whether we -- you going which look years to world be from the believe XX world, are multi-edge the at positioned. I multi-cloud, it hybrid the infrastructure on very

all well we are Code with things OpenAI the SaaS and last even industry and think every When again, one it led about I the XXX about year lead leaders the to services to of next XX what the what I at Dynamics do the digital there. of most and and that is look things just then, AI cloud on have capability at we're doing And been is the what with to Power plan doing edge. developers the Microsoft that. cognitive Synapse we going as we years comes we're When you Platform. as to When with the we of are in and and can course, be VS it We and in what enterprise in the able continue do believe GitHub. we've our exciting Developer that to comes with side. it both that doing it currently data in even when or

in for stack TAM But said, the positioned expansive we as with for don't and itself. take individual layers well competitive stack anything granted. the both the So, that as ultimately, the cohesiveness what differentiation we're well is of of

a much. much. so you you just gain so it. story. Thank sound it. share Appreciate like Got That Thank

question next please. Thanks, Kash. Operator,

next Gregg Mizuho. comes Our with with question question. your from Moskowitz Please proceed

you for bit Can much your more? industries verticalization Okay, about over you in see increase we much like may other as in like make sense an opportunity question. click well? Satya, more very that the How manufacturing? taking a And are on Azure. we to do financials, remarks, prepared in of pursue there incremental spoke time as verticals double that

to the you cost question. Thank that customers absolutely to We agility. improve are time and lower for their increase value think looking ultimately,

these today think industry. does not it industry because an that to about to is perhaps able when you of So next take inside being with of digitization workflows, what workflow level up customize increased and come automation, digital schemers schematization

ability absolutely Power together Teams, of we industries of as with of Azure, to to therefore, for Microsoft value. time by any one well in their improves inside do improve certain the so any together, stitching customer what workflows, And as XXX, Platform coming even Dynamics, data with that these

So look. that other to one industry speed increases is and going It's not the the the us it's workflows. doing time. yes, just also a us. continue to it we'll And with rates help differentiates of we're also it with one adoption at which things it And cross-industry both is increase,

called Microsoft we industry talking Cloud individual we part absolutely And it's talk about cross Microsoft we cloud, only industry. not now of about Cloud. talk just by the we're already about our that thing, So any believe that -- increasingly one and

Thank helpful. you. Very

Thanks Gregg. question. time last Operator, have one we for

of Lenschow line Our Please your proceed with come the final Raimo will question Barclays. from question. with

playing industry for ask we wanted and Microsoft how terms I how bit in where, realizing thanks security what talk was squeezing about see there? you fit kind a in you of role terms obviously offering and customers and there is kind topic. quarter, big a that last about changes from broadened Hey, what changing of of is in the of Thank to cloud a you. me the of little the Can the see in. in Microsoft

is the security every super executive have customer, every that do how for ensure a question. we team. has No. every topic fundamental Thank approach we you the participation board, for the accelerate industry, But defense And every the and Obviously, important is, implemented digital entire Microsoft customer essentially security how which a factor zero is, beyond. cyber through trust architecture. the of name the the game of in can that's

these using That's bringing trillion our more sure to and And the all cloud defense that me, you're processing also the so systems aggregate increasing what your native. customers and events We'll to posture the who cloud posture. pretty with SIM, together together point, to continuously XDR and we has is let done in to to have depth, but able really of operational that of pretty our key that customer security help make get able be because you the any to infrastructure sort approach don't is unique sort the adoption in data unique taken endpoint identity, application, X way. detect a is of which we with And respond rate. is couple when because any then intrusion that's to deploy

were if that the the make not patches multiple servers at when of were of was that for years. work And for lot cloud challenges HAFNIUM, look out did impacted. you So support a some of of like to sure out we the even sort

And so that cloud those moved of same any business already had issues. none -- time, but had the at the to

importantly, of operational all And architecture. We're the like So, posture to what offer. therefore, suites to increased going great and time great see most trust see we going usage security end-to-end hygiene adoption. I increased zero with we cloud security think are

Thank you.

up Q&A wraps for us Thank today, you to the soon. today's we you of earnings That portion Raimo. all call. Thanks joining forward of speaking with look and

Thank you all.

Thank you.

Ladies and for disconnect conference. gentlemen, participation time. this you your Thank and your at this concludes you today's may lines