All-up, six million hours of speech were transcribed in March alone. Gross margin dollars increased 18 percent and 20 percent in constant currency. our next question comes from the line of Brent Thill with Jefferies. MICHAEL SPENCER: Thanks, Heather. This hybrid work is going to be there with us for a period of time. As long as business applications like ours with Dynamics 365 address the immediate, pressing needs, these are project starts that will happen because, in some sense, that's the way for economic activity to return. Thinking that through holistically is the most important thing, and that's where our focus will be. Please proceed with your question. During this call, we will be making forward-looking statements which are predictions, projections, or other statements about future events. Despite a global pandemic, Microsoft's … Microsoft Teams supports multiple communications modalities in a shared workspace.  are all using Power Platform to accelerate their automation. In More Personal Computing, we expect revenue between $11.3 and $11.7 billion. Microsoft Defender ATP now supports Linux, in addition to Windows and MacOS, with iOS and Android to come soon. Investor Relations. In Surface, the continued strong demand should drive revenue growth in the low-teens. Satya, given the incredible spike you're seeing in Teams and broader Office adoption around remote work, I guess maybe first, given how this crisis has dramatically accelerated some of these adoption curves, how do you think about the longer-term growth and monetization trajectory on Teams and Office maybe versus pre-COVID levels?Â. Overall, for the way we've always approached Teams is as a user experience and I would say a scaffolding was to sort of incorporate what's the modern way of working. : Thanks, Brent. 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. Satya talked about two years or three years, for sure. I think the migration to the cloud is absolutely a secular shift. Things will start coming back in terms of economic activity and we'll have to keep adjusting the dial. and this quarter we announced new regions in Mexico as well as in Spain. : Thanks, Raimo. And, with supply chain constraints easing, we expect a material sequential increase in our capital expenditures to support growing usage and demand for our cloud services. You have to collaborate without any fatigue. And I think that's probably not surprising. From remote teamwork and learning, to sales and customer service, to critical cloud infrastructure and security – we are working alongside customers every day to help them stay open for business in a world of remote everything. Today's call is being webcast live and recorded. One of the most exciting things to me that happened even in this COVID response was people were able to use Power Platform to build new applications in hours, put that into Teams, and then get their first-line workers to be able to track, say, for PPE, because there was no ERP system that did that. We are also expanding our opportunity with consumers with Microsoft 365 Personal and Family, which now has more than 39 million subscribers.Â. We are empowering people and organizations for a world of secure remote work and learning with Microsoft 365 and Teams. The supply chain in China returned to more normal operations at a faster pace than we had anticipated.Â, And operating margins expanded this quarterÂ, Capital expenditures including finance leases were $3.9 billion, up 15 percent year-over-year to support growing demand for our cloud services, and lower than expected, driven by COVID-19 related delays across the supply chain. I would say there is no question that moving to the public cloud, even at a time like this, is just capital efficient. Just last week, Accenture became the first organization to surpass half a million users. And, we expanded our partnership with the NFL to include Teams, which powered their first-ever virtual draft. We care about this. Most Popular. Next, the Intelligent Cloud segment. Microsoft, which belongs to the Zacks Computer - Software industry, posted revenues of $35.02 billion for the quarter ended March 2020, surpassing the Zacks Consensus Estimate by … That's the core of how we approach it. MARK MURPHY, JP Morgan: Thank you very much. Cash paid for P,P, and E was $3.8 billion. Can you talk to us a little bit about how much of that sort of assistance and how much of that you were able to actually take to revenues, if you will?  How much of that is stuff that you could actually monetize today, reverse it?  Given the customer relationship, given the focus on the long-term, you have to sort of let play out over time and it's about kind of expanding usage and expanding the relationships with customers that you expect to pay out over a longer period? Microsoft does well when our customers do well, and we are uniquely positioned to continue to invest and contribute to their future success. In closing, we will continue to work and innovate alongside our customers as their digital first responders today, and as their trusted digital transformation partners going forward. In our commercial business, our strong position in durable, growth markets means we expect consistent execution on a large annuity base, with continued usage and consumption growth across our cloud offerings. I’d like to close sharing a few thoughts as we look beyond Q4 and into the next fiscal year. : Great. In Windows, overall OEM revenue growth should be low to mid-single digits on a strong prior year comparable. Operating expense increased 12 percent and 13 percent in constant currency, driven by continued investment in LinkedIn and cloud engineering. Thanks for getting our firm up on Teams, basically, in a couple weeks. That's sort of what we use to forecast out what we commit, both in terms of capex, op-ex, innovation and customer engagement. We saw all-time record engagement this quarter, with nearly 90 million active users of Xbox Live, led by strength on and off console. One of the things is data sovereignty and security is not going to go away ever, especially in the geopolitical environment we live in. Teams is about actually getting work done where meetings and video is one part. Other income and expense should be negative $100 million as interest expense is expected to more than offset interest income. In Windows commercial products and cloud services, we expect mid-single digit revenue growth with headwinds from our transactional business and the previously mentioned sales dynamics. Windows commercial products and cloud services revenue grew 17 percent and 18 percent in constant currency, again driven by Microsoft 365 and demand for our advanced security solutions.