Microsoft (MSFT) 27 Oct 212022 Q1 Earnings call transcript

Greetings and welcome to the Microsoft Fiscal Year 2022, First-Quarter earnings conference call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Brett Iversen, General Manager and Investor Relations. Thank you, you may begin.

Good afternoon, and thank you for joining us today.

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

impact website a On the further release financial financial as reconciliation first quarter during understanding financial supplement slide to of period performance summary today's and we'll can the have to our the the which included in intended between these prepared earnings results. performance, in and GAAP to or is non-GAAP They comparisons provided additional you non-GAAP deck, addition our we accordance the today, Microsoft measures last press on refer to All find call, with of the Relations to call. noted. Investor remarks year, growth items financial non-GAAP are in and the relate items differences Unless for, specified, the financial be of otherwise otherwise call not on GAAP. events to metrics make The clarifying substitute Company's considered prepared provides measures investors should measures. corresponding on as aid and superior unless

to growth growth Where provide rates We will currency the are growth excluding as our same only. when the currency underlying performed, rate fluctuations. framework available, the in constant-currency, also rates for constant a businesses how foreign refer we assessing effect rate and of

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

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on Now to industry.

help for existential clouds, our agility, together for new to just along industry services monitor we're clients approach entire our business new Cloud footprint than adoption think about our carbon is and Our sustainability, footprint increase of to every seeing the an become reduce and healthcare, using its Cloud bringing capabilities for datacenters. our next report, financial available customizations to the in an own The manufacturing society Cloud world's across the and our with more lower for today. it's every largest tools when process costs. creating business category example, priority it to operates. Industry record, our Company, broadly our sustainability, week. emissions improve where more Bimbo, And Sustainability country Microsoft baking Microsoft of for will We're and Grupo is operations. for we carbon across industry-specific organizations With time-to-value, their customer entirely and strong

platform connect, experiencing change more jobs to people increased LinkedIn now a increasingly We million as reshuffle how people market, opportunity great rethinking creator the before, Learning, help we increasingly labor with the with In and and how a want turn now to to Confirmed across as launched year-over-year. labor XX,XXX including quarter, way up-skill trusted up ever only And we're in companies LinkedIn work. market, And build their customers XXX% XXX re-skill not ways Learning job-seekers reach hired. enterprise and continue and global LinkedIn we expanding for nearly members. live. they saw rapidly-evolving to learn, LinkedIn, economy, discover new advertising offering more where this they why. than revenue LinkedIn connect are LinkedIn record as grow, have align instructors learners LinkedIn the ways onto year-over-year. on roles they as Now of hires audiences choose a their was we to work, new to than employees. to to to LinkedIn the Businesses but over professionals. engagement and get our XX% turning that Learning are are has

not are exclusive. XXX and mutually Microsoft and productivity Flexibility onto Now teams.

We into the higher. and including quarter Calls transforming only from market. to participant. have meeting phone always rise is increased chats ago. Teams this people PSTN, the never the and and hybrid year home, work. a SAP and empower we're their than Group, to work ensure a enterprise industry, in XXX,XXX audio, external anywhere first-class users meet to office, now been AI Schlumberger, Westpac, quarter Updates Teams. a is across spatial Pod the including that cameras, innovating Operator of VoIP. in XX,XXX The calling share existing compared users. supports more needs. are originating solution have chose Teams ways to Connect [Indiscernible] and people Teams, XX% rooms, Teams taking ZF and of And in their directly organizations bring enables this Teams' leaders from to every internal And impact between. all have than has service REI, is organizations attendee Usage to XXX than more Microsoft A and every X,XXX, new more all

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with third-party brings together knowledge, All than year-over-year. with insights. of users more thousand which We're resources, of Microsoft line the new XX% and business teams XX integrating complete of Veeva, increased that applications organizations a and with category creating communications, learning, number

