MSFT - Earnings call transcript Q2 2021

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Operator

Greetings, and welcome to the Microsoft Fiscal Year 2021 Second 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, Michael Spencer, General Manager, Investor Relations. sir. you Thank

begin. You may

Michael Spencer

and thank us afternoon for you today. Good joining

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

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complete call available. our following the remarks transcript being and call recorded. post website is will until our prepared live webcast to is We Today’s immediately the

be use our any If included you transmission, the transcript the in of a it live future and in in recording. will question, ask

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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

Satya Nadella

Mike. highlight you, by revenue how no and digital to just the is innovating own now and the growth. cloud of a the I'll need technology It's layer modern we most cloud compete to company transformation enough key every with industry. every commercial It are grow. comprehensive What platform. in is build stack up dawn briefly longer and second to both Thank is world's starting shift Businesses Microsoft to was year-over-year. billion wave which we quarter are XX% driven every sweeping Digital surpassed and a $XX capability of witnessing record of our powering with this largest adopt And Azure. technology. tech across their resilience

cloud world's needs. are growing We to organizations as building the Azure support computer

to Azure and multi-cloud Deutsche power at as helps to researchers work massive industry. or digital sovereign now Azure in is [Coats] we data Azure institute governance just path they every simplify companies any data to layer Synapse only for competitive in integration In to as today. the in with the customers always in PepsiCo cloud are management organizations industries computing is At of now data one our brings as more and thousand use be cloud six Azure. of like to enable the companies all classified a systems, Carhartt, preferred warehousing the will analytical of Edge. organizations, our modernize businesses insights top data, the build last analytics to and initiatives autonomous that investing and category AI factories, as extend than SAP its companies operations. advantage. critical United and to accelerating meet own make And Cruise twins see accelerate Johnson optimize the workloads ERP Honeywell MIT grow Azure as GM to SAP our led where from driving broad with and mind amounts More of Telekom innovation as data. into on-premises cloud Controls announced together top P&G category Harvard HCI creating seen build physical Bentley their our center important using predictive Tier We Azure to to generate cloud hybrid analytics an accelerate Azure of digitally and IT are growth leader their cities of big to as partnership are. mainstream. help new an biomedical rely strong transform. and its X well Data workloads. Europe customers support business for we've our customers analytics Latin and Arc overall business on of limitless and with unstructured on as migrations available across verily from with FedEx, stack immediate the digital Grab We've to their last partnership America are to are expansion through powerful [Bair], announcing every We the infrastructure in and Azure workloads Azure. Asia, States. capability and Leading chose data we adoption structured momentum on to hybrid and like into regions months and seven data required bring cloud And we as data simulations such and and secret the worlds the data and they Synapse solution. services Friday adding run seeing used broadly more services and can to analyzed bridge Azure

tools, to Yammer more healthcare Teams to workers the and investing technology. has that offer and capabilities. more use growth in security EX in this Purview including an premium new Amgen, increasingly home Microsoft XXX,XXX frontline depot education Diamler, connection than Ikea In on-premise, Azure products including around will worldwide and learning engagement Teams employees are end two of digits the customers impossible. comprehensive at to XX,XXX and than the workers multi-cloud view was XXX,XXX the compliance, data participate weeks. offerings analytics the of for million across past industry four across portfolio provides in are The organization's infrastructure apps state shown We revenue four to and world AI XXX an In and AT&T, globally Microsoft Affairs, quarters. education with educators associates for has including use grown right the end SaaS of GSK most enabling [Technical of Difficulty]. importance Veterans frameworks for triple advanced we empowering billion voice turning remote students Microsoft every leading employees foster to collaborate. calling to U.S. the on XXX and XXX just of organization Department pandemic previously the rely our

and organizations attack the We're deploy Now are of focused solarwinds reminder reason ensuring customers. security. to our critical on trust stark architecture. zero how maintain The a fork security is a