Â. We are accelerating Teams innovation, adding new capabilities each week, and now supporting meetings of all sizes … meetings that scale from 250 active participants, to live events for up to 100,000 attendees, to streaming broadcasts.We saw more than 200 million meeting participants in a single day this month, generating more than 4.1 billion meeting minutes. Congratulations,Â, We understand there are supply chain issues have been impacting server deliveries in the quarter, and the changes in demand have been massive. And that's what you see play out. But at the same time, what is happening in a meeting is the important context that can't get lost. Please proceed with your question. Just two questions on this topic. And then, secondly, for both Satya and Amy, if COVID-19 is really creating sort of a zeitgeist opportunity for the cloud and digital transformation, how are you seeing your broadening CICD pipeline products impacting Azure's competitive position, near and longer term? Thank you for your participation. video slides. Please proceed with your question. Please proceed with your question. Power Platform is already used by more than 3.4 million citizen developers and business decision makers. And so, while we spent 3.9 in Q3, that was certainly short. OPERATOR: Thank you. Overall, first, I think I would say the current cloud architecture, whether it's at the infrastructure level or the SaaS applications with M365 or Azure, have been I think very, very helpful in us being able to all, as an economy, pivot to this new way of working, working from home, remoting all of our operations. COVID-19 has accelerated the urgent need for every business to create no-code/low-code apps and workflows in hours or days, not weeks or months. OPERATOR: Thank you. (PRNewsFoto/Microsoft Corp.) (PRNewsfoto/Microsoft Corp.) On Jan. 29, as part of our second quarter of fiscal year 2020 earnings call, we … In fact, we have marketplaces on Azure, as well as on GitHub. Now to More Personal Computing. Operator, can you please repeat your instructions. That's sort of what we use to forecast out what we commit, both in terms of capex, op-ex,Â. Security remains a strategic priority for every organization, and the shift to remote only increases the need for integrated, end-to-end Zero Trust security architecture that reduces both cost and complexity.  from GitHub to the world’s most popular code editing tool, Visual Studio Code. It'll work across cloud, so we will always ensure that it's an open community that supports all of the developer choices. In this sort of environment where there's a lot of uncertainty, with Dynamics, you're addressing some very fundamental kind of business apps. And then, the third phase is where there is going to be structural change. Very impressive quarter in a difficult time, and I hope all of you and your families are all safe and healthy. What products were released that could help with business decisions? Now more than ever, organizations are relying on Azure to stay up and running, driving increased usage. In the latest quarter, COVID-19 had a minimal net impact on total company revenue. Teams is not just about having lots and lots of video meetings. They'll all have surge demand, or even in some segments of retail, there is surge demand. That's sort of, I would say, the phase we are in broadly. And new Insider Risk Management in Microsoft 365 helps organizations detect and mitigate malicious activity. List any three and describe Companies mainly focused on producing products or services or release new or enhance the existing ones for a continued fulfillment of its promises to the market. Analysts: We expect COGS of $11.55 to $11.75 billion and operating expense of $11.8 to $11.9 billion. During the quarter, there were disruptions in Azure, Xbox Live, in Teams,Â. Please proceed with your question. If you look at one of the key considerations, as people go to remote work, is to ensure, starting with the identity to the device endpoint to the application to the information in the application and the infrastructure behind the app, you need that zero trust architecture. Twenty organizations with more than 100,000 employees are now using Teams, including Continental AG, Ernst & Young, Pfizer, and SAP. MARK MURPHY, JP Morgan: Yes, thank you. LinkedIn revenue increased 21 percent and 22 percent in constant currency as early quarter momentum was slightly offset by the slowdown in advertising. tracking the spread of COVID-19, to implementing contact tracing, to helping expand access to personal protective equipment. And that breadth in a moment, in a period like this, all the pieces are important to value, long-term here, to a company being able to transition through the phases that Satya talked about, from this initial phase of almost emergency response to a hybrid phase to ultimately what I think we all believe is a very different way and a long-term way of working, and collaborating together, and driving a digital economy. January 26, 2021. Office 365 now has 258 million paid seats. I actually have two for you. Overall, for the way we've always approached Teams is as a user experience and