Australia's the and in just [Indiscernible], output, in Our premium to Microsoft their a all Jude voice turn front-line. adds a leader empowerment. connections [Indiscernible] employees. acquisition H&M, and Lumen including usage, between strengthen and XXX, America bring all Teams XXX,XXX tools of retailers results advanced PayPal, drive help Microsoft of Chevron, growth and objectives chose employees security offerings between in help frontline E-X hybrid to for to compliance, and key individual largest seeing our analytics. work. Teams employees category, Mutual, new more communications not all to Across in fast-growing we're employees Old of than triple-digit segments, [Indiscernible] to drive Toyota Ally.io, mission And XXX St. North one chose year-over-year and managers two-way and outcomes, growth

shift and of I onto Earlier to we XX, on launched this connect, the thing month, structural the biggest PC back early the the Windows. critical in Windows There Windows our from a one delighted new play, work, a with of XX, we how decade. operating future system update is more step Now ever. response When reflect than emerging clear, PC and windows. generation we has this demand in to pandemic, with and every be will been

form ecosystem. OEM we the point unlocked with choice generation widest across holiday. together excited We every at offer factor are our also XX devices every innovation Windows of the of our next partners, to this price in hardware And

is XX, advantage with most and people and commerce Windows productivity, both bringing opportunity are And of of We devices Amazon for and policies differentiated create the Microsoft edge Epic cloud. the AI the also Store. and pioneering that a providing take with and learning, and organizations of coupled to Games also the applications It's have store most gaming, new Windows, new everywhere in their capabilities class to marketplaces with open platform. models massive

the Now facing on today. to threat security. Cyber number security is businesses one

help defense each all Our innovative is platforms. through identities day XX our email, this on strengthen trillion zero intelligence every span the endpoints, solutions that goal protect trust end-to-end into built clouds translate to signals over customers. organization and features across We and its and analyze to architecture all

We security And usage more than password-less. identity, Azure In to solutions, have of third-party customers now to million over And completely can [Indiscernible] attacks there. directory businesses have year We active users their have our have year-over-year. XXX,XXX prevented stopping remove we up and the Siemens year-over-year. and switched users, billion XXX increase past apps now personal XX% more the login Nearly Healthcare XX Microsoft endpoints. security like their consumers using accounts. protect active and nearly our future to-date now monthly million solutions XXX adopted And has is passwords from not X.XX seen we're security than of alone. password-less

security we'll X invest advance to protect next years, customers. the and billion solutions Over $XX our

to gaming. on Now,

Game continue the ever, monetization exclusive value first-quarter attract Japan. best is holiday continues available bringing the gaming gained console which Cloud gamers of lineup new will we users a engagement. also stream XX Xbox and and retain record XXX to with including over Brazil, and for AAA time, in including games and season countries, discover just quarter, available to and titles, more biggest in content This gaming We service, We're new year X subscription Infinitive half. those the a Halo and this the to XCloud Australia, We enabling gaming. the our in Mexico, with to stream have now bring saw a Pass via as games offer click. of first past than

creator independent scale operate diversified portfolio their with well as opportunity we we new studios. this developers to customers are Craften, top In on innovating era. the easier our expanding in they have set the most and relying closing, opportunity in of it Updates games leading marketplace PlayFab from to for the our cloud to entire are to expand games. are We and our Azure to across businesses, our creators digital all help And publishers integrate as make built. Bungie to

AI, Conference Next I opportunities week, infrastructure. it With over we I'll where of hybrid Ignite hybrid we'll our from next work the share more hold chapter will hand that, Amy. couldn't Cloud the flagship to the optimistic Microsoft from [Indiscernible] to be about to large-scale ahead.

good Thank you Satya and everyone. afternoon

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job was market. talent annuity in-period Office consumer Server the In from constraints. better fiscal Azure business, healthy customers and revenue to to OEM And as start partners greater-than-expected Platform, expected from PC year. in recognition. and contracts, products, despite LinkedIn, and saw consumption-based. across our performance a our an to business, supply in In teams of usage in to a We ongoing increased the growth Microsoft in continue Cloud. continued chain And such benefit choose Windows business reflected and business, comments. the [Indiscernible] again benefited improved higher Solutions Teams with Power in on-premises our strong sales mix the market, Our business, delivered our growing performance a commercial than