impact. management all key security, end-to-end security Our mitigate clouds help as across their have capabilities posture and client security of inclusive platforms customers and all and compliance identity, strengthen we been

analyzes trillion defend security signals themselves. each Beyond intelligence threat which our products day customers X and our operational posture help

alone. a than to in Over surpassed of billion milestone business and place XX capabilities see XX Azure testament managed In our million than compliance in in in deep XX% we digit past and This our months momentum Microsoft to across usage more active seen will growth services have X Defender organizations users. is devices triple in year XXX Microsoft in trust by number the protect management revenue saw block security increase our in in last strong monthly customers. year-over-year. June In the continue products our us nearly billion to of we products the threats more XX all new our XX%. up and invest identity We base is security has we customer

quarter of in We're cloud cloud. turn gaming. billion play. distributed they while we and broader now our bringing We Game XXX a and onto $X months. users games quarter gaming as we the XX in S Xbox most time We to revenue Windows as Pass and pass has first third-party console X our billion titles active of PCs world's how more devices devices reach than opportunity the and wherever Game they series exceeded more and successful power and games developers viewed reach over transforming game this three time. are our this most to in the sold value the our gaining too of from the X expand the recognize series the Xbox revenue a gamers ecosystem. scale for history benefiting the billion share The Live to million few iOS monthly for as played Now to launch gamers are are next has first subscribers was with in launch month. us the using players in surpassed ever million

ahead. subscribers overall our rapid you a move consumer detail of and opportunity will services by expanding XX are large decade brought demand and in meeting we rejoining needs the I subscriptions technology. both significant We increasing see Amy family investing I'm business optimistic with in what's Game on growth it by digital opportunity segments and financial in in In and after hand personal I'm than coming forward and I'll to adoption results the to they change models. energized our share more for have and as structural these and momentum these questions. pleased over with by our we of the consumer look With fueled and growing Pass that cover our closing to million about about to subscription We're the XXX Microsoft outlook the

Amy Hood

everyone. And you, Satya. Thank good afternoon,

continue and our business offerings was markets Platform constant improving $X.XX security Earnings stronger transactional to a share XX% we Azure consumption across businesses. series console by XX% small to and XX% This geographical as The trend our quarter XX% our strong customer Across businesses increasing driven show and and constant Power supply improvement was OEM, X exceeded results and segments in within expectations higher revenue billion demand currency. licensing platform our execution currency. and in advertising saw resulting launches. usage compliance monetization industries, XXX $XX.X business Microsoft Xbox drove has and contracts. in consumer demand up advanced business customer transformation our per Azure exceeded medium and Windows In search digital We improvement. offerings and and double healthy surface growth. well which as benefiting top their number gaming, show well market with bottom and of material record $XX following engagement that S growth as in digit for some customers line saw cloud significantly prioritize the and and segments Office the our our as hybrid plus continued our Teams, million of commercial across and in and [indiscernible] trends and LinkedIn

better and with Even of Azure XX% to annuity between XX% the a bookings increased across drove useful as and revenue results. the in be declining And the was XXX that expected Strong $XXX overall to within momentum growth obligation including our a portion strong equipment next in XX% constant execution constant accounting than recognized base accelerated currency. prior Commercial points earlier networking and to XX% Commercial XX cloud commercial billion assets. Commercial $XX.X driven equivalent Microsoft split currency. the increased performance for with our increased XX% sales X.X year by percentage expiration core margin our to of the remaining currency beyond the constant in motions result. roughly to the the to and that comparable Moving and server over life estimate XX% billion annuity change mix XX%. XX% X.X expanded gross and months. will year year-over-year revenue cloud

slightly. Excluding commercial up percentage was gross margin this impact cloud

continue a strategic Azure to increased and will support our customers deployment customer and margin. of impact collaboration of usage As our continue revenue reminder to shift solutions to and the solutions mix productivity investments gross success

no point expense by approximately With U.S. on growth point impact than anticipated. up increased the about increased percentage more earlier. favorable XX% margin X accounting with FX FX a change with was points the expectations. revenue increased margin had operating weaker comps both points constant roughly dollar estimate one impact by growth currency. of and Gross approximately in year-over-year Gross line X from XX% and XX% favorable in dollars noted slightly growth

