Q3 2020 Earnings Call

April 29, 2020

Greetings and welcome to the Microsoft Fiscal Year 2020 Third 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.

Greetings, and welcome to the Microsoft Fiscal Year 2020 Third 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. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. (Operator Instructions) As a reminder, this conference is being recorded.

Greetings and welcome to the Microsoft fiscal year, 2023rd quarter earnings Conference call.

I would now like to turn the conference over to your host, Mr. Mike Spencer, General Manager of Investor Relations for Microsoft. Thank you. You may begin. I would now like to turn the conference over to your host, Mr. Mike Spencer, General Manager of Investor Relations for Microsoft.

At this time all participants are in listen only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance. During the conference. Please press star zero under telephone keypad.

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.

If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded.

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 third-quarter performance in addition to the impact these items and events have on the financial results.

Under this conference is being recorded.

I would now like to turn the conference over to your host, Mr. Mike Spencer, General Manager of Investor Relations for Microsoft. Thank you. You may begin.

I'd now like for Tenda conference over to your host Mr., Mike Spencer General manager of Investor Relations for Microsoft thinking you may begin.

Thank you. You may begin. Good afternoon, and thank you for joining us today.

Good afternoon, and thank you for joining us today on the call with me are such a dollar Chief Executive Officer.

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, Frank Broad, Chief Accounting Officer, and Keith Oliver, 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 reconciliation of differences between GAAP and non-GAAP financial measures.

Michael Spencer: Good afternoon, and thank you for joining us today.

Michael Spencer: On the call with me are Satya Nadella, Chief Executive Officer; Amy Hood, Chief Financial Officer; Frank Broad, Chief Accounting Officer; and Keith Oliver, Deputy General Counsel. 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.

Hi, Chief Financial Officer, Frank broke Chief Accounting Officer, and keep the Oliver Deputy General Counsel.

Michael Spencer: 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 reconciliation of differences between GAAP and non-GAAP financial measures. 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.

On the Microsoft Investor Relations website, you can find earnings press release, and financial summary, slide deck, which in set 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.

Michael Spencer: 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 third quarter performance in addition to the impact these items and events have on the financial results.

Michael Spencer: Unless otherwise specified, we will refer to non-GAAP metrics on the call. However, 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.

Unless otherwise specified we will refer to non-GAAP metrics on the call. The non-GAAP financial measures provided should not be consider a substitute for or superior to the measures of financial performance prepared in accordance with cap.

Michael Spencer: They are included as additional clarifying items to aid investors in further understanding the company's third-quarter performance in addition to the impact these items and events have on the financial results. However, 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 third-quarter performance in addition to the impact these items and events have on the financial results.

They are included as additional clarifying items to eat investors and further understanding the company's third quarter performance. In addition to the impact these items and events have on the financial results.

Michael Spencer: All growth comparisons we make on the call today relate to the corresponding period last year, unless otherwise noted.

Michael Spencer: All growth comparisons we make on the call today relate to the corresponding period of last year, unless otherwise noted. We also provide growth rates in constant currency when available as a framework for assessing how our underlying business is performed, excluding the effect of foreign currency rate fluctuations.

Michael Spencer: All growth comparisons we make on the call today relate to the corresponding period of last year, unless otherwise noted. All growth comparisons we make on the call today relate to the corresponding period last year, unless otherwise noted.

All growth comparisons, we make him a called they relate to the corresponding period like last year unless otherwise noted we also provide growth rates in constant currency when available as a framework for assessing our underlying business has performed excluding the effect of foreign currency rate fluctuations or growth rates are the same accounts currency, we were pretty growth rate only.

Michael Spencer: We also provide growth rates in constant currency when available as a framework for assessing how our underlying business is performing, excluding the effect of foreign currency rate fluctuations. We 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. We 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.

Michael Spencer: Where growth rates are the same in constant currency, we'll refer to growth rates only. Where growth rates are the same in constant currency, we'll refer to growth rates only.

Michael Spencer: We're growth rates are the same in constant currency. We will refer to growth rate only.

Michael Spencer: We're growth rates are the same in constant currency, so we will refer to growth rates only.

Michael Spencer: We will post our prepared remarks on our website immediately following the call until the complete transcript is available.

Michael Spencer: We will post our prepared remarks to our website immediately following the call until the complete transcript is available. Today's call is being webcast live and recorded. If you ask a question, it will be included in our live transmission, in the transcript, and in any future use of the recording.

Michael Spencer: We will post our prepared remarks to our website immediately following the call until the complete transcript is available. Today's call is being webcast live and recorded.

We will close our prepared remarks through our website immediately following the call.

Michael Spencer: If you ask a question, it will be included in our live transmission, in the transcript, and in any future use of the recording. If you ask a question, it will be included in our live transmission, in the transcript, and in any future use of the recording.

On a complete transcript is available days called being webcast Library Gordon If you ask question. It will be included in our life transaction in the transcript and then any future use of the recording.

Michael Spencer: Today's call is being webcast live and recorded. You can replay the call and view the transcript on the Microsoft Investor Relations website.

Michael Spencer: You can replay the call and view the transcript on the Microsoft Investor Relations website.

Michael Spencer: You can replay the call and view the transcript on the Microsoft Investor Relations website. You can replay the call and view the transcript on the Microsoft Investor Relations website.

You can replay the call and view the transcript on the Microsoft Investor Relations website.

Michael Spencer: During this call, we will be making forward-looking statements, which are predictions, projections, or other statements about future events. During this call, we will be making forward-looking statements, which are predictions, projections, or other statements about future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties.

Michael Spencer: During this call, we will be making forward-looking statements, which are predictions, projections, or other statements about future events.

During this call will be making forward looking statements, which our predictions projections or other statements about future events.

Michael Spencer: These statements are based on current expectations and assumptions that are subject to risks and uncertainty.

These statements are based on current expectations and assumptions that are subject to risks and uncertainties.

Speaker Change: Actual results could materially differ because of factors discussed in today's earnings press release, in the comments made during this conference call, and in the risk factor section of Form 10-K, Forms 10-Q, and other reports and filings with the Security Exchange Commission. We do not undertake any duty to update any forward-looking statement. And with that, I'll turn the call over to Satya.

Speaker Change: Actual results could materially differ because of factors discussed in today's earnings press release, in the comments made during this conference call, and in the risk factor section of Form 10-K, Forms 10-Q, and other reports and filings with the Securities Exchange Commission. We do not undertake any duty to update any forward-looking statement.

Actual results could materially different because it factors discussed in today's earnings press release in the comments made during this conference call.

And then the risk factor section that form 10-K forms 10-Q, and other reports and filings with the Securities Exchange Commission, we did not undertake any duty to update any forward looking statement and with that I'll turn the call over to Sasha.

Speaker Change: And with that, I'll turn the call over to Satya. Actual results could materially differ because of factors discussed in today's earnings press release, in the comments made during this conference call, and in the Risk Factors section of Form 10-K, Forms 10-Q, and other reports and filings with the Securities and Exchange Commission. We do not undertake any duty to update any forward-looking statement.

Speaker Change: And with that, I'll turn the call over to Satya. Thank you, Mike.

Thank you Mike.

Satya Nadella: Thank you, Mike.

Satya Nadella: Thank you, Mike. We delivered double-digit top line and bottom line growth once again this quarter, driven by the strength of our commercial cloud.

Satya Nadella: We deliver double-digit top-line and bottom-line growth once again this quarter, driven by the strength of our commercial cloud. As COVID-19 impacts every aspect of our work and life, we have seen two years' worth of digital transformation in two months.

Satya Nadella: We delivered double-digit top-line and bottom-line growth once again this quarter, driven by the strength of our commercial cloud. As COVID-19 impacts every aspect of our work and life, we have seen two years' worth of digital transformation in two months.

We delivered double digit topline and bottom line growth once again this quarter driven by the strength of our commercial cloud.

Satya Nadella: During this call, we will be making forward-looking statements, which are predictions, projections, or other statements about future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could materially differ because of factors discussed in today's earnings press release, in the comments made during this conference call, and in the Risk Factors section of Form 10-K, Forms 10-Q, and other reports and filings with the Securities and Exchange Commission. We do not undertake any duty to update any forward-looking statement.

That's covert 19 impacts every aspect of all walk in life, we have seen two years' worth of digital transformation in two months.

Satya Nadella: And with that, I'll turn the call over to Satya.

Satya Nadella: As COVID-19 impacts every aspect of our work and life, we have seen 2 years' worth of digital transformation in 2 months. 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.

Satya Nadella: 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. There is both immediate surge demand and systemic structural changes across all of our solution areas that will define the way we live and work going forward.

From remote team walk in 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.

Satya Nadella: There is both immediate surge demand and systemic structural changes across all of our solution areas that will define the way we live and work going forward.

Satya Nadella: There is both immediate surge demand and systemic structural changes across all of our solution areas that will define the way we live and work going forward. Our diverse portfolio, durable business models, and differentiated technology stack across the cloud and the edge position us well for what's ahead.

That is both immediate so Jim on and systemic structural changes across all about solution areas that will define the way, we live and work going forward.

Satya Nadella: Our diverse portfolio, durable business models, and differentiated technology stack across the cloud and the edge position us well for what's ahead. And now I'll highlight our innovation and momentum, starting with modern work.

Satya Nadella: Our diverse portfolio, durable business models, and differentiated technology stack across the cloud and the edge position us well for what's ahead. We delivered double-digit top line and bottom line growth once again this quarter, driven by the strength of our commercial cloud.

Diverse portfolio durable business models, and differentiated technology stack across the cloud in the edge position us well for what's ahead.

Satya Nadella: And now I'll highlight our innovation and momentum, starting with modern work. As COVID-19 impacts every aspect of our work and life, we have seen 2 years' worth of digital transformation in 2 months. 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.

Satya Nadella: And now I'll highlight our innovation and momentum, starting with modern work. We are empowering people and organizations for a world of secure remote work and learning with Microsoft 365 and Teams.

Now I'll highlight our innovation momentum starting with modern look.

Satya Nadella: Thank you, Mike.

Satya Nadella: We are empowering people and organizations for a world of secure remote work and learning with Microsoft 365.

We had empowering people in organizations for world of secure all remote walk in learning with Microsoft 365 and teams.

Satya Nadella: As work norms evolve, organizations are realizing they need a comprehensive solution that brings together communications, collaboration, and business processes built on a foundation of security and privacy. As work norms evolve, organizations are realizing they need a comprehensive solution that brings together communications, collaboration, and business processes, built on a foundation of security and privacy.

As well known googles organizations are realizing they need a comprehensive solution that brings together communications collaboration and business process built on a foundation a security and privacy Microsoft team supports multiple communications modalities in a shed work space, it's the only solution with meetings coal.

Satya Nadella: Microsoft Teams supports multiple communications modes in a shared work space.

Satya Nadella: Microsoft Teams supports multiple communications modalities in a shared workspace. It's the only solution with meetings, calls, chat, collaboration, and with the power of office and business process workflows in a single integrated user experience with the highest security as well as compliance.

Satya Nadella: Microsoft Teams supports multiple communications modalities in a shared workspace. Teams keeps all your work in communication, conversations, documents, whiteboards, and meeting notes in context.

Satya Nadella: It's the only solution with meetings, calls, chat, collaboration, and the power of office and business process workflows in a single integrated user experience with the highest security as well as compliance. It's the only solution with meetings, calls, chat, collaboration, and the power of office and business process workflows in a single integrated user experience with the highest levels of security as well as compliance.

All chat to collaboration and the part with the power of office and business process workflows in a single integrated user experience with the highest security as well as compliance teams keeps all your work in communication conversations documents White board meeting nodes in context, it helps people culture.

Satya Nadella: Teams keeps all your work and communication, conversations, documents, whiteboards, and meeting notes in context. It helps people collaborate inside and outside.

Satya Nadella: Teams keeps all your work and communication, conversations, documents, whiteboards, and meeting notes in context. It helps people collaborate inside and outside. It helps people collaborate inside and outside meetings, making them more efficient and effective while reducing fatigue.

Satya Nadella: Microsoft Teams supports multiple communications modes in a shared work space. It's the only solution with meetings, calls, chat, collaboration, and the power of Office and business process workflows in a single integrated user experience with the highest levels of security as well as compliance.

Operate inside and outside meetings, making them more efficient effective while reducing fatigue.

Satya Nadella: Making them more efficient, effective, while reducing

Satya Nadella: We're accelerating Teams innovation, adding new capabilities each week, and now support meetings of all sizes, meetings that scale from 250 active participants to live events for up to 100,000 attendees to streaming broadcasts.

Satya Nadella: Making them more efficient and effective while reducing

Satya Nadella: We're accelerating Teams innovation, adding new capabilities each week and now support meetings of all sizes. Meetings that scale from 250 active participants to live events for up to 100,000 attendees to streaming broadcasts.

Satya Nadella: We're accelerating Teams innovation, adding new capabilities each week, and now support meetings of all sizes, from 250 active participants to live events for up to 100,000 attendees to streaming broadcasts.

Good accelerating teams innovation, adding new capabilities, each week and now support meetings of all sizes meetings that scale from 250 active participants live events for up to 100000 attendees to streaming broadcast.

Satya Nadella: We saw more than 200 million meeting participants in a single day this month, generating more than 4.1 billion meeting minutes.

Satya Nadella: We saw more than 200 million meeting participants in a single day this month, generating more than 4.1 billion meeting minutes. Teams now has more than 75 million daily active users engaging in rich forms of communication and collaboration. And two-thirds of them shared, collaborated, or interacted with files on Teams. And number of organizations integrating their third-party and line-of-business apps with Teams has tripled in the past two months.

Satya Nadella: We saw more than 200 million meeting participants in a single day this month, generating more than 4.1 billion meeting minutes.

So more than 200 million meeting participants in a single day. This month generating more than 4.1 billion meeting minutes teams now has more than 75 million daily active users engaging in rich forms of communication and collaboration and two thirds of them shed collaborated or interacted with files on.

Satya Nadella: Teams now has more than 75 million daily active users engaging in rich forms of communication and collaboration, and two-thirds of them shared, collaborated, or interacted with files on Teams.

Satya Nadella: And the number of organizations integrating their third-party and line-of-business apps with Teams has tripled in the past two months. And the number of organizations integrating their third-party and line of business apps with Teams has tripled in the past 2 months.

Satya Nadella: Teams now has more than 75 million daily active users engaging in rich forms of communication and collaboration, and 2/3 of them shared, collaborated on, or interacted with files on Teams.

Teens and number of organizations integrating that third party in line of business apps with teens.

Satya Nadella: In health care alone, there were more than 34 million Team meetings in the past month.

Tripled in the past two months.

Satya Nadella: In healthcare alone, there were more than 34 million Teams meetings in the past month. New capabilities enable providers like Northwell Health, New York State's largest health provider, to deliver first-class telehealth. And the NHS in the United Kingdom is using Teams to ensure staff have the tools they need to do their vital work.

Satya Nadella: In healthcare alone, there were more than 34 million Teams meetings in the past month. New capabilities enable providers like Northwell Health, New York State's largest health provider, to deliver first-class telehealth. New capabilities enable providers like Northwell Health, New York State's largest health provider, to deliver first-class telehealth.

In health care of alone they were more than 34 million teens meetings in the past month, new capabilities enable providers like North will help New York State largest health provider to deliver flows blocks tele health and the NHS in the United Kingdom is using teams to ensure staff helped the tools they need to do they have like look.

Satya Nadella: And the NHS in the United Kingdom is using Teams to ensure staff have the tools they need to do their vital work. And the NHS in the United Kingdom is using Teams to ensure staff have the tools they need to do their vital work.

