Q&A is a session under a company's earnings conference that institutional and retail investors ask some most-concerned questions to the management. On this page, you may discover info that might affect the stock price in the following weeks. $Microsoft (MSFT.US)$
Key Takeaways:
Attitudes: management believes the next quarter will also be a strong demand quarter even constrained by supply, and the execution on Cloud was well positioned.
Goals: the strong Windows performance resulting higher revenue per license results and a very strong position in Q2.
Services: competitiveness comes because of all of those cloud-layers integrated and delivering that time to value for our customers.
Congratulations on another remarkable quarter. I was hoping you could talk a little bit about the edge computing opportunity.
We will always have a cloud and then we will have a distributed cloud infrastructure for application deployment. So then when we think about our Cloud plus Edge, we put the multi-cloud control plane in there. So whether it is, what's happening with say 5G and how naturally compute will go to where data is getting generated with low latency access to a factory floor to a hospital to cities where you want to play xCloud gaming that's sort of one phenomena. I think that the multi-cloud, multi-edge world is sort of really how we built Azure in the first place and I think we’re still very early in all of that playing out, but we feel well positioned.
Commercial bookings up 14%, it's impressive, but it's slow down from last quarter's 25% against a more difficult comp. Can you just maybe anything else you would call out there and realize it’s come off the tough comps?
Large Azure commitments that create some of the tough comparables that we’re talking about. Which is Dynamics, Microsoft Cloud, GitHub in the broader universe. Our execution on that was actually quite good, very good renewals, very good recapture rates, very good add-ons, meaning you sell outside of the normal pattern. The day-to-day execution of Azure commitments actually was very consistent, the volatility comes with some of the bigger things and we — a lot of them in Q4 less on a comparable basis in Q1 and that happens from time to time.
I'd say there was a higher than normal level of worry from investors about your Windows PC segments in light of all of the unit shipment and supply chain issues, and yet you put up Windows OEM number that blew away your guidance. So, in essence, how did you dodge that bullet?
The market grew this quarter and it was constrained by supply.I believe Q2 will also we a strong demand quarter that is constrained by supply, but even with that, we see a growing market. And particularly, in both Q1 and Q2, we see a strong demand in the commercial segment. Then of course we do get some benefit because revenue per license is higher in commercial than it is in the broad market. Those things together, which is a growing market, strong Windows performance within that market in commercial in particular and then the resulting higher revenue per license results and I think a very strong position in Q1 and Q2.
With inflation at least in the U.S. increasing and likely to further accelerate due to government spending, Amy, how do you think this increasing inflation will impact your customers and your business?
I mean in an inflationary environment the first place any business should go to is how to really ensure that they are able to get productivity gains. And I think that's reflected in most of the surveys that really quite topreference for our cloud to help customers do that. So while it's hard to predict what any quarter or second half will do, the things I believe to be sustainable, our push to digital, our push to clouds would help customers get value quickly and us being a trusted advisor and partner to help that happen.
Should we think of the Azure business results kind of driven increasingly by these industry cloud type solutions away from horizontal type projects like ERP, database？
We think of the Microsoft Cloud, which includes Azure, it includes Dynamics 365, it includes Microsoft 365, it includes things like Power Platform, it includes even GitHub and VS Code. So that's why we keep stressing the full modern tech stack that makes up Microsoft Cloud. And then with the industry cloud, we add value on top of that, whether it's in retail, whether it's manufacturing, in healthcare. It's the coming together of the Microsoft Cloud and then the industry cloud adds further value on top of it. So, yes, I think ultimately our competitiveness comes because of all of those layers integrated and delivering that time to value for our customers.
This article is a script from the Q&A session of Microsoft's earnings call on Oct 26. In order to facilitate reading, we have made appropriate cuts. If you want to know more details, you can click here to re-watch the earnings call.