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strong voice currency commercial Now of with acceleration and our demand across Results well conversion quarter. XXX commercial growth XX% strength offers. customer was strong a EX installed our noted LinkedIn currency. processes office and currency. Office compliance and expectations our revenue XX% billion The stronger transactional by productivity higher for primarily year Office Revenue in and drove XX% X of year-over-year and security, increased revenue constant all roughly driven XXX commercial constant segment this Microsoft and primarily ahead as constant Japan. ARPU. X% components grew grew particularly commercial base of revenue comparable on to prior XX% results. points for increasing as and benefits in seats segments free were $XX.X workloads included in and trial earlier Office Paid business expansion XX% from XX% again XXX driven from

currency, currency our saw business of constant Dynamics roughly benefit Office small up year-over-year. strength points increased in revenue to Operating points roughly expenses grew constant offerings. X% XX% year-over-year growth and currency of XXX impact We XX% and constant in line percentage the to in X% the consumer points driven and solutions XXX in currency accelerated XX% a of including accelerated adopting Growth X increased X customers in Dynamics expectations. gross from of estimate. in comparable and million constant X% subscriptions X% constant with constant and strong Dynamics the on currency in quarter. improvement steep and noted number significantly increased unchanged benefiting operating in change from X LinkedIn currency XX% accounting workloads included gross a XXX dollars increased was transactional estimate. income worker consumer constant Japan. by also change and from accounting to in and Microsoft stronger and revenue that market grew XX% XX% favorable The due XX.X ahead our Segment first of and margin in margin XX% multiple again growth XX% XX% in business advertising XX% and grew marketing revenue in earlier. XX% currency. relatively this XX% revenue medium

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growth XXX security seats of up million enterprise XX% X that Windows roughly XXXX. better mobility strong and and for included points a than benefit comparable Our installed prior year driven end over support by per-user our also expected to from on in of base accelerated results were Server the

of server X% on-premise gross by services offerings. X% in revenue our driven annuity constant constant currency by demand strong grew in Enterprise in Our currency XX% driven increased increased and continued premier and with services. dollars X% in premium grew estimate. operating X and impact estimate. currency roughly business the constant from XX% XX% currency margin accounting increased increased X for year-over-year XX% X% the support and with in expenses percentage again margin points and XX% impact with constant income performance and XX% hybrid gross in from Segment accounting roughly and XX% and Operating change change currency points favorable and favorable constant

year-over-year declined than year a Now revenue currency OEM revenue new and constant businesses. the across and pro XX% earlier. in and resulted the products revenue revenue and benefiting grew and X% performance prior and shift Windows and advertising in expense $XX.X better growth grew operating continued all points in constant Operating strong commercial in currency. the expected currency content gaming. constant decreased X% Surface pro market advanced from XX% console titles. to decreased Computing. Segment consoles. hardware currency lower third Search services in constant despite levels OEM grew XX% revenue XX% percentage Revenue end constant and and dollars normal driven the XX% constant driven demand mix XX% in by X. of security grew constant and in quarter price increasing margin XX% by ex income generation Windows X%. In noted subscribers PC TAC gross Microsoft And promotions comparable gross constant revenue support in XX% in OEM Pass first-party X% from party prior our increased the the XX% revenue and More currency. to and OEM grew for in cloud revenue services increased the XX% growth currency. in billion from well in Xbox X% margin X X% as And XX% and of Windows, currency Gaming solutions. launch overall benefit X% In Personal strong our by stronger XXX revenue on and was grew range. and improved sales market and Inventory XX% XX% as non-pro driven ended the Xbox Game transactions, increased X% for currency