Satya Nadella: Teams keeps all your work in communication, conversations, documents, whiteboards, and meeting notes in context. It helps people collaborate inside and outside meetings, making them more efficient and effective while reducing fatigue.

Satya Nadella: Now that home offices are doubling as home schools, educational outcomes are at a premium.

Now that home offices are doubling its home schools educational outcomes that are at a premium the combination of teams and curriculum in one note and social learning with flip grid gift teachers, a completely more remote learning solution. So that they can improve student outcomes.

Satya Nadella: Now that home offices are doubling as homeschools, educational outcomes are at a premium. The combination of teams and curriculum in OneNote and social learning with Flipgrid give teachers a complete remote learning solution so that they can improve student outcomes.

Satya Nadella: Now that home offices are doubling as homeschools, educational outcomes are at a premium.

Satya Nadella: The combination of teams and curriculum in OneNote and social learning with Flipgrid gives teachers a complete remote learning solution so that they can improve student outcomes. The combination of Teams, curriculum in OneNote, and social learning with Flipgrid gives teachers a complete remote learning solution so that they can improve student outcomes.

Satya Nadella: We saw more than 200 million meeting participants in a single day this month, generating more than 4.1 billion meeting minutes. Teams now has more than 75 million daily active users engaging in rich forms of communication and collaboration, and 2/3 of them shared, collaborated, or interacted with files on Teams. A number of organizations integrating their third-party and line of business apps with Teams has tripled in the past 2 months. Additionally, more than 183,000 educational institutions now rely on Teams.

Satya Nadella: More than 183,000 educational institutions now rely on...

More than 180 to 3000 educational institutions now rely on teams.

Satya Nadella: In the United Arab Emirates, more than 350,000 students are using Teams. In the United Arab Emirates, more than 350,000 students are using Teams.

Satya Nadella: In Italy, the University of Bologna chose Teams to move 90% of their courses for 80,000 students online in just three days. In Italy, the University of Bologna chose Teams to move 90% of their courses for 80,000 students online in just 3 days.

Satya Nadella: In the United Arab Emirates, more than 350,000 students are using Teams. In Italy, the University of Bologna chose Teams to move 90% of their courses for 80,000 students online in just three days.

The United Arab Emirates more than 350000 students are using teams in Italy. The University of millennia chose teams do move 90% of their courses for 80000 students online in just three days.

Satya Nadella: 20 organizations with more than 100,000 employees are now using Teams, including Continental AG, Ernest & Young, Pfizer, and SAP. Just last week, Accenture became the first organization to surpass half a million users.

Satya Nadella: 20 organizations with more than 100,000 employees are now using Teams, including Continental AG, Ernest & Young, Pfizer, and SAP. 20 organizations with more than 100,000 employees are now using Teams, including Continental AG, Ernst & Young, Pfizer, and SAP.

20 organizations with more than 100000 employees are now using teams, including Continental AG honest in young fives and Sep just last week Accenture became the first organization to support half a million users and we expanded our partnership with NFL do include teams, which followed that first ever virtual draft.

Satya Nadella: Just last week, Accenture became the first organization to surpass half a million users. Just last week, Accenture became the first organization to surpass 0.5 million users.

Satya Nadella: In health care alone, there were more than 34 million Teams meetings in the past month. New capabilities enable providers like Northwell Health, New York state's largest health provider, to deliver first-class telehealth. And the NHS in the United Kingdom is using Teams to ensure staff have the tools they need to do their vital work.

Satya Nadella: And we expanded our partnership with NFL to include Teams, which powered their first-ever virtual draft. More broadly, we continue to see momentum with organizations across Microsoft 365.

More broadly.

Satya Nadella: More Broadly

Satya Nadella: More Broadly, we continue to see momentum with organizations across Microsoft 365.

Satya Nadella: Now that home offices are doubling as home schools, educational outcomes are at a premium. The combination of Teams and Curriculum in one node and social learning with Flipgrid gives teachers a complete remote learning solution so that they can improve student outcomes. More than 183,000 educational institutions now rely on Teams.

Satya Nadella: We continue to see momentum with organizations across Microsoft 365.

We continue to see momentum with organizations across Microsoft 365.

Satya Nadella: Office 365 now has 258 million pages.

Officethree six five now has 258 million paid seats usage of windows virtual desktop tripled this quarter as organizations deploy virtual desktops and apps on azure to enable secure remote work.

Satya Nadella: Office 365 now has 258 million paid seats.

Satya Nadella: Usage of Windows Virtual Desktop tripled this quarter as organizations deploy virtual desktops and apps on Azure to enable secure remote work.

Satya Nadella: Usage of Windows Virtual Desktop tripled this quarter as organizations deploy virtual desktops and apps on Azure to enable secure remote work. Usage of Windows virtual desktops tripled this quarter as organizations deploy virtual desktops and apps on Azure to enable secure remote work.

Satya Nadella: From interpublic group and caller to Vodafone, the world's leading companies are choosing Microsoft 365 as their productivity cloud.

Satya Nadella: From Interpublic Group and Caller to Vodafone, the world's leading companies are choosing Microsoft 365 as their productivity cloud. From Interpublic Group [and Coca-Cola] to Vodafone, the world's leading companies are choosing Microsoft 365 as their productivity cloud.

From Interpublic group and color to Vodafone the world's leading companies are choosing Microsoft 365 out that productivity cloud.

Satya Nadella: And we continue to see strong demand for our premium offerings from customers like Mastercard, Autodesk, AARP, and Coca-Cola, which chose not only Microsoft 365 but Dynamics 365 and Azure in a 5-year multi-cloud agreement.

Satya Nadella: And we continue to see strong demand for our premium offerings from customers like MasterCard, Autodesk, AARP, and Coca-Cola, which shows not only Microsoft 365, but Dynamics 365 and Azure in a five-year multi-cloud agreement.

Satya Nadella: And we continue to see strong demand for our premium offerings from customers like MasterCard, Autodesk, AARP, and Coca-Cola, which includes not only Microsoft 365 but Dynamics 365 and Azure in a five-year multi-cloud agreement.

And we continue to see strong demand for our premium offerings from customers like Mastercard, Autodesk ERP and Coca Cola, we chose not only Microsoft through six five by dynamics 306, five and Azure in a five year multi cloud agreement.

Satya Nadella: 20 organizations with more than 100,000 employees are now using Teams, including Continental AG, Ernst & Young, Pfizer, and SAP. Just last week, Accenture became the first organization to surpass 0.5 million users.

Satya Nadella: And we expanded our partnership with NFL to include Teams, which powered their first-ever virtual draft. We're also expanding our opportunity with consumers with Microsoft 365 Personal and Family, which now has more than 39 million subscribers, and we're bringing Teams to consumers for the first time so that they can stay connected with family and friends.

Satya Nadella: We're also expanding our opportunity with consumers with Microsoft 365 Personal and Family, which now has more than 39 million subscribers. And we're bringing teams to consumers for the first time so that they can stay connected with family and friends.

We're also expanding our opportunity with consumers with Microsoft three six by personal and family, which now has more than 39 million subscribers and we're bringing teams to consumers for the first time. So they can stay connected with family and friends.

Satya Nadella: Windows 10 now has more than 1 billion monthly active devices, up 30% year-over-year, and we are seeing demand for Windows 10 PCs from small screens to large screens to dual screens.

Satya Nadella: Windows 10 now has more than 1 billion monthly active devices, up 30% year-over-year, and we are seeing demand for Windows 10 PCs, from small screens to large screens to dual screens.

I understand now has more than 1 billion monthly active devices up 30% year over year up and we are seeing demand for windows 10, Pcs from small screen large screens to dual screen.

Satya Nadella: More broadly, we continue to see momentum with organizations across Microsoft 365. From Interpublic Group to Vodafone, the world's leading companies are choosing Microsoft 365 as their productivity cloud.

Satya Nadella: Office 365 now has 258 million paid seats. Usage of Windows virtual desktops tripled this quarter as organizations deploy virtual desktops and apps on Azure to enable secure remote work.

Satya Nadella: And we continue to see strong demand for our premium offerings from customers like Mastercard, Autodesk, AARP, and Coca Cola, which chose not only Microsoft 365 for Dynamics 365 but Azure in a 5-year multi-cloud agreement.

Satya Nadella: Now on to security.

Satya Nadella: Now on to security. Security remains a strategic priority for every organization, and the shift to remote access only increases the need for integrated end-to-end zero-trust security architecture that reduces both cost and complexity.

Now onto security security remains a strategic priority for every organization and the shift remote only increases the need for integrated end to end Zero Trust security architecture that reduces both cost and complexity.

Satya Nadella: 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.

Satya Nadella: Security remains a strategic priority for every organization, and the shift to remote access only increases the need for integrated end-to-end zero-trust security architecture that reduces both cost and complexity.

Satya Nadella: Third-party analysts affirm our leadership as the only company that offers comprehensive identity, security, and compliance solutions. Third-party analysts affirm our leadership as the only company that offers comprehensive identity, security, and compliance solutions.

Satya Nadella: Third-party analysts affirm our leadership as the only company that offers comprehensive identity, security, and compliance solutions.

Body analysts a pharma leadership at the only company that off as comprehensive identity security and compliance solutions. This quarter, we introduce new capabilities to protect customer data no matter, where did resides Microsoft defender ATP now support Linux in addition to windows and makeover with iOS and Android.

Satya Nadella: This quarter, we introduced new capabilities to protect customer data no matter where it resides.

Satya Nadella: This quarter, we introduce new capabilities to protect customer data no matter where it resides. Microsoft Defender ATP now supports Linux in addition to Windows and macOS, with iOS and Androids to come soon. And new insider risk management in Microsoft 365 helps organizations detect and mitigate malicious activity.

Satya Nadella: This quarter, we introduce new capabilities to protect customer data no matter where it resides.

Satya Nadella: Microsoft Defender ATP now supports Linux in addition to Windows and macOS, with iOS and Android to come soon. Microsoft Defender ATP now supports Linux in addition to Windows and macOS, with iOS and Android to come soon.

Satya Nadella: And new insider risk management in Microsoft 365 helps organizations detect and mitigate malicious activity. A new insider risk management feature in Microsoft 365 helps organizations detect and mitigate malicious activity.

Satya Nadella: We're also expanding our opportunity with consumers with Microsoft 365 Personal and Family, which now has more than 39 million subscribers, and we're bringing Teams to consumers for the first time so that they can stay connected with family and friends.

Do come soon and new inside the risk management, and Microsoft 365 helps organizations detect and mitigate malicious activity.

Satya Nadella: The world's largest hedge fund, Bridgewater Associates, is using security services built into Microsoft 365 to protect employees and core services in a zero-trust environment.

Satya Nadella: The world's largest hedge fund, Bridgewater Associates, is using security services built into Microsoft 365 to protect employees and core services in a zero-trust environment. Retailer Asos is using Azure Sentinel to detect and mitigate threats. And the need to secure remote identity and access management is increasing demand for Azure Active Directory, now at 300 million active users.

Satya Nadella: The world's largest hedge fund, Bridgewater Associates, is using security services built into Microsoft 365 to protect employees and core services in a zero-trust environment.

The worlds largest hedge fund Bridgewater associates since using security services built into Microsoft three centsfive to protect employees and core services in a zero trust involvement retailer resources, using azure Sentinel to detect and mitigate threats and the need to secure remote identity and access management is increasing demand for Andrew.

Satya Nadella: Retailer Asos is using Azure Sentinel to detect and mitigate threats. [Retail Resource] is using Azure Sentinel for detection and mitigation.

Satya Nadella: And the need for secure remote identity and access management is increasing demand for Azure Active Directory, which now has 300 million active users. And the need for secure remote identity and access management is increasing demand for Azure Active Directory, which now has 300 million active users.

Satya Nadella: 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.

Satya Nadella: Microsoft Defender ATP now supports Linux in addition to Windows and macOS, with iOS and Android to come soon. A new insider risk management feature in Microsoft 365 helps organizations detect and mitigate malicious activity.

About active directory now at 300 million active users.

Satya Nadella: Now on to developer tools.

Satya Nadella: Now on to developer tools, we have the most complete developer tool chain independent of language, framework, or cloud from GitHub to the world's most popular code editing tool, Visual Studio Code, and our developer relevance is increasing.

Satya Nadella: Now on to developer tools, we have the most complete developer tool chain independent of language, framework, or cloud, from GitHub to the world's most popular code-editing tool, Visual Studio Code, and our developer relevance is increasing. We have the most complete developer tool chain, independent of language, framework, or cloud, from GitHub to the world's most popular code editing tool, Visual Studio Code. And our developer relevance is increasing.

No I want to develop a tools we have the most complete develop a tool chain independent of language framework of cloud from get help to the world's most popular coded cutting tool visuals duty code.

Satya Nadella: For over a decade, developers have come together remotely on GitHub to build the world's software.

And our developer relevance is increasing for over a decade developers have come together remotely on get help to build the world's software as of today, we have 50 million developers on get help.

Satya Nadella: For over a decade, developers have come together remotely on GitHub to build the world's software. As of today, we have 50 million developers on GitHub. From Twilio to the U.S. Department of Veterans Affairs to more than 10,000 engineers at Daimler, GitHub is where developers go from idea to code and code to cloud. 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.

Satya Nadella: For over a decade, developers have come together remotely on GitHub to build the world's software. As of today, we have 50 million developers on GitHub.

Satya Nadella: From Twilio to the U.S. Department of Veterans Affairs to more than 10,000 engineers at Daimler, GitHub is where developers go from idea to code and code to cloud. GitHub 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. As of today, we have 50 million developers on GitHub. From Twilio to the U.S. Department of Veterans Affairs to more than 10,000 engineers at Daimler, GitHub is where developers go from idea to code and code to cloud. 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.

Too early to the US Department of Veterans Affairs to more than 10000 engineers, a dime the get up is where developers goal from idea to code and code to cloud developers are also collaborating on mission critical projects from tracking the spread of covert 19 to implementing contact racing to helping expand access to personal.

Satya Nadella: The world's largest hedge fund, Bridgewater Associates, is using security services built into Microsoft 365 to protect employees and core services in a zero-trust environment.

Satya Nadella: Retail Array is using Azure Sentinel to detect and mitigate threats.

Satya Nadella: And the need for secure remote identity and access management is increasing demand for Azure Active Directory, which now has 300 million active users.

Active equipment.

Satya Nadella: We are bringing GitHub to even more developers, making core features free for the first time for teams of any size. And our acquisition of NPM makes GitHub the largest software repository for JavaScript.

We are bringing good hub it even more developers, making core features free for the first time for teams of any size and our acquisition of NPM makes get help the largest software depository Java script.

Satya Nadella: We are bringing GitHub to even more developers, making core features free for the first time for teams of any size. And our acquisition of npm makes GitHub the largest software repository for JavaScript.

Satya Nadella: Now on to Power Platform.

Satya Nadella: Now on to the Power Platform. Now on to the power platform.

Now onto Paul platform.

Satya Nadella: 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.

Covert 19 has accelerated the urgent need for every business to create no code locomote apps and workflows in hours or days not weeks or months power platform is already used by more than 3.4 million citizen developers and business decision makers. If you can create an excel spreadsheet you can create an app builder virtual ADC.

Satya Nadella: Now on to developer tools. We have the most complete developer tool chain, independent of language, framework, or cloud, from GitHub to the world's most popular code editing tool, Visual Studio Code. And our developer relevance is increasing.

Satya Nadella: Power Platform is already used by more than 3.4 million citizen developers and business decision-makers.

Satya Nadella: Power Platform is already used by more than 3.4 million citizen developers and business decision makers. If you can create an Excel spreadsheet, you can create an app, build a virtual agent, automate a workflow, analyze data, and share insights in real time. In just two weeks, Swedish Health Services, the largest non-profit health provider in the Seattle area, used Power Apps to track critical supplies. Thousands of organizations are relying on new integration between Microsoft Teams and Power Apps to share timely information.