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result, of in And Microsoft XX%. Microsoft our slightly and year-over-year XX% be to points obligation equivalent to $XXX constant billion to currency X a ahead will XX% annuity roughly $XX.X XX with months. remaining portion grew revenues the recognized XX% constant commercial revenue beyond gross billion mix within As in increased percentage margin increased XX%. year-over-year a to Cloud next split XX% that Cloud and performance between and the expectations. currency decreased

accounting Excluding increased Cloud, Azure. of offset particularly to in server the roughly network sales gross useful estimate margin XXX, change and impact life equipment in Office Microsoft from driven in points, Cloud partially X our mix and by assets. Azure Services, for the a improvement percentage by shift

in the Productivity personal with With X currency. less cost increased by growth margin operating impact increased total U.S. XX%, with than revenue XX% expected. margin weaker than In and revenue Business X and favorable point, and increased dollar dollars line Gross affects slightly points. percentage expense, Processes expectations, Cloud More by had slightly expected. down and computing X year-over-year. point by favorable increased XX%, growth was was no more expectations. constant Company line to [Indiscernible], Gross Intelligent FX

percentage Cloud invest Services sales Cloud. income to Excluding X discussed increased in noted roughly XX% and the estimate and as primarily earlier, quarters. driven investments expected, points shifted Cloud future sales, to shift the by partially margins driven key improvements Company earlier, expanded two that increased mix and total areas, level, increased than continue point, year-over-year offset currency, impact by accounting by XX%, a lower gross constant of expense XX% XX% to operating At change margin in in to Operating XX%. deployment, in as such customer grew engineering, headcount year-over-year, gaming. we Operating

change operating accounting four margins expanded estimate, roughly of impact the the Excluding year-over-year. in points

EX from currency XXX workloads Now, Office, revenue installed constant commercial continued quarter. XX% and another revenue in earlier. growth in to in results. Paid XX% as XX% and a constant segment across ahead medium small Demand commercial -than-expected and LinkedIn grew Productivity voice customer momentum in revenue and strong better performance currency Office base this our period subscriptions. all XX% prior-year in currency, Consumer compliance, grew Business XXX front-line noted in and XX% higher and as X% benefiting offerings. from well driven XX% revenue our segments, Revenue Processes expectations, offerings commercial, Office currency, driven on constant growth XX% strong ARPU. $XX Office higher by security, of XX% for our and with currency. increased end all constant expansion office Microsoft business growth in Office comparable, [Indiscernible]. grew worker XXX seats and licensing grew in quarter commercial constant billion was XX% year-over-year, significantly the and recognition revenue with and XX% of and decreased commercial in better-than-expected and advanced by

XX% performance XX% gross better-than-expected LinkedIn, revenue was in Over and currency, and gross at constant dollars talent Apps, XX%, in revenue increased which XX% continued X constant [Indiscernible] currency. with XXX% increased currency. constant margin base Power Dynamics XX.X XXX XXX currency, growth in job And and grew strong and currency the from market continued for at grown and the grew Dynamic constant slightly. XXX% XX% XX% over million Segment Microsoft this past increased demand solutions improved with earlier. percentage marketing in in reaching XX% solutions our in margin constant and subscriber years, revenue XX% in strength XX% has quarter.

accounting the gross of improvement Teams Operating increased all X% two points, impact by across income, driven roughly XX% percentage the margin currency. and Cloud increased operating constant expense, XX% increased services. Excluding estimate, and in

of Cloud enterprise Services services. currency. expectations, business ARPU was products several based and in revenue Windows our XX% including demand by XX% hybrid XX% Azure and in-period base revenue differentiated, annuity Server our was grew business, ahead multi-cloud The of our Microsoft billion Server and XX% margin Revenue X segment. Server increased SQL in our In XXXX the annuity X% for constant Cloud Windows and increasing XX% by continued constant recognition, customer XX% driven XX% X% constant in seats. higher of ahead Enterprise prior-year gross expectations, XX% installed and in environments and XXX revenue over currency business, to Cloud ahead Technical driven gross in point, consulting and dollars benefit launch. currency on Overall comparable constant hybrid security services offerings and other to Intelligent margin the offerings. our in a Next, percentage purchasing the XX% ahead consumption currency and and XX% in driven revenue grew Enterprise year-over-year. low increased and healthy on-premises driven mobility Services. Strengthen, user growth constant-currency of Support billion, include currency cloud for Services grew from in and XX% services demand by by decreased expectations. constant roughly increased running and that $XX

Excluding XX% partially margin expense, currency currency. mix accounting XX% XX% by increased income change estimate, increased shift percentage in operating offset in the Azure. constant sales constant grew and in in Operating of points, and to X impact by the roughly and Azure, driven improvements XX% gross