XX% billion. expenditures total was for $X.X year-over-year were including Now of customer usage XX% results. Capital our Cash by growing to was Cash flow increased related company tax leases partially to billion support Free billion $XX.X collections from payments $X.X settlement. paid billings services. cloud a audit to back cash finance offset billion global operations were was and cloud demand as XX%. year-over-year up $X.X strong and up PP&E flow

foreign Excluding the XX% grew driven impact and $XXX mark on to gains from including market higher flow portfolio of income primarily free Other tax these than and net and flow as on gains operations anticipated gains on XX% cash cash was expense currency net well our as remeasurement. investments respectively. payments million equity by

approximately of tax share effective $XX Our line rate XX% year-over-year. returned XX% finally increase And billion was with repurchases to dividends; we expectations. and an in through shareholders

outlook. we portfolio markets rates year. continued the engagement significant demand our for not drive the and continue. see X The healthy for compelling the again our success our does low In by quarter. fiscal to be base and the by commentary focus a growing for of commercial expect in to last LinkedIn that expect bookings year business, Xbox remarks S series still should demand and strong execution, advertising growth end expiry and search tools a Now platform consistent end and any of Xbox the include support on Gaming, PCs on quarter will In full our still from year let's should solution X consumer for year. the have by businesses customer comparable. expect we commercial growth prior impacted QX strong supply will be improving the the both market. close productivity move In another in In we and business benefit high Windows constrained to any next My which ZeniMax acquisition and for impact from we the a

cloud So core motions should increased drive commitment healthy platform to across growth. our our strong execution sales and annuity

large X.X accounting again a Commercial the Azure long-term percentage drive As by volatility which more are quarterly by approximately the cloud in unpredictable timing increased change their increasing year-over-year reminder estimate. driven in of contracts an mix rates. gross can growth and margin

IaaS by customer success. offset and Excluding PaaS this continued to margin our and impact Azure Azure in shift be revenue investments gross continued will support improvement make to

sequential We cloud expenditures on global capital basis invest dollar meet continue expect a our increase our as to a to to growing we for demand services.

FX COGS growth to current on Based total points. X increase approximately expense expect we FX. by Now and revenue company operating rates to

and points X X increase segments processes revenue business more growth growth computing intelligent the productivity should by and approximately revenue by Within cloud FX points. and approximately personal

low processes driven though in ongoing anticipate to in Now revenue prior revenue customer we strong commercial and will to comparable the growth high to guidance. cloud. purchasing the $XX.X in In revenue dynamics and consistent productivity upsell continued In range on $XX.XX growth XX% drive In the quarter XXX growth on-premise growth revenue expect to XXX to with business segment on to similar In continued we shift by quarter. similar revenue. consumer In growth subscription decline revenue we opportunity LinkedIn will Office platform between drive last again Office the should continued EX. business and the range transactional mid revenue to last engagement we Microsoft continued expect with our strong continued a billion. Office expect billion in be with trends year to in teens momentum be improvement

in $XX.X we momentum. In consumption-based for Personal for revenue server to Windows we growth prior comparable hybrid advertising Cloud expect cloud the Windows driven and earlier. revenue in ex should expect teens and mentioned growth OEM low to services from should revenue between $XX.XX be the offerings high on billion sales the be as be the Surface mid revenue Microsoft our the $XX.X teens expect low expect demand drive revenue in and business services XXXX. strong low console comparable a billion. we in with growth driven our growth and as And line driven roughly low growth Windows to in included business should by between More demand mid mid and In that per-user Enterprise annuity Intelligent our should by our generation services suite the continued in in In Azure products will be by For of support quarter. In Microsoft strong be growth and $XX.X growth we on-premise prior advanced business strong XX% expect solutions. of again driven year revenue Search Computing TAC And continued revenue range. demand digits XXX XX% to our range. digits server benefit commercial revenue in we billion by comparable mid the billion. driven Xbox growth a in be on last for overall against and by good should improvements single premium market single benefit next end approximately well from continued XXX the in content In and in Gaming a security

