Microsoft Corporation Q2 FY2021 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Overview

  • Revenue reached $43.1 billion, up 17% year-over-year (15% in constant currency).
  • Earnings per share were $2.03, increasing 34% year-over-year.
  • Commercial Cloud revenue grew to $16.7 billion, up 34% (32% constant currency).
  • Operating income rose 29% with operating margins expanding to 42%.
  • Free cash flow reached $8.3 billion, up 17% (and 41% excluding tax settlement effects).
  • Shareholder returns totaled $10 billion, an 18% increase year-over-year.

Business Segment Highlights (Year-over-Year Comparisons)

Productivity & Business Processes

  • Revenue: $13.4 billion, up 13% (11% constant currency).
  • Office 365 Commercial: +21%; paid seats +15% with strong trial conversions.
  • Office Consumer: +7%; 47.5 million Microsoft 365 consumer subscribers (+28%).
  • Dynamics: +21%, with Dynamics 365 up 39%.
  • LinkedIn: +23%; marketing solutions +53% as advertising markets recovered.

Intelligent Cloud

  • Revenue: $14.6 billion, up 23% (22% constant currency).
  • Azure: +50% (48% constant currency), driven by consumption growth and industry recovery.
  • On-premises server: +4%; EMS installed base +29% to 163 million seats.

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

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