XXX. and advertising in XX% was by increasing The the stronger-than-expected Now, currency news XX% revenue services availability. higher revenue constant PC XX% and a strong $XX.X comparable. for early to include XX% grew revenue, Windows products Windows driven and XX deferral a constant license. currency commercial market, upgraded in sold currency commercial computing, prior-year prioritized constant performance driven in revenue revenue in lower-than-expected segment, XX% and Microsoft billion prior Windows of eligible OEM deferral related which XX% to bills results XX% and general gaming. Surge personal quarter. from increased OEMs the points impact in $XXX These was and advertising million device has on better-than-expected OEMs unchanged XX% demand Windows growth and and XX% roughly more benefiting constant licenses better and to to Xbox XTech, console by in revenue revenue constant as with the particularly continued with the ahead Surface driven in currency cloud constant-currency and revenue income X% Operating market increased a constant expenses seven per hardware OEM XXX% comparable. constant in revenue and currency. XX% margin in XX% than decreased prior-year driven against and expected at increased currency. gaming, mix Resulted by grew strong earlier. of gross in X% the expectations Xbox Segment and currency. expectations, noted content And margin a in increased of acquisition, from revenue currency hardware. marketing. increased increased percentage as Gross dollars line year-over-year, XXX% to by in strong XX% ZeniMax in gaming constant roughly X%, sales shift was X% Windows relatively X demand. Operating in XX% supply services well XX point declined

with and expenditures, to leases, total billion. Capital including paid Company was for expectations. were results. $X.X line billion finance back cash Now, $X.X in PP&E

capital year-over-year. including $XX.X collections. year-over-year, new driven continued $XX.X increasing and datacenter in flow expansion billion, was strong up from Cloud on and to flow billion demand and significant regions, based signals. existing operations both by Free XX% was be cash regions Our investments, XX% usage Cash billings customer

This quarter, higher expense on by primarily income million $XXX other driven investments. than anticipated, net was and gains

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

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

Now, provide before our we a I'd reminders. to couple of turn to outlook, like

U.S. give, outlook the specifically dollar unless noted First, otherwise, is basis. on we a

acquisition, gross discussed. QX the should of With impact expect by percentage that, outlook. close accounting percentage remarks to contracts the my by Hugh another percentage by two QX. points the impact Microsoft Second, bookings the the portfolio, Azure solution driven Cloud points to will excluding across next from position, the quarter be impacted despite two Azure, differentiated usage quarter. on strategic growth modest roughly we be Nuance of And again with impacted to the a increased expenditures basis, now end business, in our early long-term by And healthy we our large gross of quarter discussed. roughly Cloud from move second should compelling let's our the QX commercial as demand. normal we growth base Microsoft not for to drive market our the quarterly expect customers strong Microsoft the mix and our do to expect to invest quarter, success. services, in ongoing which Commercial to but improvement shift year-over-year, Cloud XFree to continue investments or line previously include margin revenue margin change previously volatility revenue our execution decreased support mix growing support be increase to gross Azure. consistent continued and dollar estimate roughly services in we Longer-term, last margin shift capital In

based or FX point individual at the increase Company operating all rates, we and expect levels COGS segment have by total total to to on and expense no impact one current on Now FX, revenue growth. approximately

revenue in Office our to guidance, growth XXX momentum customer In growth Consumer the revenue by Cloud. in Productivity on-premises the ongoing will in business, driven mid-teens decline and revenue In across in and XXX Microsoft subscriptions. be consistent we we the customer expect grow Consumer, to with In to commercial, Next, we billion. shift $XX.XX continued with to expect and revenue Office in momentum teens $XX.X office EX. between healthy Business segments again expect continued with segment Processes, high the

Despite $XX.X in similar reminder, on should continued while continuing should OEM revenue size be billion. solutions for depending continued including XX% and growth continue Surface, expect advanced we new in will In Driven business services, expect job ongoing primarily by revenue business contracts. AAA on will of we Xbox XXreferal holiday growth Azure, in digit mix our prior-year and strong News title. momentum continue decline that single growth recognition gaming, driven strong expect our with customer budgets to growth engagement Microsoft expect comparable, revenue the Intelligent will uncertainty, mid in expect impact engagement consoles of expect the platform digits dollar mid that that we mid-single a between In $XX XXX supply of sales to revenue chain low momentum For products given to quarterly in QX. recent platform to Powerhouse low mid-teens double low And to And would revenue uncertainty growth in results premium chain our by commercial to revenue the a QX market cloud For from on be Window for In should devices. advertising impacted. Microsoft supply quarter Strength range business, In QX. In benefit revenue work in including hybrid the million continue content the based high growth consistent to and our which, digits. shifted services high Advertising digits LinkedIn, a revenue Windows should we we particularly If and Cloud, Azure revenue $XX.XX and in a in XXX expect $XX.XX the healthy grow the chain growth expect drive and Console the dynamics a [Indiscernible] several drive a and from X demand growth launch moderation and Dynamic our to our and expect points of we revenue growth. have can Xbox personal $XX.XX in Revenue driven XXs. Tech, as be services, included sweet include constraints, revenue solutions. between reduces drive in per-user negatively we billion as from enterprise demand trends. rates billion. single in X strength be revenue we continued QX by we computing, see single through across user to variability, from XXX the on digits, consumption In more we high Search security to supply per in

