Microsoft Corporation Q2 FY2024 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Overview

  • Microsoft delivered record results driven by strong Microsoft Cloud performance.
  • Total revenue reached $62 billion, up 18% year-over-year (16% in constant currency).
  • Operating income rose 25% (23% in constant currency) after adjusting for last year’s restructuring charge.
  • EPS increased 26% to $2.93.
  • Microsoft Cloud revenue surpassed $33.7 billion, up 24% (22% in constant currency).
  • Activision Blizzard acquisition closed on October 13, 2023, contributing:
    • 4 points to company-wide revenue growth
    • 2-point drag on adjusted operating income
    • $0.05 negative EPS impact

Business Segment Performance

Productivity & Business Processes
  • Revenue: $19.2 billion, up 13% (12% CC) and above expectations.
  • Office 365 Commercial: +17% (+16% CC), driven by E5 momentum and strong renewals.
  • Paid Office 365 seats exceeded 400 million, up 9% YoY.
  • Office Consumer: +5%, with Microsoft 365 subs rising 16% to 78.4 million.
  • LinkedIn: +9% (+8% CC), ahead of expectations; hiring business gained share for the 6th consecutive quarter.
  • Dynamics 365: +27% (+24% CC), with broad growth across workloads.
Intelligent Cloud
  • Revenue: $25.9 billion, up 20% (19% CC).

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Operator: Greetings, and welcome to the Microsoft Fiscal Year 2024 Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Brett Iversen, Vice President of Investor Relations. Please go ahead. Brett Iversen: Good afternoon, and thank you for joining us today. On the call with me are Satya Nadella, Chairman and Chief Executive Officer; Amy Hood, Chief Financial Officer; Alice Jolla, Chief Accounting Officer; and Keith Dolliver, Corporate Secretary and 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. More detailed outlook slides will be available on the Microsoft Investor Relations website, when we provide outlook commentary on today's call. Microsoft, completed the acquisition of Activision Blizzard this quarter and we are reporting its results in our More Personal Computing segment, beginning on October 13, 2023. Accordingly, our Xbox content and services revenue growth investor metric includes the net impact of Activision. Additionally, our press release and slide deck contains su

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