Microsoft Corporation Q2 FY2020 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Overview

  • Microsoft reported another strong quarter, driven by broad commercial cloud strength and continued hybrid adoption.
  • Revenue was $36.9 billion, up 14% year-over-year (15% in constant currency).
  • Operating income rose 35% year-over-year, with earnings per share increasing 37% to $1.51.
  • Commercial cloud revenue was $12.5 billion, up 39% year-over-year (41% in constant currency).
  • Company-wide gross margin rose 5 points year-over-year to 67%, with improvements across all segments.

Business Segment Performance

Productivity and Business Processes

  • Revenue: $11.8 billion, up 17% (19% in constant currency).
  • Office 365 Commercial revenue grew 27% (30% constant currency) with 21% seat growth.
  • Office Consumer revenue up 19%, supported by Office 365 subscription growth to 37.2 million users.
  • Dynamics 365 revenue rose 42% (45% constant currency), showing strong multi-workload adoption.
  • LinkedIn revenue grew 24% (26% constant currency) with 25% session growth and strong marketing solutions performance.

Intelligent Cloud

  • Revenue: $11.9 billion, up 27% (28% constant currency).
  • Azure revenue grew 62% (64% constant currency), accelerating quarter-over-quarter due to strong IaaS/PaaS consumption and expanding SaaS-based components.

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Operator: Welcome to the Microsoft Fiscal Year 2020 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. I would like to turn the call over to Mike Spencer, General Manager of Investor Relations. Thank you. Please proceed. Mike Spencer: 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; Frank Brod, 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 a 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 y

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