Satya Nadella: In just two weeks, Swedish Health Services, the largest non-profit health provider in the Seattle area, used Power Apps to track critical supplies. In just 2 weeks, Swedish Health Services, the largest nonprofit health provider in the Seattle area, used Power Apps to track critical supplies.

And automated workflow analyze data and share insights in real time in just two weeks Swedish health services, the largest nonprofit health providers in the Seattle area use power apps to track critical supply thousands of organizations are relying on new integration between Microsoft teams and power apps to share.

Satya Nadella: Thousands of organizations are relying on the new integration between Microsoft Teams and Power Apps to share timely information. Thousands of organizations are relying on the new integration between Microsoft Teams and Power Apps to share timely information.

Satya Nadella: If you can create an Excel spreadsheet, you can create an app, build a virtual agent, automate a workflow, analyze data, and share insights in real time. And governments around the world are using Power BI to share the latest COVID-19 data with their citizens.

Timely information.

Satya Nadella: and governments around the world are using Power BI to share the latest COVID-19 data with their citizens.

Satya Nadella: 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.

And governments around the world using power B. I shared the latest cobot 19 data with that citizens.

Satya Nadella: Leaders in every industry, from global healthcare company GSK to Coca-Cola to Toyota, are all using Power Platform to accelerate their automation.

Satya Nadella: Leaders in every industry, from global healthcare company GSK to Coca-Cola to Toyota, are all using Power Platform to accelerate their automation. Leaders in every industry, from the global health care company GSK to Coca-Cola to Toyota, are all using Power Platform to accelerate their automation.

Leaders in every industry from global Healthcare company GSK to Coca Cola, Toyota or all using Paul platform to accelerate their automation.

Satya Nadella: Now on to Dynamics 365.

Now onto dynamics 365.

Satya Nadella: Dynamic 365 is helping thousands of organizations accelerate digital transformation as they remote every part of their operations from manufacturing to supply chain management to sales and customer service, inclusive of new scenarios like curbside pickup, contactless shopping, remote customer assistance, and operations.

Satya Nadella: Dynamic 365 is helping thousands of organizations accelerate digital transformation as they remote every part of their operations, from manufacturing to supply chain management to sales and customer service, inclusive of new scenarios like curbside pickup, contactless shopping, remote customer assistance, and operations. Dynamics 365 is helping thousands of organizations accelerate digital transformation as they connect every part of their operations, from manufacturing to supply chain management to sales and customer service, inclusive of new scenarios like curbside pickup, contactless shopping, remote customer assistance, and operations.

Dynamically six times, helping thousands of organizations accelerate digital transformation at the remote every part of their operations from manufacturing to supply chain management to sales and customer service inclusive of new scenarios like curbside pickup contactless shopping remote customer assistance and operations.

Satya Nadella: Now on to the power platform. 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. Power Platform is already used by more than 3.4 million citizen developers and business decision-makers. If you can create an Excel spreadsheet, you can create an app, build a virtual agent, automate a workflow, analyze data, and share insights in real time. In just 2 weeks, Swedish Health Services, the largest nonprofit health provider in the Seattle area, used Power Apps to track critical supplies. Thousands of organizations are relying on new integration between Microsoft Teams and Power Apps to share timely information.

Satya Nadella: Patagonia is using Dynamics 365 Commerce to rapidly move to new, more intelligent distribution and fulfillment models, including contactless shopping. 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. An enterprise software company, C3.ai, founded by Tom Siebel, shifted its entire sales force to Dynamics 365 sales in less than two weeks.

Patagonia using dynamic through six five commas to rapidly move to new more intelligent distribution and fulfillment models, including contact with shopping and we're working with card issuers like American Express emergency use dynamics 365 fraud protection can reduce fraud land activity as they process.

Satya Nadella: 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. 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.

Satya Nadella: An enterprise software company, C3.ai, founded by Tom Siebel, shifted its entire sales force to Dynamics 365 for Sales in less than two weeks. And enterprise software company, C3.ai, founded by Tom Siebel, shifted its entire sales force to Dynamics 365 Sales in less than 2 weeks.

More transactions online in field service, the worlds largest commercial real estate services from CB Ari using dynamics 365 remote assist to help keep its life Sciences, Kevin labs fully operational from afar.

An enterprise software companies see Threed Adi founded by Tom Siebel shifted and Das Salesforce to dynamic 365 sales in less than two weeks.

Satya Nadella: And governments around the world are using Power BI to share the latest COVID-19 data with their citizens.

Satya Nadella: Leaders in every industry, from the global health care company GSK to Coca-Cola to Toyota, are all using Power Platform to accelerate their automation.

Satya Nadella: Now to LinkedIn.

Satya Nadella: Now to LinkedIn. Amidst the changing jobs market, LinkedIn's role in creating economic opportunity for every member of the global workforce has never been more acute.

Now to linked in.

The changing job market Lincoln's role in creating economic opportunity for every member of the global workforce has never been more acute.

Satya Nadella: LinkedIn is where more than 690 million professionals go to connect, learn new skills, and find new opportunities, contributing to record levels of engagement across the platform in Q3. We're helping organizations attract, retain, and develop talent with our portfolio of talent solutions, talent insights, glint, and LinkedIn learning. We are helping organizations attract, retain, and develop talent with our portfolio of Talent Solutions, Talent Insights, Glint, and LinkedIn Learning. Professionals watched nearly 4 million hours of content on LinkedIn Learning in March, a nearly 50% increase month-over-month.

Lincoln is where more than 690 million professionals go to connect learn new skills and find new opportunities contributing to record levels of engagement across the platform in Q3, we're helping organizations attract retain and develop talent with our portfolio of town solutions talent inside blunt and linked and learning professor.

Satya Nadella: Now on to Dynamics 365. Dynamics 365 is helping thousands of organizations accelerate digital transformation as they connect every part of their operations, from manufacturing to supply chain management to sales and customer service, inclusive of new scenarios like curbside pickup, contactless shopping, remote customer assistance, and operations. Patagonia is using Dynamics 365 Commerce to rapidly move to new, more intelligent distribution and fulfillment models, including contactless shopping. 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.

Satya Nadella: Professionals watch nearly 4 million hours of content on LinkedIn Learning in March, a nearly 50% increase month over month. With LinkedIn Live, people and organizations can broadcast video content to their networks in real time. Streams are up 158% since February. And the combination of LinkedIn Sales Navigator and Dynamics 365 gives sales professional tools for more effective remote selling.

Satya Nadella: Professionals watched nearly 4 million hours of content on LinkedIn Learning in March, a nearly 50% increase month over month.

I just want to nearly 4 million AWS a constant on linked and learning in March nearly 50% increase month over month with linked in life people and organizations can broadcast video content to the networks in real time screens are up 158% since February and the combination of linked in sales navigator and dynamic.

Satya Nadella: With LinkedIn Live, people and organizations can broadcast video content to their networks in real time. Streams are up 158% since February.

Satya Nadella: And the combination of LinkedIn Sales Navigator and Dynamics 365 gives sales professionals tools for more effective remote selling. And the combination of LinkedIn Sales Navigator and Dynamics 365 gives sales professionals tools for more effective remote selling.

Satya Nadella: With LinkedIn Live, people and organizations can broadcast video content to their networks in real time. Streams are up 158% since February.

Six five gives sales professional tools for more effective remote selling.

Satya Nadella: Now on to gaming.

Satya Nadella: Now on to games.

Satya Nadella: Now on to games. People everywhere are turning to gaming to sustain human connection while practicing social distancing, and we continue to deliver new, exclusive first- and third-party content to attract and retain gamers.

Now onto gaming.

Satya Nadella: People everywhere are turning to gaming to sustain human connection while practicing social distancing, and we continue to deliver new, exclusive, first- and third-party content to attract and retain gamers. We saw all-time record engagement this quarter, with nearly 19 million active users of Xbox Live, led by the strength on and off-console.

People everywhere are turning to gaming to sustain human connection practicing social distancing and we continue to deliver new exclusive.

Third party content to attract and retain gamers.

Satya Nadella: And enterprise software company, C3.ai, founded by Tom Siebel, shifted its entire sales force to Dynamics 365 Sales in less than 2 weeks.

Satya Nadella: We saw all-time record engagement this quarter, with nearly 19 million active users of Xbox Live, led by the strength on and off console.

Satya Nadella: We saw all-time record engagement this quarter, with nearly 19 million active users of Xbox Live, led by strong engagement on and off console. Xbox Game Pass has more than 10 million subscribers, and we are seeing increased monetization of in-game content and services.

So all time record engagement this quarter with nearly 19 million active users of X. box live led by the strength on and off console.

Satya Nadella: Xbox Game Pass has more than 10 million subscribers and we are seeing increased monetization of in-game content and services.

Satya Nadella: Xbox Game Pass has more than 10 million subscribers, and we are seeing increased monetization of in-game content and services. And our Project xCloud gaming service now has hundreds of thousands of users in preview across 7 countries, with 8 more launching in the coming weeks.

Xbox game path has more than 10 million subscribers and we're seeing increased monetization of in game content and services.

Satya Nadella: and our Project xCloud gaming service now has hundreds of thousands of users in preview across seven countries with eight more launching in the coming months.

Satya Nadella: and our Project xCloud gaming service now has hundreds of thousands of users in preview across seven countries, with eight more launching in the coming months.

And our project ex cloud gaming service now has hundreds of thousands of users in preview across seven countries with eight more launching in the coming weeks.

Satya Nadella: Now on to Azure.

Satya Nadella: Now on to Azure. Now more than ever, organizations are relying on Azure to stay up and running, driving increased usage.

Now onto Azure.

Satya Nadella: Now more than ever, organizations are relying on Azure to stay up and running, driving increased use.

Satya Nadella: Now more than ever, organizations are relying on Azure to stay up and running, driving increased use. We have more data center regions than any other cloud provider.

Now more than ever organizations are relying on azure to stay up and running driving increased usage, we are more datacenter regions than any other cloud provider and this quarter, we announced new regions in Mexico as well as in Spain.

Satya Nadella: We have more data center regions than any other cloud provider, and this quarter we announced new regions in Mexico as well as in Spain.

Satya Nadella: We have more data center regions than any other cloud provider, and this quarter, we announced new regions in Mexico as well as in Spain. And this quarter, we announced new regions in Mexico as well as in Spain.

Satya Nadella: We are the only cloud that extends to the edge, with consistency across operating models, development environments, and the infrastructure stack.

Satya Nadella: We are the only cloud that extends to the edge with consistency across operating models, development environments, and infrastructure stacks.

We are the only cloud that extends to the edge with consistency across operating models development environments and infrastructure stack now.

Satya Nadella: Professionals watched nearly 4 million hours of content on LinkedIn Learning in March, a nearly 50% increase month-over-month. Streams are up 158% since February.

Satya Nadella: With LinkedIn Live, people and organizations can broadcast video content to their networks in real time. And the combination of LinkedIn Sales Navigator and Dynamics 365 gives sales professionals tools for more effective remote selling.

Satya Nadella: Professionals watched nearly 4 million hours of content on LinkedIn Learning in March, a nearly 50% increase month-over-month. Streams are up 158% since February.

Satya Nadella: Now, Azure Edge Zones extends Azure to the network edge, connecting directly with the carrier's 5G network to enable immersive real-time experiences that require ultra-low latency.

Satya Nadella: Now, Azure Edge Zones extends Azure to the network edge, connecting directly with the carrier's 5G network to enable immersive real-time experiences that require ultra-low latency. Now, Azure Edge Zones extends Azure to the network edge, connecting directly with the carriers' 5G network to enable immersive real-time experiences that require ultralow latency.

Now Azure edge zones extends azure to the network edge connecting directly with the carriers Fiveg network to enable immersive real time experiences that require ultra low latency and our acquisition of affirmed networks will help operators deploy and maintain fiveg networks and services cost effectively.

Satya Nadella: And our acquisition of Affirmed Networks will help operators deploy and maintain 5G networks and services cost effectively and securely.

Satya Nadella: and our acquisition of Affirm Networks will help operators deploy and maintain 5G networks and services cost-effectively and securely.

Satya Nadella: Now on to gaming. People everywhere are turning to gaming to sustain human connection while practicing social distancing, and we continue to deliver new exclusive first- and third-party content to attract and retain gamers. We saw all-time record engagement this quarter, with nearly 19 million active users of Xbox Live, led by strong engagement on and off-console. Xbox Game Pass has more than 10 million subscribers, and we are seeing increased monetization of in-game content and services. And our Project X cloud gaming service now has hundreds of thousands of users in preview across 7 countries, with 8 more launching in the coming weeks.

Satya Nadella: From BlackRock to Coca-Cola to Genesys, leading companies in every industry are choosing Azure.

Okay and securely.

Satya Nadella: From BlackRock to Coca-Cola to Genesis, leading companies.

Satya Nadella: From BlackRock to Coca-Cola to Genesis, leading companies in every industry are choosing Azure.

From Blackrock to Coca Cola to Genesis, leading companies in every industry are choosing azure dnbi A's using azure and our AI capabilities to build their own direct to consumer experiences and the world's largest companies like AB Inbev Inmarsat continue to migrate their sep.

Satya Nadella: The NBA is using Azure and our AI capabilities to build their own direct-to-consumer experiences, and the world's largest companies like AB InBev and Mars continue to migrate their SAP workloads to our cloud. The NBA is using Azure and our AI capabilities to build their own direct-to-consumer experiences, and the world's largest companies like AB InBev and Mars continue to migrate their SAP workloads to our cloud.

Satya Nadella: In every industry are choosing Azure. The NBA is using Azure and our AI capabilities to build their own direct-to-consumer experiences, and the world's largest companies like AB InBev and Mars continue to migrate their SAP workloads to our cloud.

Satya Nadella: In AI, customers are applying a comprehensive portfolio of tools, services, and infrastructure to address unique challenges, including those created by COVID-19.

Globes through our club.

Satya Nadella: In AI, customers are applying a comprehensive portfolio of tools and services and infrastructure to address unique challenges, including those created by COVID-19.

In AI customers are applying a comprehensive portfolio of tools and services and infrastructure to address unique challenges, including those created by cobot 19 in healthcare, we've seen compute data and AI come together to help speed up response from testing to therapeutics and vaccine development healthcare providers have created mold.

Satya Nadella: In healthcare, we are seeing compute data and AI come together to help speed up response from testing to therapeutics and vaccine development.

Satya Nadella: In healthcare, we are seeing compute data and AI come together to help speed up response from testing to therapeutics and vaccine development. Health care providers have created more than 1,400 bots using our Healthcare Bot service, helping more than 27 million people access critical health care information.

Satya Nadella: Healthcare providers have created more than 1,400 bots using our healthcare bot service, helping more than 27 million people access critical healthcare information. The Centers for Disease Control is using the healthcare bot to help people self-assess for coronavirus symptoms. Adaptive Biotechnologies is using our tools to decode the immune system's response to the virus. And Immunity Bio is using more than 24 petaflops of computing power on our cloud to help researchers build models in days instead of months.

Satya Nadella: Healthcare providers have created more than 1,400 bots using our healthcare bot service, helping more than 27 million people access critical healthcare information. The Centers for Disease Control is using the healthcare bot to help people self-assess for coronavirus symptoms. The Centers for Disease Control is using the Healthcare Bot to help people self-assess for coronavirus symptoms, and Adaptive Biotechnologies is using our tools to decode the immune system's response to the virus.

1400 boss using our healthcare bought service, helping more than 27 million people access critical healthcare information the centers for disease control is using the healthcare bought to help people self assessed for Corona wireless sentence adaptive biotechnologies, using our tools to decode the immune systems.