company to guidance. back the Now

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

and income income each offset should interest expense other. Another and expense

and expect to deliver margin of COVID the performance to the excluding we changing with for our healthy a of with large full estimate will a half in broadly tax unique, full delivering double-digit Investments even change our half XX%. lower as We income Mike, on revenue rate rate the value against that call; have closing, In boldly go compelling FYXX made operating teams and impact execution of the services and finally, QX we for operating well markets roadmap our that challenging of after year today growth creating well customers of Satya of portfolio the With and products our and for expansion are be outlook for products coupled significant continue is expect span focused we that integrated as discussed savings. invest to the strong by our in year another and first in and fiscal related in the us. tomorrow. environment. executed set year fiscal approximately than and to growth quarters ahead behind our drivers first accounting years over of the slightly opportunities and XX% QX earlier often approximately Q&A let's and our in year our our optimism comprehensive And

Michael Spencer

Well others comes we'll now on to question. conducting Thank Operator Research. We'll call [Operator Q&A. you the proceed could a requested with to now Out move respect Our question ask one Instructions] and participants repeat of Please Moerdler Thanks question over Amy. be of Bernstein first the only session. answer please instructions? your you. question. please your from line Mark with

Mark Moerdler

such seem question seeing feel those numbers? behind the of two now on impact taking are to the impact Thanks. the we any to meaningful we COVID you as tougher to and beat did the the is and parts you the Thank COVID build from Amy there comps that congratulations you larger tougher that allows Two my part should basically and questions the comps. one or It Satya not whole and is for demand be every team on great quarter. seems business almost like

Satya Nadella

you I'll Amy can add to Mark. Thanks it. and Maybe start

changed we're think core to is structurally resilience digital deal going I the our the COVID behavior seeing but technology our a a for even and the constraints one of is expectations. continuity be has and all is things to that lot and change what of becoming is structural one with the customer business impact critical customers on put

So what obviously and at look for I industries Mark do focused importantly all when technology the will that's in. me and you to comprehensive XX are more infrastructure across that's as a very-very next staying the we that that compute opportunity of with and years solutions what digital investing saw company on I industry the this portfolio differentiated quarter tech way applications, from business but

Amy Hood

support with them the And Mark couple half some question a particularly of I particular second of end think are another I did and two would QX are don't sure and support maybe think strong of those make your so for on-[prem] and out. pro number the of in past why we to the the call end on have number the most being to it's in mentioned I server comparables OEM for we QX I that tougher

Mark Moerdler

much Thank congratulations. safe. very stay and you Again

Michael Spencer

Operator question Thanks Mark. next please. take we'll

Operator

you. Thank

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

Brent Thill

you a talk seeing re-acceleration anything highlight and business. putting Azure this quarter accelerating why transactions the you're Thank the you're think in you. just that size Thank what in of breadth terms you. great you up seeing to and of else maybe can is to the the important

Satya Nadella

Brent. to Amy with the dev the to their value it's retail DB platform would are every and Thanks hybrid comes of their power own say all that price Azure or agility we to and the customers Azure well whether to highly differentiation with are can the as in products as I'll advantage build new capability. other or and layer with the that with differentiation I Maybe time start leading to -- and stack to to Github healthcare apps importantly layer it in integration leadership we Power the ability again have differentiated Teams of digital marketplace our data some add. the competitive in you solutions cost when industry now most of core have our some again

value think that's to parts together So cloud acceleration but differentiation azure customers. we we think about Microsoft and the what the all around see deliver to you about our coming when in

Amy Hood

had and really little some maybe commitment. recovery it is and more and saw of describe good of and not that of and quarter to saw far make consumption QX including sure that that quarter fundamental shape we're Brent clear Azure what a which some future In been on being about this the to we thoughts a growth we even on consumption obviously re-acceleration curves really segment-based size bit of I of is just so hit some couple reflective in and and growth the maybe frankly important are in that front. QX transactions a bookings signed comments way more you there, some drivers And and on add particularly would had hard industries mid-market

I is forward but made that what look the forward obviously the a it difference. looking making was contracting there numbers growth usage, continue that there in it's which as differentiation, great talked Satya usage itself have So to we is is there to quarter is sure about not bookings about

Brent Thill

you. Thank

Michael Spencer

next Thanks question Brent. we'll take Operator please.

