Microsoft Corporation (MSFT) Q2 2021 Earnings Call Transcript

Microsoft Corporation (MSFT) Q2 2021 Earnings Call Transcript

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Microsoft Corporation (NASDAQ: MSFT) Q2 2021 earnings call dated Jan. 26, 2021

Corporate Participants:

Michael Spencer — General Manager of Investor Relations

Satya Nadella — Chief Executive Officer

Amy Hood — Executive Vice President and Chief Financial Officer


Mark Moerdler — Bernstein Research — Analyst

Brent Thill — Jefferies — Analyst

Karl Keirstead — UBS — Analyst

Keith Weiss — Morgan Stanley — Analyst

Mark Murphy — JPMorgan Chase & Co. — Analyst

Walter Pritchard — Citibank — Analyst

Raimo Lenschow — Barclays Capital — Analyst

Brad Reback — Stifel Financial Corp. — Analyst



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, Mike Spencer, General Manager, Investor Relations. Thank you, sir. You may begin.

Michael Spencer — General Manager of Investor Relations

Good afternoon and thank you for joining us today. On the call with me are Satya Nadella, Chief Executive Officer, Amy Hood, Chief Financial Officer, Alice Jolla, Chief Accounting Officer, and Keith Dolliver, Deputy General Counsel.

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

We will post our prepared remarks to our website immediately following the call until the complete transcript is available. Today’s call is being webcast live and recorded. If you ask a question, it will be included in our live transmission, in the transcript, and in any future use of the recording. You can replay the call and view the transcript on the Microsoft Investor Relations website.

During this call, we will be making forward-looking statements which are predictions, projections, or other statements about future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could materially differ because of factors discussed in today’s earnings press release, in the comments made during this conference call, and in the risk factor section of our Form 10-K, Forms 10-Q, and other reports and filings with the Securities and Exchange Commission. We do not undertake any duty to update any forward-looking statement.

And with that, I’ll turn the call over to Satya.

Satya Nadella — Chief Executive Officer

Thank you, Mike. It was a record quarter, driven by our commercial cloud, which surpassed $16 billion in revenue, up 34% year-over-year. What we are witnessing is the dawn of a second wave of digital transformation sweeping every company and every industry. Digital capability is key to both resilience and growth. It’s no longer enough to just adopt technology. Businesses need to build their own technology to compete and grow. Microsoft is powering this shift with the world’s largest and most comprehensive cloud platform.

And now I’ll briefly highlight how we’re innovating across every layer of the modern tech stack, starting with Azure. We’re building Azure as the world’s computer to support organizations’ growing cloud needs. We’re investing to bring our cloud services to more customers, announcing seven new datacenter regions in Asia, Europe, and Latin America, and adding support for Top Secret classified workloads in the United States. We have always led in hybrid computing, and we are accelerating our innovation to meet customers where they are. Azure Stack HCI, now broadly available, helps businesses extend the power of the cloud to sovereign workloads. More than 1,000 customers now use Azure Arc to simplify hybrid management and run Azure services across on-premises, multi-cloud, and at the edge. And with Azure Digital Twins, organizations like Bentley Systems, Honeywell Industries, and Johnson Controls can bridge the digital and physical worlds, creating simulations of factories, cities to optimize their operations.

We are seeing momentum in every industry. Deutsche Telekom will rely on Azure to modernize its IT infrastructure. Through a partnership with the Broad Institute of MIT and Harvard, as well as Verily, our cloud will be used to help more researchers analyze biomedical data. Cruise and GM chose Azure as their preferred cloud as they work to make autonomous driving mainstream. And, just last Friday, we announced an expansion of our partnership with SAP to accelerate the adoption of SAP workloads on Azure. In the past six months, we have seen Tier 1 ERP migrations from companies such as Bayer, Carhartt, Coats, and PepsiCo to Azure.

Credit: AlphaStreet

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