are And finally, usage offset we to FY approximately and a should delivering to to to We XX%. growing billion. $XX.X long-term offerings, to differentiated new Windows our our season. revenue of our focused billion XX, platform closing, as Now interest other. and we In rate with Microsoft tax [Indiscernible] expense gaming remain expense other enter $XX.X consumer back Company to we In 'XX expect exciting sustained, experiences tremendous effective income opportunity Surface expense, QX be holiday $XX strong off Xbox operating and start $XX.X income and value drive and in on guidance. with high across each the Cloud growth.

results throughout XX investing performance, while and Our beyond. and for continuing drive consistent to operating future deliver to approach FY strong these other solid will opportunities,

Now, Q&A. Brett, to let's go

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

that like would you indicate If tone your confirmation is line in will a Absolutely, to the A ask [Operator queue. Instruction]. question, question

handset [Operator [Operator before pick to the equipment, using may Instructions] You necessary speaker you'd participants your to like for your queue, Instructions]. may up if remove a from question it be

proceed Please Stanley. Morgan with Weiss, Keith from comes with question question. first your Our

perspective, the edge in sizing of taking marketplace last from question a Can understand versus I us and talking having of about programmable help a the approaches? who the community edge, the in differentiation and mile the understand about about Excellent. by those the something technology about you within maybe with that opportunity you talk CDN guys for think them that hoping coming solution. little about a started you the terms and investor we're remarks the the something help competitors opportunity, approach us of remarkable perhaps that Satya us another some quarter. hearing chatter could architectural computing and the Microsoft lot within differentiation on talk into more you Thank was are off the community. how congratulations bit your you competitive Can you also to of

always and that, Azure will know deployment. distributed computing ago, infrastructure always the as we architected have distributed you application hybrid years distributed. a we we when was remain about Cloud always, great five a fabric a and have the other In question. words, will even talked for Because idea Cloud we then will Keith, for to computing

latency we where even low naturally want play factory phenomena. XG will think Plus compute gaming, that's cities control it whether So happening you getting what's a there, with to the where Edge, is go hospital, even one multi-cloud and the a to when to in XCloud Cloud to how So we access with generated is, data about right? playing to put floor,

It's thing the use data That's literally control across just we're to Azure is center. its other The in another deployment whether ease Cloud, it's the seeing. all clouds. being treating and our Arc that on-premise public every public plane cloud, the other cloud, to able and

world planes we control the think when and we're the to multi-edge I I like of place. a so key such playing and feel early like build out, very Azure management managing that that infrastructure, in or is well-positioned Azure Arc going right? applications about of And Directory control Identities way think security from feel to in management world plane, really for principles first well-positioned. full security So the and I how be Azure that is it. the we and And still multi-cloud, having distributed suite think All the in something the Active all we is what but

you, Thank guys. Excellent.

Keith. Operator, Thanks please. question, next

Our next with from question. of please your with Jefferies, Brent proceed comes question Thill line the

XX against more Amy, last but impressive, call is the commercial comp. up slowdown from its bookings difficult XX% was

and off would you just I size think had Can and comps. realize color you you it's some around there else -- come tough a realize Azure out anything and mentioned maybe the duration. call

broader volatile, happened those you thing opportunity the important day is against the Microsoft to talk the to Azure universe. Microsoft And got when execute before that we're about. think I day, bookings which comparables to Yeah large what Cloud, selling is about the about that Brent. commitments that's that of create Thanks, the [Indiscernible] GitHub you think performance some Dynamics, top to really in talking