Satya Nadella: Adaptive Biotechnologies is using our tools to decode the immune system's response to the virus, and Immunity Bio is using more than 24 petaflops of computing power on our cloud to help researchers build models in days instead of months. And ImmunityBio is using more than 24 petaflops of computing power on our cloud to help researchers build models in days instead of months.

Satya Nadella: Now on to Azure. Now more than ever, organizations are relying on Azure to stay up and running, driving increased usage. We have more data center regions than any other cloud provider, and this quarter, we announced new regions in Mexico as well as in Spain.

Satya Nadella: We are the only cloud that extends to the edge, with consistency across operating models, development environments, and the infrastructure stack. Now, Azure Edge zones extends Azure to the network edge, connecting directly with the carrier's 5G network to enable immersive real-time experiences that require ultra low latency. And our acquisition of Affirm Networks will help operators deploy and maintain 5G networks and services cost effectively and securely.

Responds to the wires and immunity bio is using more than 24, better lots of computing bar on our cloud to help researches build models and days in the months.

Satya Nadella: Enterprises are using our speech services to manage a record influx of customer service inquiries, including Poste Italiane, which is using it to automatically respond to nearly 170,000 calls per day.

Satya Nadella: Enterprises are using our speech services to manage a record influx of customer service inquiries, including Post Italian, which is using it to automatically respond to nearly 170,000 calls per day. All up, 6 million hours of speech were transcribed in March alone.

Enterprises are using our speed services to manage a record influx of customer service inquiries, including posted earlier, which is using it to automatically respond to nearly 170000 calls per day, all up 6 million odds of speech, where transcribed in March alone.

Satya Nadella: All up, 6 million hours of speech were transcribed in March alone. All 6 million hours of speech were transcribed in March alone.

Satya Nadella: 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. With that, I'll hand it over to Amy, who will cover our financial results in detail and share our outlook, and I look forward to rejoining for your questions.

In closing, we will continue to work and innovate alongside our customers add that digital first responders today and Thats that trusted digital transformation partners going forward with data on handed over to Amy who will cover our financial results in detail and share our outlook and I look forward to rejoining for your questions.

Satya Nadella: From BlackRock to Coca-Cola to Genesis, leading companies in every industry are choosing Azure. The NBA is using Azure and our AI capabilities to build their own direct-to-consumer experiences, and the world's largest companies, like AB InBev and Mars, continue to migrate their SAP workloads to our cloud.

Satya Nadella: In AI, customers are applying a comprehensive portfolio of tools and services and infrastructure to address unique challenges, including those created by COVID-19. In healthcare, we are seeing compute data and AI come together to help speed up responses from testing to therapeutics and vaccine development. Health care providers have created more than 1,400 bots using our Healthcare Bot Service, helping more than 27 million people access critical health care information.

Satya Nadella: With that, I'll hand it over to Amy, who will cover our financial results in detail and share our outlook, and I look forward to rejoining for your questions.

Satya Nadella: Thank you, and good afternoon, everyone.

Amy E. Hood: Thank you and good afternoon everyone.

Amy E. Hood: Thank you, and good afternoon everyone.

Thank you.

Amy E. Hood: As Satya discussed, the COVID-19 health crisis is changing the way our employees, customers, partners, and communities live and work together. As Satya discussed, the COVID-19 health crisis is changing the way our employees, customers, partners, and communities live and work together.

Good afternoon, everyone.

Second the Cobot 19 health crisis is changing the way our employees customers partners and communities.

Amy E. Hood: In a new environment, our team addressed surging usage and remote business process adjustments well. In a new environment, our team addressed surging usage and remote business process adjustments well.

And work together.

And the new environment, our team addressed surgeon usage and remote business process adjustments well.

Amy E. Hood: Therefore, in Q3, revenue was $35 billion, up 15% and 16% in constant currency. Gross margin dollars increased 18% and 20% in constant currency. Operating income increased 25% and 28% in constant currency. Earnings per share was $1.40, increasing 23% and 27% in constant currency.

Amy E. Hood: Therefore, in Q3, revenue was $35 billion, up 15% and 16% in constant currency. Gross margin dollars increased 18% and 20% in constant currency. Operating income increased 25% and 28% in constant currency. Earnings per share were $1.40, increasing 23% and 27% in constant currency.

Therefore in Q3 revenue was $35 billion up 15% and 16% in constant currency.

Amy E. Hood: The Centers for Disease Control is using the Healthcare Bot to help people self-assess for coronavirus symptoms, and Adaptive Biotechnologies is using our tools to decode the immune system's response to the virus. And ImmunityBio is using more than 24 petaflops of computing power on our cloud to help researchers build models in days instead of months.

Margin dollars increased 18% and 20% in constant currency operating income increased 25%, 28% in constant currency earnings per share was $1.40, increasing 23% and 27% in constant currency.

Amy E. Hood: Let me take a moment to discuss the impact of COVID-19 on the quarter. Our earnings per share were $1.40, increasing 23% and 27% in constant currency.

Amy E. Hood: Let me take a moment to discuss the impact of COVID-19 on the quarterback.

Let me take a moment to discuss the impact of cobot 19 on the quarter.

Amy E. Hood: In our consumer business, the landscape changed quickly following our mid-quarter guidance update.

Amy E. Hood: In our consumer business, the landscape evolved quickly following our mid-quarter guidance update.

Amy E. Hood: In our consumer business, the landscape evolved quickly following our mid-quarter guidance update, and the supply chain in China returned to more normal operations at a faster pace than we had anticipated.

And our consumer business the landscape evolving quickly following our mid quarter guidance update.

Amy E. Hood: The supply chain in China returned to more normal operations at a faster pace than we had anticipated.

Pricing in China return to more normal operations at a faster pace than we had anticipated.

Amy E. Hood: Enterprises are using our speech services to manage a record influx of customer service inquiries, including Post Italian, which is using it to automatically respond to nearly 170,000 calls per day. All (inaudible) 6 million hours of speech were transcribed in March alone.

Amy E. Hood: And we saw increased demand from work, play, and learn-from-home scenarios, benefiting Windows OEM, Surface, Office Consumer, and Gaming.

Amy E. Hood: And we saw increased demand from work, play, and learn-from-home scenarios, benefiting Windows OEM, Surface, Office Consumer, and gaming.

Amy E. Hood: And we saw increased demand from work, play, and learn-from-home scenarios, benefiting Windows OEM, Surface, Office Consumer, and gaming. However, this was partially offset by a significant reduction in advertising spend, which impacted our Search and LinkedIn businesses.

And we saw increased demand from work play and learn from Marios benefiting when does that Liam surface office consumer and gaming.

Amy E. Hood: This was partially offset by a significant reduction in advertising spend which impacted our search and LinkedIn businesses.

Amy E. Hood: This was partially offset by a significant reduction in advertising spend which impacted our search and LinkedIn businesses. In our commercial business in March, we saw healthy Azure consumption and, as Satya mentioned, increased usage across Windows Virtual Desktop, Power Platform, and Microsoft 365, particularly in Teams and our advanced security solutions.

This was partially offset by a significant reduction in advertising spend which impacted our search and Linkedin businesses.

Amy E. Hood: 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. With that, I'll hand it over to Amy, who will cover our financial results in detail and share our outlook, and I look forward to rejoining for your questions.

Amy E. Hood: In our commercial business in March, we saw healthy Azure consumption

Amy E. Hood: In our commercial business in March, we saw healthy Azure consumption and, as Satya mentioned, increased usage across Windows Virtual Desktop, Power Platform, and Microsoft 365, particularly in teams in our advanced security solutions.

And our commercial business in March we saw healthy as were consumption.

Amy E. Hood: And, as Satya mentioned, increased usage across Windows Virtual Desktop, Power Platform, and Microsoft 365, particularly in teams in our advanced security solutions.

End to stop you mentioned increased usage across windows virtual desktop platform and Microsoft 365, particularly in teams in our advanced security solution.

Amy E. Hood: However, we also saw some changes to our sales dynamics, particularly in the industries and segments most impacted by COVID-19.

Amy E. Hood: However, we also saw some changes to our sales dynamics, particularly in the industries and segments most impacted by COVID-19. We saw a slowdown in our transactional business across segments but particularly in small and medium businesses.

However, we also saw some changes to our sales dynamics.

Currently in the industries and segment most impacted by 19.

Amy E. Hood: We saw a slowdown in our transactional business across segments, but particularly in small and medium businesses. In enterprise services, growth rates slowed as consulting projects were delayed.

Slowed down our transactional business across segments.

Amy E. Hood: Thank you, and good afternoon, everyone. As Satya discussed, the COVID-19 health crisis is changing the way our employees, customers, partners, and communities live and work together. In a new environment, our team addressed surging usage and remote business process adjustments well.

It really small and medium businesses and enterprise services growth rate load is consulting projects were delayed.

Amy E. Hood: Therefore, in Q3, revenue was $35 billion, up 15% and 16% in constant currency. Gross margin dollars increased 18% and 20% in constant currency. Operating income increased 25% and 28% in constant currency. Our earnings per share were $1.40, increasing 23% and 27% in constant currency.

Amy E. Hood: In Enterprise Services, growth rates slowed as consulting projects were delayed. And on annual contracts in LinkedIn's Talent Solutions business, renewals were impacted by the weak job market.

Amy E. Hood: And on annual contracts in LinkedIn's talent solutions business, renewals were impacted by the weak job market.

Amy E. Hood: And on annual contracts in LinkedIn's talent solutions business, renewals were impacted by the weak job market. Moving on to our overall results.

And on annual contracts and linked and talent solutions business.

Amy E. Hood: Moving to our overall results, commercial bookings increased 7% and 12% in constant currency on a relatively small expiration base and strong prior year comparable.

When you were impacted by the week job market.

Amy E. Hood: Moving to our overall results.

Moving to our overall result.

Amy E. Hood: Commercial bookings increased 7% and 12% in constant currency on a relatively small expiration base and strong prior year comparable. Growth was driven by strong renewal execution consistent with prior quarters, though we saw some impact from the previously mentioned changes in sales dynamics.

Amy E. Hood: Commercial bookings increased 7% and 12% in constant currency on a relatively small expiration base and a strong prior year comparable. Growth was driven by strong renewal execution consistent with prior quarters, though we saw some impact from the previously mentioned changes in sales dynamics.

So bookings increased 7% and 12% in constant currency on a relatively small expiration date and strong prior year comparable growth was driven by strong renewal execution consistent with prior quarters. So we saw some impacts from the previously mentioned changes in sales dynamic.

Amy E. Hood: Growth was driven by strong renewal execution, consistent with prior quarters, though we saw some impact from the previously mentioned changes in sales dynamics. Commercial remaining performance obligation increased 24% to $89 billion.

Amy E. Hood: Let me take a moment to discuss the impact of COVID-19 on the quarter. In our consumer business, the landscape evolved quickly following our mid-quarter guidance update. The supply chain in China returned to more normal operations at a faster pace than we had anticipated, and we saw increased demand from work, play, and learn-from-home scenarios, benefiting Windows OEM, Surface, Office Consumer, and gaming. This was partially offset by a significant reduction in advertising spend, which impacted our Search and LinkedIn businesses.

Amy E. Hood: Commercial remaining performance obligation increased 24% to $89 billion. Approximately 50% will be recognized in revenue in the next 12 months, in line with prior quarter trends.

Amy E. Hood: The commercial remaining performance obligation increased 24% to $89 billion, and approximately 50% will be recognized in revenue in the next 12 months, in line with prior quarter trends.

Commercial remaining performance obligation increased 24% to $89 billion approximately 50% will be recognized in revenue in the next 12 months in line with prior quarter trends.

Amy E. Hood: Approximately 50% will be recognized in revenue in the next 12 months, in line with prior quarter trends. Our commercial revenue annuity and mix increased 2 points year-over-year to 92%.

Amy E. Hood: Our commercial revenue annuity mix increased 2.0 per year to 92%, and commercial crowd revenue was $13.3 billion, growing 39% and 40% in constant currency.

Amy E. Hood: Our commercial revenue annuity mix increased 2.0 per year to 92%, and commercial crowd revenue was $13.3 billion, growing 39% and 40% in constant currency. And commercial cloud revenue was $13.3 billion, growing 39% and 40% in constant currency.

Our commercial revenue annuity mix increased two points year over year to 92% and commercial cloud revenue was $13.3 billion growing 39% and 40% in constant currency.

Amy E. Hood: The commercial cloud gross margin percentage increased 4 points year-over-year to 67%.

Amy E. Hood: Commercial cloud growth margin percentage increased four points year-over-year to 67%.

Amy E. Hood: Commercial cloud growth margin increased four points year-over-year to 67%. Significant improvement in Azure gross margin percentage, including some benefit from short-term utilization gains as we worked through COVID-19-related supply chain constraints more than offset sales mix shift to Azure.

Cloud gross margin percentage increased four points year over year to 67%.

Amy E. Hood: Significant improvement in Azure gross margin percentage, including some benefit from short-term utilization gains as we work through COVID-19-related supply chain constraints.

Amy E. Hood: Significant improvement in Azure gross margin percentage, including some benefit from short-term utilization gains as we work through COVID-19-related supply chain constraints. In our commercial business in March, we saw healthy Azure consumption.

Significant improvement in Azure gross margin percentage, including some benefit from short term utilization gains as we work through because it 19 related supply chain constraints.

Amy E. Hood: and, as Satya mentioned, increased usage across Windows Virtual Desktop, Power Platform, and Microsoft 365, particularly for Teams and our advanced security solutions. However, we also saw some changes to our sales dynamics, particularly in the industries and segments most impacted by COVID-19. We saw a slowdown in our transactional business across segments but particularly in small and medium businesses.

Amy E. Hood: More than offset sales mix shift to Azure.

Amy E. Hood: More than offset the sales mix shift to Azure. Company gross margin percentage was 69%, up 2 points year-over-year, driven by favorable segment sales mix and improvement across all 3 of our segments.

More than offset sales mix shift to answer.

Amy E. Hood: Company gross margin percentage was 69%, up two points year-over-year, driven by favorable segment sales mix and improvement across all three of our segments.

Company gross margin percentage was 69% up two points year over year, driven by favorable segment sales mix and improvement across all three of our segment.

Amy E. Hood: Company gross margin percentage was 69%, up two points year-over-year, driven by favorable segment sales mix and improvement across all three of our segments. In line with expectations, FX reduced revenue growth by 1 point and had no impact on operating expense growth.

Amy E. Hood: In line with expectations, FX reduced revenue growth by one point and had no impact on operating expense growth. The FX impact on COGS growth was slightly more favorable than expected and reduced growth by one point.

Amy E. Hood: In line with expectations, FX reduced revenue growth by one point and had no impact on operating expense growth. Operating expense grew 10%, slightly below expectations, primarily driven by lower marketing and travel spend in March.

Inline with expectations FX reduced revenue growth by one point and had no impact impact operating expense growth.

Amy E. Hood: The FX impact on COGS growth was slightly more favorable than expected and reduced growth by one point. The FX impact on COGS growth was slightly more favorable than expected and reduced growth by 1 point.

The FX impact on top growth was slightly more favorable than expected and reduced growth by one point.

Amy E. Hood: Operating expense grew 10%, slightly below expectations, primarily driven by lower marketing and travel spend in March.

Operating expense grew 10% slightly below expectations, primarily driven by lower marketing and travel spend in March and operating expenses.

Amy E. Hood: In enterprise services, growth rates slowed as consulting projects were delayed.

Amy E. Hood: And on annual contracts in LinkedIn's Talent Solutions business, renewals were impacted by the weak job market.