I would say a scaffolding was to sort of incorporate what's the modern way of working. Our next question comes from the line of Phil Winslow with Wells Fargo. For example, if you're a retailer and you now need to do contactless shopping, that is something that, for example, Dynamics is going to support for you to be able to use even commodity cameras with AI modules with all of it helping with a data model that supports shopping inside of physical stores, or curbside pickup, or even remote assistance. And commercial cloud revenue was $13.3 billion, growing 39 percent and 40 percent in constant currency. And so, while we spent 3.9 in Q3, that was certainly short, in particular, on the server side in terms of getting what we need into the datacenters. It helps people collaborate inside and outside meetings, making them more efficient and effective while reducing fatigue. Office 365 consumer subscribers grew to 39.6 million, benefiting from the increased demand noted earlier. If you ask a question, it will be included in our live transmission, in the transcript, and in any future use of the recording. Tech earnings have been strong in Q3 2020. 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. contributing to record levels of engagement across the platform in Q3. In Productivity and Business Processes, we expect revenue between $11.65 and $11.95 billion. Commercial remaining performance obligation increased 24 percent to $89 billion. Teams of people and organizations can get more done. Adaptive Biotechnologies is using our tools to decode the immune system response to the virus. Our effective tax rate was slightly above 16 percent, in line with expectations. OPERATOR: Thank you. Then, I believe as we work out here, so if you think about the next phase of recovery, it's more like a dial. I think there's a lot of opportunity here for us to continue to add value. And we are working with card issuers like American Express so merchants who use Dynamics 365 Fraud Protection can reduce fraudulent activity as they process more transactions online.In field service, the world’s largest commercial real estate services firm, CBRE, is using Dynamics 365 Remote Assist to help keep its life sciences’ tenants’ labs fully operational from afar. And, enterprise software company C3 DOT AI, founded by Tom Siebel, shifted its entire sales force to Dynamics 365 Sales in less than two weeks. Segment gross margin dollars increased 16 percent and 18 percent in constant currency and gross margin percentage increased 1 point year-over-year as improvements in Office 365 and LinkedIn margins more than offset an increase in cloud revenue mix. MICHAEL SPENCER: Thanks, Mark. MICHAEL SPENCER: Thanks, Mark. Even in this pandemic, if you look at it, of course there's no question meetings are most important. Xbox Game Pass has more than 10 million subscribers, and we are seeing increased monetization of in-game content and services. SATYA NADELLA: Thank you, Keith, for the question. Teams is not just about having lots and lots of video meetings. Moving to our overall results. Microsoft Q3 2020 Earnings Preview. : Sure. For example, the phase we are mostly in right now is that first response phase where, from business continuity perspective, people want to be able to work remotely, want to be able to conduct remote operations. we are working alongside customers every day to help them stay open for business in a world of remote everything. Digital twins, this is something I think I talked about maybe even the last earnings, even. And so, it'll have some impact as big deals always did or didn't on bookings. The FX impact on COGS growth was slightly more favorable than expected and reduced growth by 1 point. In commercial bookings, growth from healthy renewal execution on a larger Q4 expiry base will be impacted by some large commitments in the prior year and the previously mentioned sales dynamics.Â. Transcript And we continue to deliver new exclusive, first and third-party content to attract and retain gamers. Our next question comes from the line of Phil Winslow with Wells Fargo. Teams keeps all your work and communication – conversations, documents, whiteboards, and meeting notes – in context. Thousands of organizations are relying on new integration between Microsoft Teams and Power Apps to share timely information. And, governments around the world are using Power BI to share the latest COVID-19 data with their citizens. Developers are also collaborating on mission-critical projects, from tracking the spread of COVID-19, to implementing contact tracing, to helping expand access to personal protective equipment. We assume advertising spend levels from March do not improve in Q4, which will impact Search and LinkedIn. I would say there is no question that moving to the public cloud, even at a time like this, is just capital efficient.  And I would maybe add that I think, in some ways, this speaks and Alex's question goes back to the very beginning of how we feel the value sits in that Microsoft 365.  Thank you. This was the largest beat by dollar in Twilio’s history, as referenced by analyst Khozema on the earnings call. Then, I believe as we work out here, so if you think about the next phase of recovery, it's more like a dial. Now onto developer tools.We have the most complete developer toolchain independent of language, framework, or cloud – from GitHub to the world’s most popular code editing tool, Visual Studio Code. We care about this. You can replay the call and view the transcript on the Microsoft Investor Relations website. As a result, operating income grew 15 percent and 17 percent in constant currency. Operator, we'll take the next question now, please. Retailer ASOS is using Azure Sentinel to detect and mitigate threats.