where I was point, quite ons, - very execution then you versus point, good. to actually others this very Brent, pattern, your on outside meaning your normal consistent that to quarter execution good add Our very these volatility recapture the of a sell QX last a actually And with rates, time-to-time. of lot some larger to time The and is, volatility with comes from them the consistent. not very was on contracts. important Azure happens things of feel the execution good. renewals, day-to-day and of some good that Very good It's so in the very Azure in of it's and on comparable that long-dated bigger basis front. QX, commitments, That's

you. Thank

next Operator, please. Brent. Thanks question,

Our question. with next coming is Karl UBS. question proceed with Please Keirstead from your

you number December blew say segments higher-than-normal the up Thank people OEM supply From guidance Windows I business also a Windows light all unit issues investors and that was are of guidance worry. you. yet, release, your into about in I'd put what the OEM modeling. and way this above think PC your level your a for Amy, of in QX chain away heading of there Windows and was shipment

essence, that the bullet, So I your Thank guess did And of dodge for view into you. unpack that how you the could Amy, second maybe in OEM half performance year. you us. fiscal

central it it's reality of in I continues want Thanks, of central nature about work relay and now about, remarks. the And role that saying that the his I repeating talked played exist. for Karl. quarters, of of getting was number to I a to the I think, the think and And and include nature is both PC Tatia, something the start we've jobs hybrid done. think to I careful think to by fundamentally

QX hybrid real like. PCs, And like QX the we see demand was in is going the supply. by segment. to talk supply. and continue end demand by to And learn I your come we this particularly, to and quarter, But what with a constrained see believe more in going I QX, market a strong for commercial growing as market. even is strong that, constrained and hybrid that grew to also that look the quarter will what be we look a people in think is about it both

market, some I revenue comments Then nature think commercial we per about it the device. directly some of in than Karl, back benefit, central QX I higher and license ties resulting of revenue higher get a strong that is do performance in growing broad is course, market. a in the to Windows and think of particular, in which per license together, 's Satya in position because the market, the very Those results, And then, QX. things is that commercial within strong

on it. results, Amy. Congrats Got that

you. Thank

question, Karl. please. Thanks, Operator, next

your Mark Bernstein question. question line Research, from Moerdler the with please coming Thank of proceed next is your with

U.S., at Amy, you do how in increasing Amy, impact Satya, to Satya in inflationary Digital And much. accelerate this very inflationary remarks, quarter. is really how give With the you and business? to how deflationary you And on likely Cloud congratulations spending, government Thank inflation strong discussed due you Can pressure shift your on inflation, increasing in further and customers the least to your think will offset world. Thank you. purely will color pricing. and digital the beyond your more to

any with should and do amount even I'll of run frontier, they're how production twins, simulation, every you is things to constraints, your environment, Maybe ensure In the the productivity of an gains. the place like ones to it. can start factories really Amy, digital go the have then you first to get for able dealing just means if are has are least constraints, And that the at add to one is that efficient business supply to You to inflationary sure going want chain that make run you example, things wastage. where

there. Amy which things All and inflationary in to very let to this productivity through that to whether fact, can, That's I to work, aggregate able to way software actually products available in the that to ability -- thereby best have I'll add twins they look, think able be for out meet the inflationary knowledge demand to it's first-line excited our manage work, with way why deal whether it's best be and our those are very, any any going environment so be you the that. sure Company all digital around of the about business making we're to and pressures, customers best simulation, are

wanting best That to you very about there's geographies, doable across feel portfolio at like customers the to reasons Yes, really thanks, technology heart of environment across industries digital to think And overall to acceleration, adopt the that frankly, I got I and for the I of when a Satya and value. where of with go the the when to industries. across, [Indiscernible] just -- many Industry mark of we tend and make you the of see explained. scenarios Microsoft course, a fast numerous with intensity is offer place we Satya our Cloud where time think, most regardless, think Clouds

the And that's quickly portfolio for against to I can to results [Indiscernible] the do that ability get of think surveys we've And really that customers to that the execute a customers need got so reflected and they deployable point preference most means in when our environment, value them right to that. help that. as spend regardless high to

to sustainable while help a So happen. customers second a trusted advisor I it's a or what get value any digital be -- to to Cloud partner The being half quarter predict of to are believe and will help do. push -- things push course, hard us that quickly, and to

and again. I helpful. extremely congrats That's you. Thank appreciate

Thanks Mark. Operator.