Operator

you. Thank

with Our line the Karl with Please UBS. question comes of proceed next Keirstead from your question.

Karl Keirstead

Amy Office a to particular if acceleration that's to I see March we you two is confirm wanted part comfortably and could reasonable the to so everybody I'm of XXX. wondering that and good would question growth above is unpack an you. guide modeling I in for it was XXX Thank quarter you the your in where that ask PVP I'm in and Office upside I to why that third describe could infer Office quarter guide about recent that think wanted in to paid about much. the Office if the Of the where businesses really conversion larger EX is your saw seat so the in in ones XXX. for except wondering didn't you whether Thanks all perhaps the segment to one March likely and you XXX accelerate assumption. this the most March. Microsoft despite quarter migration is free for the perhaps ask despite quarter

Amy Hood

There's them a bit. a guide let Karl the and in PVP things of me couple little down break

have consistent components execution. better As you sort heard of to actually slightly in almost QX all the

that in execution and there stronger is there LinkedIn. So saw reflected There and number commercial. we the is in consumer is that's in subscriptions upside office upside good There in saw is dynamics. we upside

trends about it's seeing a of second. more So we in into think QX when interestingly ago those which bit and a commercial Office Microsoft XXX what saw, we're good Office seen good good improving selling. of then back revenue to more for talk about is and trends you so EX gosh did is remember is see saw in the subscription but we in good things all year performance great the course had up and pieces there me Each of lot for better comp tough seat had in me really front a XXX so consistent pretty speaks in we and growth, come execution. be and a that's revenue conversion conversion again revenue, which yet we'll before a trial we than and given quarter seat so seeing all you forward in won't in growth I look that reflected say SMB some improving and line, We

that good of feel in actually value QX we're conversions market. I pretty So subscriptions entering terms and of the leaving the in and QX getting seeing out customers are they've that got that

Satya Nadella

the I just is value the would talked Yes, things things Office usage to tracking the using and new that I the by they're from forward is so and think the usage recently is the hope investing I've I of of what mean now are at That's is real all at as Microsoft usage depth offering the customer that and seen I one of that and breadth I we to that power shareholders and even best XXX XXX add depth I really a depth you look closely. year think going the franchise about when think increase. and of one when things account the and least compared which what's quick one look last just at thing

Karl Keirstead

That's on numbers. the helpful. you both and congrats Thank

Michael Spencer

Operator take please. Karl. question we'll Thanks next the

Operator

you. Thank

Stanley. question Keith of Weiss next with question. Morgan proceed from the Please Our your comes with line

Keith Weiss

through channel kind framework Excellent. and very Microsoft pulling Thank and working of a and the you to of a the people I introduction sort doing in competitor's wanted about solutions quarter. people a into of taking dynamic lot me a into dig was about topics Satya and more the as of all and guys in competitor for the connecting nice calls your I one and Team's you of this acquisition of and CRM Teams that's your mentioned across how that that understood talk they defense framework. Teams more some kind quarter number additional the was to pulled behind asking is workers story is guys go get two huge worker that how of products and Teams Could think of connection that you how Teams I of workers like was be base people area an because and I it they the one us to a in there help a between kind two. Microsoft acquisition kind to information as hear another story Microsoft frontline between for would understand about linkage of most that and for the against surprised a number frontline after. into think you from one broader question