Â, We have the most complete developer toolchain independent of language, framework, or cloudÂ. Thank you for joining us today, and we look forward to speaking with all of you soon. Thanks, Phil. : Let me start, and Amy, you can add to it. Things got a lot better in March, and they're continuing to get better. After all, Microsoft was created as a Dev tools company first before anything else, and that means a lot to us. For Q4, Twilio expects revenue of $450M-$455M (37% YoY growth) vs. consensus of $432.1M. Leaders in every industry – from global healthcare company GSK to Coca-Cola to Toyota – are all using Power Platform to accelerate their automation. And of course, there are certain sectors, like the healthcare sector, there is even education obviously, as well as some of the public sector organizations. 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. I'm interested in whether you see the current environment as a net tailwind or a net headwind on Azure growth, just as we try to weigh the idea of the pandemic as a forcing function to adopt cloud a little more rapidly versus, on the other hand, potential economic pressure on IT budgets. I think that there are ways for us to participate in what ultimately will be productivity growth, but our immediate term, we're mostly building out the relationships, adding new customers, adding intensity and usage in existing relationships, which all, in the long term, will play out in terms of economics for us, as well. And, the world’s largest companies – like ABInBev and Mars – continue to migrate their SAP workloads to our cloud. And we'll obviously want to monetize these as appropriate at different levels of subscription we have for M365. AMY HOOD: And I think that you would say that we've seen that in our pipeline and really in the customer demand scenarios. Upcoming Microsoft FY21 Q2 Earnings. This is what is sort of going to be high priority. And that's where we shine. Operating income increased 25 percent and 28 percent in constant currency. In fact, some of the stats I shared even around some of the number of business process applications that are getting integrated. These are some of the examples I even used in my script. : Thanks, Heather. And our acquisition of Affirmed Networks will help operators deploy and maintain 5G networks and services cost effectively and securely.From BlackRock to Coca-Cola to Genesys – leading companies in every industry are choosing Azure. In Office consumer we expect low single digit revenue growth, down sequentially, as subscription growth is offset by a slowdown in our Office 2019 transactional business. Our next question comes from the line of Heather Bellini with Goldman Sachs. Cash paid forÂ, In our commercial business, our strong position in durable, growth marketsÂ, In Surface, the continued strong demand should drive revenue growth in theÂ, In Search ex-TAC, we expect revenue to decline in the mid 20 percent rangeÂ, And in Gaming, we expect revenue growth in theÂ. Our commercial revenue annuity mix increased 2 points year-over-year to 92 percent. There's no turning back, for example, in telemedicine. Satya Nadella — Chief Executive Officer. The way you would have seen a little bit of weakness, I guess, in on-premises Office Commercial due to transactional weakness and maybe SMB. Microsoft Corporation (MSFT Quick Quote MSFT - Free Report) is set to report third-quarter fiscal 2020 results on Apr 29, after market close.Over the … Now, onto Gaming.People everywhere are turning to gaming to sustain human connection while practicing social distancing. RAIMO LENSCHOW, Barclays: Okay, thanks. There is both immediate surge demand, and systemic, structural changes acrossÂ. Satya, I know in your prepared remarks you mentioned how Microsoft continues to broaden its relevancy with developers from GitHub, Visual Studio, Visual Studio Code, DevOps, dev server and most recently obviously a multi-cloud infrastructure as a code with Azure Arc.Â. At the same time, think of this is we are building essentially what we did with Microsoft 365 for knowledge workers and first-line workers.  And the one scenario I should mention is, for anyone you know who's looking to say how do I continue to generate revenue, remote sales, for example, is going to be a very critical scenario, and there's no better solution than the combination of Dynamic sales and LinkedIn sales navigator to be able to drive especially B2B sales. And our on-premises server business grew 11 percent and 12 percent in constant currency driven by the demand for our hybrid and premium solutions and continued benefit from the end of support for Windows Server 2008. Thousands of organizations are relying on new integration between Microsoft Teams and Power Apps to share timely information.Â,  from global healthcare company GSK to Coca-Cola to ToyotaÂ. Windows 10 now has more than 1 billion monthly active devices, up 30 percent year-over-year, and we are seeing demand for Windows 10 PCs – from small screens to large screens to dual-screens.Now onto Security. Patagonia is using Dynamics 365 Commerce to rapidly move to new, more intelligent distribution and fulfillment models, including contactless shopping. Third party analysts affirm our leadership as the only company that offers comprehensive identity, security, and compliance solutions.This quarter, we introduced new capabilities to protect customer data no matter where it resides. VIEW DETAILS. In Azure, revenue growth will again be driven by our consumption-based business, with continued strong growth across our customer base, though we expect some moderation in the most impacted industries and segments. In fact, we have marketplaces on Azure, as well as on GitHub. OPERATOR: Thank you. If you can create an Excel spreadsheet, you can create an app, build a virtual agent, automate a workflow, analyzeÂ, In just two weeks, Swedish Health Services, the largest non-profit health provider in the Seattle area, used Power Apps to track critical supplies. : I apologize. Unless otherwise specified, we will refer to non-GAAP metrics on the call. Q3 guidance.