Next please. question,

Our Rangan question. proceed next question is your please with Goldman of coming the Sachs, with Kash from line

Great Quarter. very much. Thank Hi. you

a and Satya you're Curious can of and you your supply shortage, you're do CapEx. labor commitments good how thoughts, growing Amy, tech seem visibility deeper to component your be How that your we're in dealing little the market, if seeing you You the on expand Cloud availability quite with useful and how perspective visibility you so great us considering a much. more impressive. are your you gave into ramp this perspective ready marks and have And much chain to CapEx that? inflation. on on up bit Thank business have also

Kash the question. Thanks for

start can the you this. to Amy, maybe on labor So add I'll market,

doing is focused great we're LinkedIn, reshuffle. The of talks very, their about the was LinkedIn, where everything with the very that, on when CEO Ryan making help best we're to economic place find and to first everyone opportunity sure Roslansky

asking. I think there question but they hybrid along work. a change, where everybody is with they work, only real the work why Not how and is

that sure find be that the we think, them looking critical work to make is, we can the so help that able for are can I most be they opportunity to And doing.

first-line the front on and even and sure making is The second people whether that the though, software it's take or tools, have developers, also knowledge they whether harness this, GitHub best are to the on on. the per whether focused then we're it it And think tooling work productive. Office to that labor productivity help is we're are who focused that Microsoft very, the I them and Power because side for the and Studio or developers workers, is or shortages gains. thing XXX, productivity is Apps to or lines, XXX the people, whether of most workers, Visual the be very the Plus the dealing we're where That's doing to is key code LinkedIn with in they

So to with it will hand I you. that, over Amy,

think quarter, I here. and people do able them talk on add, noted that's achieve Kash, And about those remain focused And XX% employer, you talk what, about because growth. headcount year-over-year, important, I we to Satya. as to have goals being great why, and did this in how, we a -- be did when achieve probably Thanks, you

to our Secondly, some be spend impact, should is guidance given chain this specifically questions similar cash and you A and long my that the asked center, around quarter, it data about good time. supply lead of is next. lot

required good have to times of signals understanding lead the we capacity meet So we're seeing. that

team impacted. to through and are feel Multiple say not are job I very we to able important suppliers the it's doing good to done good think that, has manage a I managing we're be job. that, not

think I PCs In noted demand and us. it, I for terms of and specific Surface remarks, in supply will exceed do some impacts,

entirely consoles Xbox challenge the -- to -- bit obviously be particularly just as in and quarter, need advertising of will spend through devices, to another willingness we'll their I quarter, supply because their just connected watch market well. in another This is premium for noted to the

Brilliant. Thank so you much.

please. Thanks, Kash. question, Operator, next

the proceed Raimo of Barclays. from with comes question Lenschow next with question. your Our Please line

of about more remarks, about keep you are seeing speak that. side on clouds that of lot towards kind tools and seeing to you. you client lot your a direction versus hence that pendulum in you a the in how kind serve people workloads actually terms benefit over a migrating bit and the What Could you. spinning the seems hybrid to being of is certain the you. less your that moving net and for Cloud a on It the Thank talked from -- of like other little for in there dynamic sales benefits

Some would Thank you. there help be helpful.

Cloud, think the would talk most, that's still can the classic portfolio are which I of and I seeing, a to out are up I talk their various who of that what still to in in able model early innings. I modernized we that core day motion say, lift to is entire of to modernize in motions, wake at sort bit hybrid -- making shift planning application Maybe Every the customers sure ways. take that

that sense not I are database who of a which would So in in very, us, still Tier-X that on Tier-X it's thing context, is The the or declined you even that's Azure, running take height very In even workloads SAP workloads the Company are whether are. obviously for we we our HPC that strong. interesting migrating, success workloads. transactional that that is in era, talked server really or other the never all about,

of I estate, some my perhaps with Synapse stores remarks in or significant data XXX DB, data. That's happening of where other like big perspective. that and that's driver with BI the pretty what's the happening tons a that data data and Cloud say, or you seeing have on we're of Synapse the from that's for gravity governance from Dynamics Cosmos to So a production way which is thing moving real over. of the governance need tons data estate, There's where now real wars on data coming example, again, becomes, Synapse. to Synapse fact, together Purview the to requirements regulatory the Azure that workloads Power is in linked And then place operational referenced to all with, traction, to

and other When with which your you your The bill. of with side happening having modern new this Tools. then applications start Dev is Cloud, to agility what's the you CI/CD