Amy E. Hood: And operating expenses expanded this quarter -- excuse me, operating margins expanded this quarter as a result of higher gross margins and disciplined decisions to invest in strategic and high-growth areas.

Amy E. Hood: and operating expenses expanded this quarter, excuse me, operating margins expanded this quarter as a result of higher gross margins and disciplined decisions to invest in strategic and high-growth areas.

Amy E. Hood: and operating expenses expanded this quarter. Excuse me, operating margins expanded this quarter as a result of higher gross margins and disciplined decisions to invest in strategic and high-growth areas.

We ended this quarter.

Amy E. Hood: Moving to our overall results, commercial bookings increased 7% and 12% in constant currency on a relatively small exploration base and a strong prior year comparable. Growth was driven by strong renewal execution consistent with prior quarters, though we saw some impact from the previously mentioned changes in sales dynamics.

Operating margins expanded this quarter as a result of higher gross margins and discipline decisions to invest in strategic and high growth areas.

Amy E. Hood: Now to our segment results.

Amy E. Hood: Now to our segment.

Amy E. Hood: Now to our segment. In line with expectations, revenue from Productivity and Business Processes was $11.7 billion, increasing 15% and 16% in constant currency.

Now to our segment results.

Amy E. Hood: In line with expectations, revenue from productivity and business processes was $11.7 billion, increasing 15% and 16% in constant currency. Office commercial revenue grew 13% and 15% in constant currency. Office 365 commercial revenue grew 25% and 27% in constant currency, again driven by install-based growth across all workloads and customer segments, as well as higher ARPU, with strong upsell to E5.

Amy E. Hood: In line with expectations, revenue from productivity and business processes was $11.7 billion, increasing 15% and 16% in constant currency.

I would expectations revenue from productivity in business processes was $11.7 billion, increasing 15%, 16% in constant currency.

Amy E. Hood: Office commercial revenue grew 13% and 15% in constant currency. Office Commercial revenue grew 13% and 15% in constant currency.

Amy E. Hood: Office 365 commercial revenue grew 25% and 27% in constant currency, again driven by install-based growth across all workloads and customer segments, as well as higher ARPU and strong upsell to E5. Office 365 Commercial revenue grew 25% and 27% in constant currency, again driven by installed base growth across all workloads and customer segments as well as higher ARPU with strong upsell to E5. And Office 365 Commercial seats grew 20% to nearly 258 million, with an increasing mix from Microsoft 365.

Commercial revenue grew 13% and 15% in constant currency.

This was 65 commercial revenue grew 25% in 27% in constant currency again, driven by installed base growth across all workload and customer segment as well as higher ARPU with strong sell five.

Amy E. Hood: Our commercial revenue annuity and mix increased [2.0] over year to 92%, and commercial cloud revenue was $13.3 billion, growing 39% and 40% in constant currency. The commercial cloud gross margin percentage increased 4 points year-over-year to 67%.

Amy E. Hood: Significant improvement in Azure gross margin percentage, including some benefit from short-term utilization gains as we worked through COVID-19-related supply chain constraints more than offset sales mix shift to Azure.

Amy E. Hood: and Office 365 commercial seats grew 20% to nearly 258 million with an increasing mix from Microsoft 365.

Amy E. Hood: and Office 365 commercial seats grew 20% to nearly 258 million with an increasing mix from Microsoft 365. Office Consumer revenue grew 15% and 17% in constant currency, driven by growth in Office 2019 and Office 365 subscription revenue.

And office for 65 commercial seats grew 20% to nearly 258 million within increasing mix from Microsoft 365.

Amy E. Hood: Office consumer revenue grew 15% and 17% in constant currency, driven by growth in Office 2019 and Office 365 subscription revenue.

Amy E. Hood: Office consumer revenue grew 15% and 17% in constant currency, driven by growth in Office 2019 and Office 365 subscription revenue. Office 365 Consumer subscribers grew to 39.6 million, benefiting from the increased demand noted earlier.

All this consumer revenue grew 15% and 17% in constant currency driven by growth in office 2019, and office 365 subscription revenue.

Amy E. Hood: Office 365 consumer subscribers grew to 39.6 million, benefiting from the increased demand noted earlier.

Officethree 65 consumer subscribers grew to 39.6 million benefiting from the increased demand noted earlier.

Amy E. Hood: Company gross margin percentage was 69%, up 2 points year-over-year, driven by favorable segment sales mix and improvement across all 3 of our segments. And operating expenses expanded this quarter -- excuse me, operating margins expanded this quarter as a result of higher gross margins and disciplined decisions to invest in strategic and high-growth areas.

Amy E. Hood: In line with expectations, FX reduced revenue growth by 1 point and had no impact on operating expense growth. However, the FX impact on COGS growth was slightly more favorable than expected and reduced growth by 1 point. Operating expense grew 10%, slightly below expectations, primarily driven by lower marketing and travel spend in March.

Amy E. Hood: Dynamics revenue grew 17% and 20% in constant currency, driven by Dynamics 365 growth of 47% and 49% in constant currency.

Amy E. Hood: Dynamics revenue grew 17% and 20% in constant currency, driven by Dynamics 365 growth of 47% and 49% in constant currency. LinkedIn revenue increased 21% and 22% in constant currency, as early quarter momentum was slightly offset by the slowdown in advertising.

In EMEA revenue grew 17% and 20% in constant currency given by dynamics to 65 growth of 47% and 49% in constant currency linked in revenue increased 21% in 22% in constant currency as early quarter momentum was slightly offset by the slowdown in advertising.

Amy E. Hood: LinkedIn revenue increased 21% and 22% in constant currency as early quarter momentum was slightly offset by the slowdown in advertising. Segment gross margin dollars increased 16% and 18% 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.

Amy E. Hood: Segment gross margin dollars increased 16% and 18% in constant currency and gross margin percentage increased one point year over year as improvements in Office 365 and LinkedIn margins more than offset an increase in cloud revenue mix.

Segment gross margin dollars increased 16% of 18% in constant currency in gross margin percentage increased one point year over year as improvements in office 365, Enlink, Denmark and more than offset an increase in cloud revenue mix.

Amy E. Hood: Operating expense increased 12% and 13% in constant currency, driven by continued investment in LinkedIn and cloud engineering. Operating expense increased 12% and 13% in constant currency, driven by continued investment in LinkedIn and cloud engineering.

Amy E. Hood: And operating income increased by 20% and 23% in constant currency. And operating income increased by 20% and 23% in constant currency.

Amy E. Hood: Now to our segment results. In line with expectations, revenue from Productivity and Business Processes was $11.7 billion, increasing 15% and 16% in constant currency. Office commercial revenue grew 13% and 15% in constant currency. Office 365 commercial revenue grew 25% and 27% in constant currency, again driven by installed base growth across all workloads and customer segments as well as higher ARPU with strong upsell to E5. And Office 365 commercial seats grew 20% to nearly 258 million, with an increasing mix from Microsoft 365.

Amy E. Hood: Operating expense increased 12% and 13% in constant currency, driven by continued investment in LinkedIn and cloud engineering. And operating income increased 20% and 23% in constant currency.

Operating expense increased 12%, 13% in constant currency driven by continued investment in links in cloud engineering, and operating income increased 20% and 23% in constant currency.

Amy E. Hood: Next, the Intelligent Clouds segment.

Amy E. Hood: Next, the Intelligent Clouds segment. Next, the Intelligent Cloud segment. Next, the Intelligent Cloud segment.

Next the intelligent cloud segment.

Amy E. Hood: Revenue was $12.3 billion, increasing 27% and 29% in constant currency, ahead of expectations driven by continued customer demand for our hybrid offering.

Amy E. Hood: Revenue was $12.3 billion, increasing 27% and 29% in constant currency, ahead of expectations driven by continued customer demand for our hybrid offering. Revenue was $12.3 billion, increasing 27% and 29% in constant currency, ahead of expectations, driven by continued customer demand for our hybrid offerings.

Revenue was $12.3 billion, increasing 27% in 29% in constant currency headed expectations driven by continued customer demand for our hybrid offering.

Amy E. Hood: On a significant base, server products and cloud services revenue increased 30% and 32% in constant currency. Azure revenue grew 59% and 61% in constant currency, driven by continued strong growth in our consumption-based business.

On a significant Dave.

Server products and cloud services revenue increased 30% and 32% in constant currency as a revenue grew 59% and 61% in constant currency driven by continued strong growth in our consumption based business.

Amy E. Hood: On a significant basis, server products and cloud services revenue increased 30% and 32% in constant currency. Azure revenue grew 59% and 61% in constant currency, driven by continued strong growth in our consumption-based business. In our per user business, our enterprise mobility installed base grew 34% to over 134 million seats, with continued benefit from Microsoft 365.

Amy E. Hood: Office consumer revenue grew 15% and 17% in constant currency, driven by growth in Office 2019 and Office 365 subscription revenue. Office 365 consumer subscribers grew to 39.6 million, benefiting from the increased demand noted earlier.

Amy E. Hood: Dynamics revenue grew 17% and 20% in constant currency, driven by Dynamics 365 growth of 47% and 49% in constant currency.

Amy E. Hood: LinkedIn revenue increased 21% and 22% in constant currency as early quarter momentum was slightly offset by a slowdown in advertising.

Amy E. Hood: In our per-user business, our enterprise mobility install base grew 34% to over 134 million seats, the continued benefit from Microsoft 365.

Amy E. Hood: In our per-user business, our enterprise mobility install base grew 34% to over 134 million seats, demonstrating the continued benefit from Microsoft 365. And our on-premises server business grew 11% and 12% 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.

And our per user business, our enterprise mobility installed base grew 34% to over 134 million seat.

Can you benefit from Microsoft 365.

Amy E. Hood: and our on-premises server business grew 11% and 12% 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. Enterprise Services revenue increased 6% and 7% in constant currency as growth in Premier Support Services more than offset the consulting delays.

And our on premise of server business grew 11% and 12% in constant currency driven by the demand for our hybrid and premium solution and continued benefits from the end to support for Windows server 2008.

Amy E. Hood: Enterprise services revenue increased 6% and 7% in constant currency as growth in premier support services more than offset the consulting delays.

Interplant services revenue increased 6% and 7% in constant currency growth in premier support services more than offset the consulting delays.

Amy E. Hood: Segment gross margin dollars increased 30% and 32% in constant currency, and gross margin percentage increased 2 points year-over-year as another quarter of significant improvement in Azure gross margins more than offset the growing mix of Azure IaaS and PaaS revenue.

Amy E. Hood: Segment gross margin dollars increased 16% and 18% 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.

Amy E. Hood: Operating expense increased 12% and 13% in constant currency, driven by continued investment in LinkedIn and cloud engineering, and operating income increased 20% and 23% in constant currency.

Amy E. Hood: Segment gross margin dollars increased 30% and 32% in constant currency, and gross margin percentage increased 2.0 over year as another quarter of significant improvement in Azure gross margins, more than offset the growing mix of Azure IaaS and PaaS revenue.

Segment gross margin dollars increased 30%, 32% in constant currency gross margin percentage increased two point year over year as another quarter of significant improvement in Azure gross margin more than offset the growing mix of Azure IR and path revenue.

Amy E. Hood: And operating income grew 42% and 46% in constant currency. Operating expense increased 19%, primarily driven by continued investments in Azure, and operating income grew 42% and 46% in constant currency.

Amy E. Hood: Operating expense increased 19%, primarily driven by continued investments in Azure. And operating income grew 42% and 46% in constant currency.

Operating expenses increased 19%, primarily driven by continued investments in Azure.

Operating income grew 42% and 46% in constant currency.

Amy E. Hood: Now to more personal computing.

Amy E. Hood: Now to more personal computing. Now to More Personal Computing.

Amy E. Hood: Next, the Intelligent Cloud segment. Revenue was $12.3 billion, increasing 27% and 29% in constant currency, ahead of expectations, driven by continued customer demand for our hybrid offerings. On a significant basis, server products and cloud services revenue increased 30% and 32% in constant currency. Azure revenue grew 59% and 61% in constant currency, driven by continued strong growth in our consumption-based business.

Amy E. Hood: Now to more personal computing. Now to More Personal Computing.

Now to more personal computing.

Amy E. Hood: Revenue was $11 billion, increasing 3% and 4% in constant currency, ahead of the revised expectations from our mid-quarter guidance update. As better than expected, Windows OEM, Surface, and Gaming revenue more than offset lower-than-expected Search revenue.

Amy E. Hood: Revenue was $11 billion, increasing 3% and 4% in constant currency, ahead of the revised expectations from our mid-quarter guidance update as better-than-expected Windows OEM, Surface, and Gaming revenue more than offset lower-than-expected Search revenue.

Revenue was $11 billion, increasing 3% and 4% in constant currency.

Head of the revised expectations from a mid quarter guidance update.

As better than expected when does.

Surface and gaming revenue more than offset lower than expected search revenue.

Amy E. Hood: OEM, as well as surface revenue, benefited from the improved supply chain in China, increased demand from remote scenarios, and continued Windows 7 end-of-support dynamics.

Amy E. Hood: OEMs, as well as surface revenue, benefited from the improved supply chain in China, increased demand from remote scenarios, and continued Windows 7 end-of-support dynamics. OEM as well as Surface revenue benefited from the improved supply chain in China, increased demand from remote scenarios, and continued Windows 7 end of support dynamics.

Oh, yes, as well as surface revenue benefited from the improved supply chain and China increased demand from remote scenarios and continued windows seven into support dynamics.

Amy E. Hood: In our per user business, our enterprise mobility installed base grew 34% to over 134 million seats, with continued benefit from Microsoft 365. And our on-premises server business grew 11% and 12% 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.

Amy E. Hood: Enterprise services revenue increased 6% and 7% in constant currency as growth in premier support services more than offset the consulting delays. Segment gross margin dollars increased 30% and 32% in constant currency, and gross margin percentage increased 2 points year-over-year as another quarter of significant improvement in Azure gross margins more than offset the growing mix of Azure IaaS and PaaS revenue.

Amy E. Hood: Operating expense increased 19%, primarily driven by continued investments in Azure, and operating income grew 42% and 46% in constant currency. However, in OEM non-Pro, those dynamics were offset by continued pressure in the entry-level category.

Amy E. Hood: In OEM non-pro, those dynamics were offset by continued pressure in the entry-level categories.

Amy E. Hood: In OEM non-pro, those dynamics were offset by continued pressure in the entry-level categories. Windows Commercial products and cloud services grew 17% and 18% in constant currency, again driven by Microsoft 365 and demand for our advanced security solutions.

No we have non pro those dynamics were offset by continued pressure in the entry level category.

Windows commercial products and cloud services grew 17%, 18% in constant currency again, driven by Microsoft We 65 and demand for our advanced security solutions.

Amy E. Hood: Windows commercial products and cloud services grew 17% and 18% in constant currency, again driven by Microsoft 365 and demand for our advanced security solutions.

Amy E. Hood: Search revenue ex TAC increased 1%, below our expectations, driven by a significantly reduced advertising spend.

Amy E. Hood: Search Revenue X-TAC increased 1%, below expectations, given by significantly reduced advertising spend.

Amy E. Hood: Search Revenue X-TAC increased 1%, below expectations, given by a significantly reduced advertising spend.

Search revenue ex Tac increased 1% below expectations, given by significantly reduced advertising spend.

Amy E. Hood: And in Gaming, revenue declined 1% and was relatively unchanged in constant currency, driven by higher user engagement than expected.

Gaming revenue declined 1% and was relatively unchanged in constant currency driven by higher user engagement than expected.

Operator: Greetings, and welcome to the Microsoft Fiscal Year 2020 Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode.