Satya Nadella

HR and of this our integrate biggest business Teams collaboration as being of enterprise for custom of IT multiple of for what brings were drivers more the Keith which happening That and is well is business as much in is really as we process usage together terms is office we right built brings all of product just the what workflow first commented tool It brings their was enterprise past Teams you with well In that's application departments that thanks in suites or essentially that or on the communications, in built It the collaboration together line That and one a even or one talked meetings, was reality things ours is of this SaaS and had In collaboration finance the is No, it's process as by I business comments I than absolutely capability. capabilities. calls all that's of the why That's stressed together breakthrough applications this that any as is applications earlier line think when question. the usage chat. scaffolding. Outlook tools was but we so before bigger business others most into it. Teams. of one the see able obviously organizations the my I whether about that to any operations. platform

some it's the is the or we're inventory application capability is that's workday all Power app SaaS that the you're phone of mobile integrations Teams with then workers inventory the seeing into that a Teams a So very brought built applications these app and person apps and ServiceNow applications Salesforce that even of first right There you can as some it's frontline into no Power using SAP longer into was platform line. power integrations whether on all up just is knowledge it seeing rapidly of dynamics, that is counting Teams using you're is think integrated but a and course management you shift so scheduling application, are about and whether collaborating. getting this absolutely so whether just or what

with the workers tools these more knowledge it's in and if collaborating digital versus workers being In anything frontline enabling fact, with workflow participate about to of work disconnected.

Keith Weiss

on for us. story. in a Thanks That's fascinating it experience digging Thanks. with

Michael Spencer

Keith. question, Thanks will we take the please. Operator next

Operator

Thank you.

with with from the your Mark Please comes Murphy Our proceed question of Morgan. next question. line JP

Mark Murphy

you maybe business you see relates Yes. for I'll could different. you and post-COVID and levels very expense much expense Are well. as comment that and profile the it of real perhaps Satya such Amy travel T&E congrats profile a to Office do and over this to different on you a estate time Microsoft return look wouldn't very Thank as add sustainably well. my footprint fuller as resumption expecting fuller

Satya Nadella

about seeing return broadly are to as we Microsoft talk as just I'll well I Maybe this how think work. what both at as

think obviously are expectations the more Mark think even, site's key forward. terms the changed. time, flexibility in where is have going work We they the because we same of about people the think there be just have I to thing going I constraints will not work

So I'm is as at going time that the But at there not forward. remain of all is to the all way return assuming January just no we same XXXX.

give hybrid meetings what especially I like Work really happens meetings. set maintain different only laid it'll online policies in in why out the have sophisticated geography, back different of so who the more by is and us So that's in irrespective meetings, flexibility what different work which and work should to therefore even meetings, our in own of before where not really for Teams conversation time. is that flexibility we and need and function, happens focused track is around policies key tools we workflow that during and of that's think going you be after to on are it's by

So more to side. if want that's to evolve. work a little on the we expense you how essentially expect don't add Amy I know

Amy Hood

expense we've the seen the XX% in a be we and and we've to are coming a remotely working that's in frankly for maybe having forward is that logic in the why would see add of that's we growth step spots headcount ways I of and over think back across of ways close invest past significant expanded been in say to a going opportunities we the some the successful what of Mark year. and to the anniversary take where when talked I many Yes, customers have year question we many as about, world narrowness on the time at I overall from up

looking what in I invest employees, and and of we of which ways is continue to Satya types conversation I to look in is industry behind course segment customer so is XXX talks role deliver are about for places, success And us across time flexibility both and as the Microsoft provide we invest rethink lots in about. own every able to productivity work which a to think travel to continuing which those how are what will specifically finally is of and very of opportunity tools a we of driving where actually about should to we to our what means takes that in every how broad be exciting many that need the learning and and for a to think developing. flexible the broader there like be pretty But this it's force patterns talked obviously do it lots

Mark Murphy

you. Thank

Michael Spencer

Thanks we question, next the Mark. Operator take will please.