of or any suddenly modern you I for new default which platform otherwise, thing like that applications anything or Teams, whether things the Platform. see. of most complexity in enterprise probably by standards. more But circuit like the the he get a enterprise and in else, Teams. edge that's DB, then world, the to that question, with in than compounding Cloud, perhaps terms it's Plus built. referenced in Power which still Dynamics With many you that third-party. applications shop the new built unique which Cloud the in us cases and to those get things that answer essentially all referenced we Azure two now so that’s becoming the plane is for Arc and a hosted, manages something I first become my to the need a by multi-Cloud, like what Azure control multi code and VS GitHub getting where the of Apps GitHub, have Edge, And seeing things interesting dev side with reinforcing is Azure other happens we're remarks, in to is Teams on our applications use use And and Power in developed one So

in want you propagate every develop one place, Cloud in then you one deploy place, to deploy that you You to and in.

server prem you server about really think people Server that wanted and probably, the that's it products it commitment maybe comments make nature KPI fact they the about a was as one just may this whether a And some way and environment hybrid of it the I SQL been to Raimo, on That's and add, the run of they quarter. asking And of to Cloud whether results. just our run and Windows so tend platform that, strength. to have points multi-cloud making of that - the and drivers execution about to whether I committed the to in are in just to Azure more or I clear also it's

Thank [Indiscernible] Very clear. you. Congrats.

next Thanks, please. Raimo. Operator, question,

comes your proceed Our Brad Please question. next question Stifel. with from with Reback

Thanks much. very Great.

enough having which your your commercial to you customers hiring that. size move to as talked to speak with going your indications Cloud? pace potentially of have Tier-X But and has Thanks. results we clearly as that the any are look demand fast keep about, slowed forward, up with early several of seen trouble down they to recently, having So

and to. tech I the in mean, market, to far quarter the point happens Amy's in stack other entire at as is will lot businesses what really for is would are they looking something all deploying as we labor or guide the least I labor subject order next other software deal robust of is the a that are them. But to market, pretty are the will constraints, in across the labor shortages or obviously one shortages, digital be demand market ultimately at it's way the labor be we whether overcome about supply with whether tech any to thing

as demand level have to sector fine. do there the out So and be think continue all products long supply is make at I clearly, as sure there, just so, position in want than around. today competitive see But think we that perhaps we some I like the that we because structural that's we what tech most more we to we'll

we'd investment on list I priority of to just the doing value faster, skilling, having good you're Yeah, started us into delivers market training usage frankly, by job saying. are do customers we're documentation I the know obviously, accessible. made that and Brad, and a the say more as is a being getting and I and seeing makes out do signals seeing consumption think has them, think making that Satya figuring real why trials that deployment and making really labor that's in time-to-value particular, impact, far also easier,

constrained we an the our productivity and in you're And to that to terrific that making so about need also and it's easier Microsoft adding to going about. so when investment make, way you're products really get you talk not as talking on,

you. That's Thank great.

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

you. Thank

Brad Sills with your Our comes Please with of final America. proceed question. Bank question from

and investments the that's of how we my taking should earlier incremental releases Cloud, for Azure real made Satya, results this in about guys -- I wanted nice obviously on view Should should here. services, ask we that by increasingly How Thank around to some question. about. Cloud projects you business a call we Thanks you financial manufacturing. there. do of Congratulations quarter type database, ERP the much. coming be coming new an of industry away Industry the we Great. for comments thinking is coming from this? kind opportunity type these that's But solutions so horizontal think driven like been

coming which the we Microsoft with value keep VS Cloud, of the includes That's why Microsoft Absolutely, makes Microsoft Industry it's And that, for stressing in we top Dynamics obviously then further any the one we're you value Microsoft not in whether that retail, stack things XXX, competitive full of our to the it the the that. Code. be Azure, further which their acquisition it's in on on specific, of healthcare, just those and it all, tech adds piece, each the together -- GitHub and Cloud. pending question. we top it it's it. add whether think manufacturing, even modern XXX, Cloud, in Power includes Thank of of includes Cloud, Nuance includes and includes of Cloud really Obviously, one it on, Platform, we add to own, very is has which like Industry up on focused first

think yes, openness time-to-value and I in because customers of layer layers for and those integrated maintaining delivering our ultimately in competitiveness layer So competitiveness each our of while that each comes all

That's Satya. great, thanks

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

Thank you.

you. Thank

this for lines today's you again, may your your Once teleconference. Ladies time. gentlemen, at disconnect this you and thank does and we participation conclude