Amy E. Hood: Xbox's content and services revenue increased 2% on a high prior year comparable with strong growth in Game Pass subscribers and Minecraft. Segment gross margin dollars increased 6% and 8% in constant currency, and gross margin percentage increased 2 points year-over-year due to a higher-margin sales mix.

Content and services revenue increased 2% on a high prior you're comfortable with strong growth in game path subscribers and minecraft.

Operator: A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Mike Spencer, General Manager of Investor Relations for Microsoft. Thank you. You may begin.

Amy E. Hood: Segment gross margin dollars increased 6% and 8% in constant currency, and gross margin percentage increased 2 points year over year due to higher margin sales mix.

Amy E. Hood: Segment gross margin dollars increased 6% and 8% in constant currency, and gross margin percentage increased 2 points year over year due to higher-margin sales mix. Operating expense declined 3%, driven by a redeployment of engineering resources to higher growth opportunities.

Segment gross margin dollars increased 6%, an 8% in constant currency gross margin percentage increased two point year over year due to higher margin sales mix.

Amy E. Hood: Operating expense declined 3%, driven by a redeployment of engineering resources to higher growth opportunities.

Operating expense declined 3%.

Amy E. Hood: Now to More Personal Computing. Revenue was $11 billion, increasing 3% and 4% in constant currency, ahead of the revised expectations from our mid-quarter guidance update as better-than-expected Windows OEM, Surface, and gaming revenue more than offset lower-than-expected Search revenue. OEM, as well as Surface revenue, benefited from the improved supply chain in China, increased demand from remote scenarios, and continued Windows 7 end of support dynamics. However, in OEM non-Pro, those dynamics were offset by continued pressure in the entry-level category. As a result, operating income grew by 15% and 17% in constant currency.

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; Frank Broad, Chief Accounting Officer; and Keith Oliver, 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 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 a substitute for or superior to the measures of financial performance prepared in accordance with GAAP.

Given by redeployment of engineering resources to higher growth opportunities.

Amy E. Hood: As a result, operating income grew 15% and 17% in constant currency.

Amy E. Hood: As a result, operating income grew 15% and 17% in constant currency. Now back to total company results.

Amy E. Hood: As a result, operating income grew by 15% and 17% in constant currency.

As a result operating income grew 15% in 17% in constant currency.

Amy E. Hood: Now back to the total company results. Now back to the total company results.

Amy E. Hood: Now back to total company results.

Amy E. Hood: Now back to total company results. Capital expenditures, including finance leases, were $3.9 billion, up 15% 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.

Now back to total company results.

Amy E. Hood: Capital expenditures, including finance leases, were $3.9 billion, up 15% 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.

Capital expenditures, including finance leases, we point $9 billion up 15% year over year.

To support growing demand for our cloud services.

Lower than expected driven by cobot 19 related delays across the supply chain.

Amy E. Hood: Cash paid for PP&E was 3.8 billion dollars.

Amy E. Hood: Cash flow from operations was $17.5 billion and increased 29% year-over-year, driven by healthy cloud billings and collections. Cash paid for PP&E was 3.8 billion dollars.

Cash paid for pp any $3.8 billion.

Amy E. Hood: Cash flow from operations was $17.5 billion and increased 29% year-over-year, given by healthy cloud billings and collections. And free cash flow was $13.7 billion, up 25%.

Amy E. Hood: Cash flow from operations was $17.5 billion and increased 29% year-over-year, due to healthy cloud billings and collections. And free cash flow was $13.7 billion, up 25%.

Cash flow from operations was $17.5 billion and increased 29% year over year, given by healthy cloud billings and collections.

Amy E. Hood: Windows commercial products and cloud services grew 17% and 18% in constant currency, again driven by Microsoft 365 and demand for our advanced security solutions. Search revenue ex TAC increased 1% below our expectations, driven by significantly reduced advertising spend. And in gaming, revenue declined 1% and was relatively unchanged in constant currency, driven by higher user engagement than expected. Xbox content and services revenue increased 2% on a high prior year, comparable with strong growth in Game Pass subscribers and Minecraft.

Michael Spencer: They are included as additional clarifying items to aid investors in further understanding the company's third-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 last year unless otherwise noted. We also provide growth rates in constant currency when available as a framework for assessing how our underlying business is performing, excluding the effect of foreign currency rate fluctuations. Where growth rates are the same in constant currency, we will refer to growth rates only. We will post our prepared remarks to our website immediately following the call until the complete transcript is available. Today's call is being webcast live and recorded.

Free cash flow was $13.7 billion up 25%.

Amy E. Hood: Other income and expense was negative $132 million, lower than anticipated, due to FX remeasurement and net recognized losses on investments.

Amy E. Hood: Other income and expense was negative $132 million, lower than anticipated, due to FX remeasurement and net recognized losses on investments. Other income and expense was negative $132 million, lower than anticipated due to FX remeasurement and net recognized losses on investments.

Other income and expense was negative $132 million lower than anticipated due to FX remeasurement and net recognize losses on investment.

Amy E. Hood: As a reminder, we are required to recognize unrealized gains or losses on our equity portfolio.

Amy E. Hood: As a reminder, we are required to recognize unrealized gains or losses on our equity portfolio. As a result, our effective tax rate was slightly above 16%, in line with expectations.

As a reminder, we're required to recognize unrealized gains or losses on our equity portfolio.

Amy E. Hood: Our effective tax rate was slightly above 16% in line with expectations.

Amy E. Hood: Our effective tax rate was slightly above 16%, in line with expectations. And finally, we returned $9.9 billion to shareholders through share repurchases and dividends, an increase of 33% year-over-year.

Effective tax rate slightly above 16% inline with expectations.

Amy E. Hood: And finally, we return $9.9 billion to shareholders through share repurchases and dividends, an increase of 33% year over year.

And finally.

Returned $9.9 billion to shareholders through share repurchases and dividend an increase of 33% year over here.

Amy E. Hood: Now let's move to our outlook, starting with our expectations for COVID-19-related impact.

Amy E. Hood: Segment gross margin dollars increased 6% and 8% in constant currency, and gross margin percentage increased 2 points year-over-year due to higher-margin sales mix. Operating expense declined 3%, driven by a redeployment of engineering resources to higher growth opportunities. As a result, operating income grew by 15% and 17% in constant currency.

Michael Spencer: If you ask a question, it will be included in our live transmission, in the transcript, and in any future use of the recording. You can replay the call and view the transcript on the Microsoft Investor Relations website. During this call, we will be making forward-looking statements, which are predictions, projections, or other statements about future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. ACTUAL RESULTS COULD MATERIALLY DIFFER BECAUSE OF FACTORS DISCUSSED IN TODAY'S EARNINGS PRESS RELEASE, IN THE COMMENTS MADE DURING THIS CONFERENCE CALL, AND IN THE RISK FACTOR SECTION OF FORM 10-K, FORMS 10-Q, AND OTHER REPORTS AND FILINGS WITH THE SEC AND WITH THAT, I'll turn the call over to Samantha.

Amy E. Hood: Now let's move to our outlook, starting with our expectations for COVID-19 related impacts.

Amy E. Hood: Now let's move to our outlook, starting with our expectations for COVID-19-related impacts. In our consumer business, we expect continued demand across Windows OEM, Surface, and Gaming from the shift to remote work, play, and learning from home.

Now, let's move to outlook, starting with our expectations for cobot 19 related impact.

Amy E. Hood: In our consumer business, we expect continued demand across Windows OEM, Surface, and gaming from the shift to remote work, play, and learn from home.

Amy E. Hood: In our consumer business, we expect continued demand across Windows OEM, Surface, and gaming from the shift to remote work, play, and learn from home. Our outlook assumes this benefit remains through much of Q4, though growth rates may be impacted as stay-at-home guidelines ease.

And our consumer business, we expect continued demand across windows OEM surface and gaming from the shift to remote work play and learned from home.

Amy E. Hood: Our outlook assumes this benefit remains through much of Q4, though growth rates may be impacted as stay-at-home guidelines ease.

Amy E. Hood: Now back to total company results. Other income and expense was negative $132 million, lower than anticipated due to FX remeasurement and net recognized losses on investments. As a reminder, we are required to recognize unrealized gains or losses on our equity portfolio. As a result, our effective tax rate was slightly above 16%, in line with expectations. And finally, we returned $9.9 billion to shareholders through share repurchases and dividends, an increase of 33% year-over-year.

Our outlook assumes this benefit remain through much of Q4, so growth rate maybe impacted just stay at home guidelines E.

Amy E. Hood: Capital expenditures, including finance leases, were $3.9 billion, up 15% 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. Cash paid for PP&E was $3.8 billion. Cash flow from operations was $17.5 billion and increased 29% year-over-year, driven by healthy cloud billings and collections. And free cash flow was $13.7 billion, up 25%.

Amy E. Hood: We assume advertising spend levels from March do not improve in Q4, which will impact Search and LinkedIn.

Amy E. Hood: We assume advertising spend levels from March do not improve in Q4, which will impact Search and LinkedIn. We assume advertising spend levels from March do not improve in Q4, which will impact Search and LinkedIn.

We assume advertising spend levels from March did not improve in Q4, which will impact search and Lynn Dan.

Amy E. Hood: In our commercial business, our strong position in durable growth markets means we expect consistent execution on a large annuity base.

And our commercial business, our strong position and durable growth market means we expect consistent execution on a large annuity day.

Satya Nadella: Thank you, Mike. We delivered double-digit top-line and bottom-line growth once again this quarter, driven by the strength of our commercial cloud. As COVID-19 impacts every aspect of our work and life, we have seen two years' worth of digital transformation in two months. From remote teamwork and learning, to sales and customer service, to critical cloud infrastructure and security, we're working alongside customers every day to help them stay open for business in a world of remote everything. There is both immediate surge demand and systemic structural changes across all of our solution areas that will define the way we live and work going forward. Our diverse portfolio, durable business models, and differentiated technology stack across the cloud and the edge position us well for what's ahead.

Amy E. Hood: However, we expect the sales dynamics from March to continue, including a significant impact on LinkedIn from the weak job market and increased volatility in new longer lead-time deal closures.

Amy E. Hood: with continued usage and consumption growth across our cloud offerings.

We continue usage and consumption growth across our cloud offerings.

Amy E. Hood: However, we expect the sales dynamic from March to continue, including a significant impact in LinkedIn from the weak job market and increased volatility in new, longer lead time deal closures.

Amy E. Hood: However, we expect the sales dynamic from March to continue, including a significant impact on LinkedIn from the weak job market and increased volatility in new, longer-lead-time deal closures. 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.

However, we expect the sales dynamic from March to continue including a significant impact in like then from the week job market increased volatility and new longer lead time deal closures.

Amy E. Hood: And 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.

Commercial bookings growth from healthy renewal execution on a larger Q4 exploration well be impacted by some large commitments in the prior year and the previously mentioned sales dynamics.

Amy E. Hood: Commercial cloud growth margin percentage will be relatively changed year over year as continued improvement in IAC

Amy E. Hood: Commercial cloud growth margin percentage will be relatively changed year over year as continued improvement in IAC and past gross margin percentage will be more than offset by revenue mix shift to Azure. And with the supply chain constraints easing, we expect a material sequential increase in our capital expenditures to support growing usage and demand for our cloud services.

Commercial cloud gross margin percentage will be relatively changed year over year as continued improvement and I asked.

Amy E. Hood: and past gross margin percentage will be more than offset by revenue mix shift to Azure.

Past gross margin percentage will be more than offset revenue mix shift to answer.

Satya Nadella: And now, I'll highlight our innovation and momentum, starting with modern work. We are empowering people and organizations for a world of secure, remote work and learning with Microsoft 365. As work norms evolve, organizations are realizing they need a comprehensive solution that brings together communications, collaboration, and business processes built on a foundation of security and privacy. Microsoft Teams supports multiple communications modalities in a shared workspace. It's the only solution with meetings, calls, chat, collaboration, and the power of Office in a single integrated user experience with the highest security as well as compliance. Teams keeps all your work in communication, conversations, documents, whiteboards, and meeting notes in context.

Amy E. Hood: And with the supply chain constraints easing, we expect a material sequential increase in our capital expenditure.

Amy E. Hood: Now let's move to our outlook, starting with our expectations for COVID-19-related impact. Our outlook assumes this benefit remains through much of Q4, though growth rates may be impacted as stay-at-home guidelines ease. We assume advertising spend levels from March do not improve in Q4, which will impact Search and LinkedIn.

Amy E. Hood: And with the supply chain constraints easing, we expect a material sequential increase in our capital expenditure.

And with the supply chain constraint evening, we expect a material sequential increase in our capital expenditures to support growing usage and demand for our cloud services.

Amy E. Hood: In our consumer business, we expect continued demand across Windows OEM, Surface, and gaming from the shift to remote work, play, and learning from home.

Amy E. Hood: to support growing usage and demand for our cloud services.

Amy E. Hood: Next to FX,

Amy E. Hood: We expect a larger impact on our results due to the stronger U.S. dollar.

Amy E. Hood: Next to FX,

Amy E. Hood: We expect a larger impact on our results due to the stronger U.S. dollar.

Amy E. Hood: Next to FX

Amy E. Hood: We expect a larger impact on our results due to the stronger U.S. dollar. Next to FX

Next to FX.

Amy E. Hood: We expect a larger impact to our results due to the stronger U.S. dollar.

Amy E. Hood: Based on current rates, FX should now decrease total company revenue growth by approximately 2 points and decrease More Personal Computing revenue growth and total company COGS and operating expense growth by approximately 1 point.

We expect a larger impact to our results due to the stronger us dollar.

Amy E. Hood: Based on current rates, FX should now decrease total company, productivity and business processes, and intelligent cloud revenue growth by approximately two points.

Amy E. Hood: Based on current rates, FX should now decrease total company, productivity and business processes, and intelligent cloud revenue growth by approximately two points, and decreased more personal computing revenue growth and total company COGS and operating expense growth by approximately 1%, and decreased more personal computing revenue growth and total company COGS and operating expense growth by approximately 1%.

Based on current rate.

FX should now decrease total company.

Activity in business processes, and intelligent cloud revenue growth by approximately two points.

Amy E. Hood: and decreased more personal computing revenue growth and total company COGS and operating expense growth by approximately 1%.

And decrease more personal computing revenue growth and total company Cogs and operating expense growth.

Amy E. Hood: Now to segment guidance, which includes wider ranges than normal given the uncertainty in our business with higher in-quarter sales and revenue recognition.

Approximately one point.

Amy E. Hood: Now to segment guidance.

Amy E. Hood: Now to segment guidance, which includes wider ranges than normal given the uncertainty in our business with higher in-quarter sales and revenue recognition, which includes wider ranges than normal given the uncertainty in our business with higher in-quarter sales and revenue recognition.

Now to segment guidance.

Amy E. Hood: which includes wider ranges than normal given the uncertainty in our business with higher in-quarter sales and revenue recognition.

Which includes wider ranges than normal given the uncertainty in our business was higher in quarter sales and revenue recognition.

Amy E. Hood: In Productivity and Business Processes, we expect revenue between $11.65 billion and $11.95 billion.

Satya Nadella: It helps people collaborate inside and outside, making them more efficient, effective while reducing, We're accelerating Teams innovation, adding new capabilities each week and now support 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. Teams now has more than 75 million daily active users engaging in rich forms of communication and collaboration, and two-thirds of them shared, collaborated, or interacted with files on Teams, and number of organizations integrating their third-party and line-of-business apps with Teams has tripled in the past two months. In healthcare alone, there were more than 34 million Teams meetings in the past month.

Amy E. Hood: In productivity and business processes, we expect revenue between $11.65 and $11.95 billion. Approximately 80% of this revenue comes from the earn-out on existing contracts and agreement renewals. The remaining 20% of revenue, primarily from annuity agreements, transactional licensing, and LinkedIn, is subject to more volatility in the current environment.