Operator

Thank you.

comes proceed of with Pritchard question. Walter your next with Our line Citibank. the question from Please

Walter Pritchard

Satya for low Question the market enterprise in Your you're billion on thinking applications market? $XXX is that fairly you. thank how Hi, share areas aggregate. about and

Dynamics accelerating. really well performing and like is that's sounds got You've

an broadly you're wondering as the market Just that how more for looking company? opportunity at

Satya Nadella

Yes.

a knowledge it rethink on what on tools we at a take the is to very-very process. previous between Walter. communications think modern there's need frontlines to continuity if process even focused that there We complete business into get around look real business are what worker applications that the to I conversation The integrated is are you such workflows way is

can even a up manufacturing. opens ton and like twins automation something digital level the of that think even mean that even one take into bring I opportunity. I of

bigger Azure So the digital pass Dynamics the transformative Same which going probably is to of supply SaaS XXX in be combination forward. to manufacturing trends can an to chain. one capabilities thing very of be service in going

Power the for So side, on apps it's area as be as important apps. both the data biz participation process on the well side, a and side us, and business business will Azure the applications if pretty side will, you on AI

business it's the So the that category not think one narrow what much way business categories applications applications and broader process least at towards. and we business because of is measure think is so are than people I most that's pretty you I and narrow building but

Amy Hood

and think that LinkedIn will it important thinking shareholders that today I not portfolio, about industry XXX And our exciting holistically well Microsoft platform as categorization for is why of and with biz with so portfolio, and as the our maybe are Power Azure us product and just it's by partially Satya about with for expansiveness redefinition of I we to add be us process just change. apps and for customers one It's and to are to dynamics terms our with keep implemented business the solution. even think that our but portfolio back how large think as that actually coming I commercial sell. dynamics addressed the see how quite we frame. see the cloud It's define how a the parts solutions for It's just why and we'll bit is

Michael Spencer

take will Walter. Operator Please. next Great. we question. Thanks

Operator

you. Thank

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

Raimo Lenschow

and experiences talk we you Xbox as strong you. bit emerging Game knew Pass early Gaming. you a well. to as ago little importance had we talk Ultimate congrats from that Thank so for all the and a I a the you of you Obviously that? about few Xbox some wanted of very the it see there the quarter saw can also a bit me about Thank launch little months but

Satya Nadella

Xcloud very the we very fundamentally Amy Yes. excited to it's it can about Maybe On start this. expansion I'll are provides. add you opportunity early but days

to subscriptions. and the the of reach technology us and allows really today of that service and ensuring a for expand catalog in any early we approach a gamers to and we'll doing same the as be that us and are at the our to console and endpoints that of very very now all that exciting a can limited to think job so are the not going PC value traditional So do so time the take we PC particular beyond it perspective have is from imagine is console solution in how the I fact we you our to our while innings the gamers be fantastic

Raimo Lenschow

Thank you.

Michael Spencer

Thanks question the we'll take Raimo. please. last Operator

Operator

Thank you.

from comes of the Please Brad with with question question. line Stifel. your final Our Reback proceed

Brad Reback

cash or but as look settlement the growing we flow ahead flow you aware the everyone's the about audit was Amy, puts quarter far talked with much. income? Thanks. quarter very expectations any there know we just line cash are forward and much and [ex] Thanks of that in I strong the focus should billings Great. pretty we net be takes on should of in in

Amy Hood

on the flow, been an things I in whether mentioned do benefited watch with in timing and like operating expenditures question us execution. general it our generally cloud it's it's the like free quarter you've improving capital tend really have in because of the strong the that feel things something it's we cash really accrual move basis you the on can settlement line or income quarter reflect move all to but those overall whether versus it on this margins of good should especially sales fundamentals and a business lines. It's Yes, focused to cash quarter, very for Brad

Brad Reback

much. Great. Thanks very

Michael Spencer

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

Amy Hood

Thank you all and stay safe.

Satya Nadella

very much. you Thank

Operator

concludes you. teleconference. Thank today's This

Thank may for lines participation this your and You at have a you your day. disconnect time. wonderful

Microsoft (MSFT) 27 Jan 212021 Q2 Earnings call transcript