And productivity and business processes, we expect revenue between 11.65 and $11.95 billion.

Amy E. Hood: Approximately 80% of this revenue comes from the earnout on existing contracts and agreement renewals. The remaining 20% of revenue, primarily from annuity agreements, transactional licensing, and LinkedIn, is subject to more volatility in the current environment.

Amy E. Hood: 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.

Nearly 80% of this revenue comes from the earn out on existing contracts and agreement renewal the remaining 20% of revenue primarily from annuity agreement transactional licensing and linked then.

Amy E. Hood: Commercial cloud gross margin percentage will be relatively changed year-over-year as continued improvement in IaaS and PaaS gross margin percentage will be more than offset by revenue mix shift to Azure. And with the supply chain constraints easing, we expect a material sequential increase in our capital expenditures to support growing usage and demand for our cloud services.

Subject can more volatility in the current environment.

Amy E. Hood: In Office Commercial, revenue growth will continue to be driven by Office 365, the strong upsell opportunity, particularly to our advanced security solution.

Amy E. Hood: In Office Commercial, revenue growth will continue to be driven by Office 365, a strong upsell opportunity, particularly for our advanced security solution. In Office Commercial, revenue growth will continue to be driven by Office 365, with strong upsell opportunities, particularly for our advanced security solutions.

In office commercial revenue growth will continue to be driven by office 365, with strong upsell opportunity, particularly to our advanced security solutions.

Amy E. Hood: However, growth will be partially offset by continued transactional weakness, some impact from the previously mentioned sales dynamics, and a strong prior year comparable, where four points of growth were from a greater mix of contracts with higher end-period recognition. However, growth will be partially offset by continued transactional weakness, some impact from the previously mentioned sales dynamics, and a strong prior year comparable, where 4 points of growth were from a greater mix of contracts with higher in-period recognition.

However growth, partially offset by continued transactional weakness some impact from the previously mentioned sales dynamic and a strong prior you're comfortable were four points of growth well from a greater mix of contracts with higher in period recognition.

Amy E. Hood: 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.

Amy E. Hood: 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.

Amy E. Hood: 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, next to FX.

Office consumer we expect low single digit revenue growth down sequentially as subscription growth is offset by a slowdown in the office 2019 transactional business.

Amy E. Hood: We expect a larger impact on our results due to the stronger U.S. dollar. Based on current rates, FX should now decrease total company revenue growth by approximately 2 points and decrease More Personal Computing revenue growth and total company COGS and operating expense growth by approximately 1 point.

Satya Nadella: New capabilities enable providers like Northwell Health, New York State's largest health provider, to deliver first-class telehealth. And the NHS in the United Kingdom is using Teams to ensure staff have the tools they need to do their vital work. Now that home offices are doubling as homeschools, educational outcomes are at a premium. The combination of Teams and curriculum in OneNote and social learning with Flipgrid gives teachers a complete remote learning solution so that they can improve student outcomes.

Enlink Dan.

Amy E. Hood: and LinkedIn.

Amy E. Hood: and LinkedIn. For LinkedIn, we expect continued strong engagement on the platform.

Amy E. Hood: We expect continued strong engagement on the platform.

Amy E. Hood: We expect continued strong engagement on the platform. However, a material mix of revenue is driven by customer hiring needs and advertising.

We expect continued strong engagement on the platform.

Amy E. Hood: However, a material mix of revenue is driven by customer hiring needs and advertising.

Amy E. Hood: However, a material mix of revenue is driven by customer hiring needs and advertising. Therefore, we expect a significant slowdown to mid-single-digit revenue growth.

However, immaterial mix of revenue was driven by customer hiring needs and advertising.

Amy E. Hood: Therefore, we expect a significant slowdown to mid-single-digit revenue growth.

Therefore, we expect a significant slowdown to mid single digit revenue growth.

Amy E. Hood: In Dynamics, we expect low double-digit revenue growth with continued Dynamics 365 momentum, offset slightly by a slowdown in new projects with longer lead times.

Amy E. Hood: In Dynamics, we expect low double-digit revenue growth when continued Dynamics 365 momentum offsets slightly by a slowdown in new projects with longer lead time.

Amy E. Hood: In Dynamics, we expect low double-digit revenue growth when continued Dynamics 365 momentum is offset slightly by a slowdown in new projects with longer lead times.

And dynamics, we expect low double digit revenue growth and continued dynamics 365 momentum offset slightly by slowdown in new projects with longer lead times.

Amy E. Hood: Now to segment guidance, which includes wider ranges than normal given the uncertainty in our business with higher in-quarter sales and revenue recognition.

Amy E. Hood: In Productivity and Business Processes, we expect revenue between $11.65 billion and $11.95 billion. Approximately 80% of this revenue comes from the earnout on existing contracts and agreement renewals; the remaining 20% of revenue, primarily from annuity agreements, transactional licensing, and LinkedIn, is subject to more volatility in the current environment.

Amy E. Hood: For Intelligent Cloud, we expect revenue between $12.9 billion and $13.15 billion.

Amy E. Hood: For Intelligent Cloud, we expect revenue between $12.9 and $13.15 billion.

Amy E. Hood: For Intelligent Cloud, we expect revenue between $12.9 and $13.15 billion. Approximately 80% of this revenue comes from the earnout on existing annuity contracts, agreement renewals, and consumption from existing Azure workloads.

For intelligent cloud, we expect revenue between 12.9 and $13.15 billion.

Satya Nadella: More than 183,000 educational institutions now rely on Teams. In the United Arab Emirates, more than 350,000 students are using Teams. In Italy, the University of Bologna chose Teams to move 90% of their courses for 80,000 students online in just three days. 20 organizations with more than 100,000 employees are now using Teams, including Continental AG, Ernst & Young, Pfizer, and SAP. 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 that powered their first ever virtual draft. More broadly, we continue to see momentum with organizations across Microsoft 365. Office 365 now has 258 million pages.

Amy E. Hood: Approximately 80% of this revenue comes from the earn-out on existing annuity contracts, agreement renewals, and consumption from existing Azure workloads.

Amy E. Hood: Approximately 80% of this revenue comes from the earn-out on existing annuity contracts, agreement renewals, and consumption from existing Azure workloads. The remaining 20%, which is primarily made up of new annuity agreements, transactional licensing, and enterprise services consulting revenue, is subject to more volatility.

Approximately 80% of this revenue comes from the earn out on existing annuity contract.

Renewals and consumption from existing asked her workload.

Amy E. Hood: The remaining 20%, which is primarily made up of new annuity agreements, transactional licensing, and enterprise services consulting revenue, is subject to more volatilities.

Amy E. Hood: The remaining 20%, which is primarily made up of new annuity agreements, transactional licensing, and enterprise services consulting revenue, is subject to more volatility.

Meaning 20%, which is primarily made up of new annuity agreements transaction licensing and enterprise services consulting revenue is subject to more volatility.

Amy E. Hood: In Azure, revenue growth will again be driven by our consumption-based business. 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.

Amy E. Hood: In Office commercial, revenue growth will continue to be driven by Office 365, with strong upsell opportunities, particularly for our advanced security solutions. However, growth will be partially offset by continued transactional weakness, some impact from the previously mentioned sales dynamics, and a strong prior year comparable, where 4 points of growth were from a greater mix of contracts with higher in-period recognition.

Amy E. Hood: In Azure, revenue growth will again be driven by our consumption-based business.

In Azure revenue growth will again be driven by our consumption based business with continued strong growth across our customer base. So we expect some moderation in the most impacted industry them segment.

Amy E. Hood: With continued strong growth across our customer base, though we expect some moderation in the most impacted industries and segments.

Amy E. Hood: With continued strong growth across our customer base, though, we expect some moderation in the most impacted industries and segments. And in our per user business, growth will be impacted by the increasing size of the installed base as well as the sales dynamic mentioned earlier.

Amy E. Hood: And in our per-user business, growth will be impacted by the increasing size of the install base, as well as the sales dynamic noted earlier. In our on-premises server business, we expect revenue to decline low single digits on a strong prior year comparable, as continued hybrid demand is more than offset by some transactional weaknesses.

Amy E. Hood: And in our per-user business, growth will be impacted by the increasing size of the installed base, as well as the sales dynamics noted earlier.

Per user business growth will be impacted by the increasing size at the installed base as well the sales dynamic earlier in our on premise a server business. We expect revenue declined low single digit on a strong prior year comparable as continued hybrid demand is more than offset by some transactional weakness.

Amy E. Hood: In our on-premises server business, we expect revenue to decline by low single digits on a strong prior year comparable, as continued hybrid demand is more than offset by some transactional weaknesses. In our on-premises server business, we expect revenue to decline low single digits on a strong prior year comparable as continued hybrid demand is more than offset by some transactional weakness.

Amy E. Hood: 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.

Amy E. Hood: In LinkedIn, we expect continued strong engagement on the platform. However, a material mix of revenue is driven by customer hiring needs and advertising. Therefore, we expect a significant slowdown to mid-single-digit revenue growth.

Satya Nadella: Usage of Windows Virtual Desktop tripled this quarter as organizations deploy virtual desktops and apps on Azure to enable secure remote work. From Interpublic Group and Kohler to Vodafone, the world's leading companies are choosing Microsoft 365 as their productivity cloud. And we continue to see strong demand for our premium offerings from customers like MasterCard, Autodesk, AARP, and Coca-Cola. We chose not only Microsoft 365 but also Dynamics 365 and Azure in a five-year multi-cloud agreement. We're also expanding our opportunity with consumers with Microsoft 365 Personal and Family, which now has more than 39 million subscribers, and we're bringing teams to consumers for the first time so that they can stay connected with family and friends. Windows 10 now has more than 1 billion monthly active devices, up 30% year-over-year, and we are seeing demand for Windows 10 PCs from small screens to large screens to dual screens. Now on to security.

Amy E. Hood: And in Enterprise Services, we expect a low single-digit revenue decline driven by continued delays in our consulting business.

Amy E. Hood: And in enterprise services, we expect a low single-digit revenue decline, driven by continued delays in our consulting business.

Amy E. Hood: And in enterprise services, we expect a low single-digit revenue decline, driven by continued delays in our consulting business. In More Personal Computing, we expect revenue between $11.3 billion and $11.7 billion.

And the enterprise services, we expect a low single digit revenue decline driven by continued delays in Arkansas business.

Amy E. Hood: In more personal computing, we expect revenue between $11.3 and $11.7 billion.

Amy E. Hood: In more personal computing, we expect revenue between $11.3 and $11.7 billion. Roughly 75% of this revenue across OEM, Surface, Search, and Gaming is earned in the quarter.

And more personal computing, we expect revenue between 11.3 and $11.7 billion roughly 75% of this revenue across OEM surface searching gaming is earned in Florida.

Amy E. Hood: Roughly 75% of this revenue across OEM, Surface, Search, and Gaming is earned in quarter.

Amy E. Hood: Roughly 75% of this revenue across OEM, Surface, Search, and Gaming is earned in the quarter. In Windows, overall OEM revenue growth should be low to mid-single digits on a strong prior year comparable.

Amy E. Hood: In Windows, overall OEM revenue growth should be low to mid-single digits on a strong prior year comparable. 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.

Amy E. Hood: In Windows, overall OEM revenue growth should be low to mid-single digits on a strong prior year basis.

In Windows overall, OEM revenue growth should be low to mid single digits on a strong prior year comparable and windows commercial products and cloud services, we expect mid single digit revenue growth with headwinds from our transactional business and the previously mentioned sales dynamic.

Amy E. Hood: 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. 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.

Amy E. Hood: In Dynamics, we expect low double-digit revenue growth when continued Dynamics 365 momentum is offset slightly by a slowdown in new projects with longer lead times.

Amy E. Hood: For Intelligent Cloud, we expect revenue between $12.9 billion and $13.15 billion. Approximately 80% of this revenue comes from the earnout on existing annuity contracts, agreement renewals, and consumption from existing Azure workloads. The remaining 20%, which is primarily made up of new annuity agreements, transactional licensing, and enterprise services consulting revenue, is subject to more volatility.

Amy E. Hood: In Surface, continued strong demand should drive revenue growth in the low teens.

Amy E. Hood: and Surface, the continued strong demand should drive revenue growth in the low-teen

Amy E. Hood: and Surface, continued strong demand should drive revenue growth in the low-teen market.

And so that they continued strong demand should drive revenue growth in the low teens.

Amy E. Hood: In Search XTAC, we expect revenue to decline in the mid-20% range, similar to March. In Search ex TAC, we expect revenue to decline in the mid-20% range, similar to March.

Amy E. Hood: In Search XTAC, we expect revenue to decline in the mid-20% range, similar to March.

In search ex Tac, we expect revenue to decline in the mid 20% range similar to March.

Amy E. Hood: And in gaming, we expect revenue growth in the high teens with continued strong user engagement across the platform.

Amy E. Hood: And in gaming, we expect revenue growth in the high teams with continued strong user engagement across the platform.

Amy E. Hood: And in gaming, we expect revenue growth in the high teens with continued strong user engagement across the platform. Now back to overall company guidance.

And in gaming, we expect revenue growth in the high teens with continued strong user engagement across the platform.

Satya Nadella: 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. 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. Microsoft Defender ATP now supports Linux in addition to Windows and macOS, with iOS and Android to come soon.

Amy E. Hood: Now back to overall company guide.

Amy E. Hood: Now back to the overall company guide. We expect COGS of $11.55 billion to $11.75 billion and operating expenses of $11.8 billion to $11.9 billion.

Now back to overall company guidance.

Amy E. Hood: We expect COGS of $11.55 to $11.75 billion and operating expense of $11.8 to $11.9 billion.

Amy E. Hood: We expect COGS of $11.55 to $11.75 billion and operating expenses of $11.8 to $11.9 billion.

We expect pod of $11.55 billion to $11.75 billion and operating expense at $11.8 billion to $11.9 billion.

Amy E. Hood: 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. And in our per user business, growth will be impacted by the increasing size of the installed base as well as the sales dynamic made earlier.

Amy E. Hood: In our on-premises server business, we expect revenue to decline low single digits on a strong prior year comparable as continued hybrid demand is more than offset by some transactional weakness. In enterprise services, we expect a low single-digit revenue decline driven by continued delays in our consulting business.

Amy E. Hood: Other income and expense should be negative $100 million, as interest expense is expected to more than offset interest income.

Amy E. Hood: Other income and expense should be negative $100 million as interest expense is expected to more than offset interest income.

Amy E. Hood: Other income and expense should be negative $100 million as interest expense is expected to more than offset interest income. And finally, we expect our Q4 effective tax rate to be approximately 18%, slightly higher than our full-year tax rate of 17% due to the geographic mix of revenue.

Other income expense should be negative $100 million as interest expense is expected to more than offset interest income.

Amy E. Hood: And finally, we expect our Q4 effective tax rate to be approximately 18%, slightly higher than our full-year tax rate of 17% due to the geographic mix of the revenue.

Amy E. Hood: And finally, we expect our Q4 effective tax rate to be approximately 18%, slightly higher than our full-year tax rate of 17% due to the geographic mix of the revenue. I'd like to close by sharing a few thoughts as we look beyond Q4 and into the next fiscal year.

And finally, we expect our Q4 effective tax rate to be approximately 18% slightly higher than our full year tax rate a 17% percent do the geographic mix at the revenue.

Speaker Change: I'd like to close sharing a few thoughts as we look beyond Q4 and into the next fiscal year.

Speaker Change: I'd like to close by sharing a few thoughts as we look beyond Q4 and into the next fiscal year. Our focus remains. Our focus remains on strategically managing the company for the long term, with decisions optimized for delivering greater customer value and long-term financial growth and profitability.

I'd like to close sharing a few thoughts as we look beyond Q4 and into the next fiscal year.

Satya Nadella: And new insider risk management in Microsoft 365 helps organizations detect and mitigate malicious activity. For example, the world's largest hedge fund, Bridgewater Associates, is using security services built into Microsoft 365 to protect employees and core services in a zero-trust environment. Retailer ASOS is using Azure Sentinel to detect and mitigate threats. And the need for secure remote identity and access management is increasing demand for Azure Active Directory, now with 300 million active users. Now on to developer tools.

Speaker Change: Our focus remains.

Our focus remains.

Speaker Change: on strategically managing the company for the long-term, with decisions optimized for delivering greater customer value and long-term financial growth and profitability. With that, we'll continue to provide increased support to our customers and partners as they navigate the uncertain future ahead, deepening our engagement and adding increased value. We will continue to aggressively expand our cloud infrastructure to support not only the usage surges of today, but the growing customer demand for our unique and differentiated cloud offerings in the future.

Speaker Change: on strategically managing the company for the long term, with decisions optimized for delivering greater customer value and long-term financial growth and profitability. With that, we'll continue to provide increased support to our customers and partners as they navigate the uncertain future ahead, deepening our engagement and adding increased value.

Strategically managing the company for the long term with decisions optimized for delivering greater customer value.

Speaker Change: We will continue to aggressively expand our cloud infrastructure to support not only the usage surges of today but the growing customer demand for our unique and differentiated cloud offerings in the future. We will continue to aggressively expand our cloud infrastructure to support not only the usage surges of today but the growing customer demand for our unique and differentiated cloud offerings in the future. We will continue to make significant investments in the strategic growth opportunities Satya outlined, organically and through strategic acquisitions like that of Affirmed Networks this quarter.

Long term financial growth and profitability.

That will continue to provide increased support to our customers and partners as they navigate the uncertainty to ahead deepening our engagement and adding increase value.

Speaker Change: In More Personal Computing, we expect revenue between $11.3 billion and $11.7 billion. Roughly 75% of this revenue across OEM, Surface, Search, and gaming is earned in the quarter. In Windows, overall OEM revenue growth should be low to mid-single digits on a strong prior year comparable. 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.

Continue to aggressively expand our cloud infrastructure to support not only the usage surgeons have today, but the growing customer demands are unique and differentiated cloud offerings in the future.

Satya Nadella: 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. And our developer relevance is increasing. For over a decade, developers have come together remotely on GitHub to build the world's software. As of today, we have 50 million developers on GitHub. From Twilio to the U.S. Department of Veterans Affairs to more than 10,000 engineers at Daimler, GitHub is where developers go from idea to code and code to cloud. GitHub 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 are bringing GitHub to even more developers, making core features free for the first time for teams of any size, and our acquisition of NPM makes GitHub the largest software repository for JavaScript. Now, on to power plugs.

Speaker Change: We will continue to make significant investments against the strategic growth opportunities Satya outlined, organically and through strategic acquisitions like that of Affirmed Networks this quarter.

Speaker Change: We will continue to make significant investments in the strategic growth opportunities Satya outlined, organically and through strategic acquisitions like that of Affirmed Networks this quarter. And we have the flexibility, given our strong financial position and free cash flow generation, to do all of this and support our commitment to capital return.

We will continue to make significant investments against the strategic growth opportunities that the outlined organically and through strategic acquisitions like that have affirmed networks this quarter.

Speaker Change: And we have the flexibility, given our strong financial position and free cash flow generation, to do all of this and support our commitment to capital return.

Speaker Change: And we have the flexibility, given our strong financial position and free cash flow generation, to do all of this and support our commitment to capital return. Microsoft does well when our customers do well, and we are uniquely positioned to continue to invest in and contribute to their future success.

And we have the flexibility given our strong financial position and free cash flow generation to do all of this and support our commitment to capital return.

Speaker Change: In Surface, continued strong demand is expected to drive revenue growth in the low teens. And in gaming, we expect revenue growth in the high teens with continued strong user engagement across the platform.

Speaker Change: In Search ex TAC, we expect revenue to decline in the mid-20% range, similar to March.

Speaker Change: Microsoft does well when our customers do well, and we are uniquely positioned to continue to invest and contribute to their future success.

Speaker Change: Microsoft does well when our customers do well, and we are uniquely positioned to continue to invest in and contribute to their future success. With that, Mike, let's go to Q&A.

Microsoft does well when our customers do well, we are uniquely positioned to continue to invest and contribute to their future success.

Speaker Change: With that, Mike, let's go to Q&A.

Speaker Change: Now back to overall company guidance. We expect COGS of $11.55 billion to $11.75 billion and operating expenses of $11.8 billion to $11.9 billion. Other income and expense should be negative $100 million as interest expense is expected to more than offset interest income. And finally, we expect our Q4 effective tax rate to be approximately 18%, slightly higher than our full-year tax rate of 17% due to the geographic mix of revenue.

Speaker Change: With that, Mike, let's go to Q&A.

But that Mike what's bed acute act.

Michael Spencer: Thanks, Amy. We'll now move over to Q&A. Out of respect to others on the call, we request that participants please only ask one question. Operator, can you please repeat your instructions?

Michael Spencer: Thanks, Amy. We'll now move over to Q&A.

Thanks, Jamie well known now move over to Kuni respect to others on the call request that participants. Please only ask one question operator can you. Please repeat your instructions.

Michael Spencer: Out of respect to others on the call, we request that participants please only ask one question. Operator, can you please repeat your instructions?

Michael Spencer: Thanks, Amy. We'll now move over to Q&A. (Operator Instructions) Operator, can you please repeat your instructions?

Thank you if you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question Q. You May proceed start to if you'd like to remove your question from the Q participants using speaker, let me maybe necessary to pick up your Hanson before pressing the star keys.

Speaker Change: Thank you. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question.

Speaker Change: Thank you.

Speaker Change: If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is busy. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing star 2.

Speaker Change: Thank you.

Speaker Change: You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star.

Satya Nadella: 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. Power Platform is already used by more than 3.4 million citizen developers and business decision makers. If you can create an Excel spreadsheet, you can create an app, build a virtual agent, automate a workflow, analyze data, and share insights in real time. For example, in just two weeks, Swedish Health Services, the largest nonprofit health provider in the Seattle area, used Power Apps to track critical supplies. 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. Leaders in every industry, from global healthcare company GSK to Coca-Cola, to Toyota, are all using Power Platform to accelerate their automation.

Speaker Change: (Operator Instructions) Our first question comes from the line of Keith Weiss with Morgan Stanley.

Speaker Change: Our first question comes from the line of Keith Weiss with Morgan Stanley. Please proceed with your question.

Speaker Change: I'd like to close by sharing a few thoughts as we look beyond Q4 and into the next fiscal year. Our focus remains on strategically managing the company for the long term, with decisions optimized for delivering greater customer value and long-term financial growth and profitability. With that, we'll continue to provide increased support to our customers and partners as they navigate the uncertain future ahead, deepening our engagement and adding increased value.

Speaker Change: Our first question comes from the line of Keith Weiss with Morgan Stanley. Please proceed with your question.

Our first question comes on line of Keith Weiss with Morgan Stanley. Please proceed with your question.

Excellent. Thank you guys for taking the question very impressive quarter in a difficult time animal, but all the you and your families are all safe and healthy.

Keith Eric Weiss: Excellent. Thank you guys for taking the question. Very impressive quarter in a difficult time, and I hope all of you and your families are all safe and healthy. Satya, a question for you. You did a really great job of talking to how well the expanded portfolio and the really broad portfolio that Microsoft brings to the market has helped customers during a crisis period and a period that engendered a lot of change within the way organizations were operating. 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 versus given the customer relationships, 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 of time.

Keith Eric Weiss: Excellent

Keith Eric Weiss: Thank you guys for taking the question.

Keith Eric Weiss: Excellent

Keith Eric Weiss: Thank you guys for taking the question.

Keith Eric Weiss: Very impressive quarter in a difficult time, and I hope all of you and your families are all safe and healthy. Satya, I have a question for you. You did a really great job of talking about how well the expanded portfolio and the really broad portfolio that Microsoft brings to the market has helped customers during a crisis period and a period that engendered a lot of change within the way organizations were operating. 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 versus given the customer relationships, given the focus on the long term? You have to sort of let it 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 of time.

A question for you on you did a really great job or talking to how well the expanded portfolio and like really brought portfolio that Microsoft pretty so the market has helped customers during.

A crisis period in a period that gendered a lot of change within late organizations were operating 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 picked revenues. If you will how much of that is stuff that you could actually monetize today reverses, giving the customer relationships given the.

Keith Eric Weiss: Very impressive quarter in a difficult time, and I hope all of you and your families are all safe and healthy. Satya, I have a question for you. You did a really great job of talking about how well the expanded portfolio, the really broad portfolio that Microsoft brings to the market, has helped customers during a crisis period and a period that engendered a lot of change within the way organizations were operating. Can you talk to us a little bit about how much of that sort of assistance, 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 versus, 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?

Because on a long term you have to sort of let play out over time, and it's about kind of expanding usage and expanding relationships with customers that you expect to pay out over a longer period.

Keith Eric Weiss: We will continue to make significant investments in the strategic growth opportunities Satya outlined, organically and through strategic acquisitions like that of Affirmed Networks this quarter. And we have the flexibility, given our strong financial position and free cash flow generation, to do all of this and support our commitment to capital return.

Keith Eric Weiss: Thank you, Keith, for the question.

Thank you keep for the question.

Satya Nadella: Thank you, Keith, for the question.

Satya Nadella: Thank you, Keith, for the question. Overall, the perspective we take, the approach we take is really to be there for our customers at their time of most acute need.

Satya Nadella: Overall, the perspective we take, the approach we take, is really to be there for our customers at their time of most acute need. So we don't go in there with the mindset of, you know, what does it mean for our revenue? I mean, this thing that I always say, which is when our customers do well, we'll do well on a long-term basis. That's at the core of our business model. That's the core of how we approach it. That said, Keith, I think there are three phases here. And there's overlap. 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. That's what's leading to increased demand in teams or increased demand in, you know, remote desktop and security and what have you. So that's sort of, I would say, the phase we are in broadly. And, of course, there are certain sectors, like the healthcare sector. There is even, you know, education, obviously, as well as some of the public sector organizations that all have surge demand, or even in some segments of retail where there is surge demand. And so that's something that we are scaling to meet their needs.

From the perspective, we take the approach we take is really to be that for our customers at that time off most acute need so we don't going there with the.

Satya Nadella: That said, Keith, I think there are three phases here, and there's overlap. For example, the phase we are mostly in right now is that first response phase, where from a business continuity perspective, people want to be able to work remotely, want to be able to conduct remote operations. That's what's leading to increased demand for teams or increased demand for, you know, remote desktop and security and what have you. So that's sort of, I would say, the phase we are in broadly.

Mindset of what does it mean for our revenue I mean, this thing that I always say, which is written not customers do well, we'll do well on a long term basis. That's at the core of our business model. That's the core of how we approach. It that's it Keith I think that a three phases here and there's overlap for example, the phase VI.

Satya Nadella: And, of course, there are certain sectors, like the healthcare sector. There is even, you know, education, obviously, as well as some of the public sector organizations that all have surged demand, or even in some segments of retail where there is surge demand. And so that's something that we are scaling to meet their needs. So we don't go in there with the mindset of, what does it mean for our revenue? Microsoft does well when our customers do well, and we are uniquely positioned to continue to invest in and contribute to their future success.

Satya Nadella: And we are working with card issuers like American Express so merchants who use Dynamics 365 Prod 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 tenant labs fully operational from afar. An enterprise software company, C3.AI, founded by Tom Siebel, shifted its entire sales force to Dynamics 365 sales in less than two weeks. Now to LinkedIn.

Satya Nadella: With that, Mike, let's go to Q&A. I mean this thing that I always say, which is when our customers do well, we'll do well on a long-term basis. That's at the core of our business model. That's the core of how we approach it. Thanks, Thanks, Amy. We'll now move over to Q&A. (Operator Instructions) Operator, can you please repeat your instructions? Thanks, Thanks, Amy. We'll now move over to Q&A.

Mostly in right now is that first response space where.

Satya Nadella: That said, Keith, I think there are 3 phases here, and there's overlap. For example, the phase we are mostly in right now is that first response space, where from a business continuity perspective, people want to be able to work remotely, want to be able to conduct remote operations.

Business continuity perspective people want to be able to walk remotely wont to be able to conduct automotive operations. All that's what's leading to increased demand and genes or increase demand in our remote remote desktop and security and what have you. So that's sort of I would say.

Satya Nadella: (Operator Instructions) Our first question comes from the line of Keith Weiss with Morgan Stanley. Very impressive quarter in a difficult time, and I hope all of you and your families are all safe and healthy. Satya, I have a question for you. You did a really great job of talking about how well the expanded portfolio, the really broad portfolio that Microsoft brings to the market, has helped customers during a crisis period and a period that engendered a lot of change within the way organizations were operating. Can you talk to us a little bit about how much that's sort of assistance? And how much of that was you able to actually take to revenues, if you will? How much of that is stuff that you could actually monetize today versus, 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?

Satya Nadella: (Operator Instructions) Our first question comes from the line of Keith Weiss with Morgan Stanley. Very impressive quarter in a difficult time, and I hope all of you and your families are all safe and healthy. Satya, I have a question for you. You did a really great job of talking about how well the expanded portfolio, the really broad portfolio that Microsoft brings to the market, has helped customers during a crisis period and a period that engendered a lot of change within the way organizations were operating. Can you talk to us a little bit about how much of that was sort of assistance? And how much of that was you able to actually take to revenues, if you will? How much of that is stuff that you could actually monetize today versus, 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?

The phase we are in broadly and of course, there are certain sectors like the healthcare sector. There is even higher education, obviously as well as some of the public sector organizations, although all have good demand or even in some segments of retail good that as such demand and so that's something that we are scaling talk to meet their needs.

Satya Nadella: Amidst the changing jobs market, LinkedIn's role in creating economic opportunity for every member of the global workforce has never been more acute. LinkedIn is where more than 690 million professionals go to connect, learn new skills, and find new opportunities, contributing to record levels of engagement across the platform in Q3. We're helping organizations attract, retain, and develop talent with our portfolio of talent solutions, talent insights, glint, and LinkedIn learning. Professionals watched nearly 4 million hours of content on LinkedIn learning in March, a nearly 50% increase month over month. With LinkedIn Live, people and organizations can broadcast video content to their networks in real time.

Satya Nadella: That's what's leading to increased demand for Teams or increased demand for remote desktop and security and what have you. So that's sort of, I would say, the phase we are in, broadly. And, of course, there are certain sectors like the health care sector. There is even education, obviously, as well as some of the public sector organizations. They all have surge demand, or even in some segments of retail, where there is surge demand. And so that's something that we are scaling to meet their needs.

Satya Nadella: Then I believe, as we work out here, so if you think about the next phase of recovery, it's more like a dial.

Satya Nadella: Then, I believe, as we work out here, so if you think about the next phase of recovery, it's more like a dial. Things will start coming back in terms of economic activity, and we'll have to keep adjusting the dial. This hybrid work is going to be there with us for a period of time. That's where some of the sort of architectural product strength of ours will be very useful to our customers. You know, even just take Teams. Teams is not just about having lots and lots of video media.

Then I believe as we work out here. So if you think about the next phase of recoveries more like a dial things will start coming back in terms of economic activity and we'll have to keep the up you know adjusting the dial this hybrid walk he's going to be there with us for a period of time, that's where some of the sort of architectural products trends of our.

Satya Nadella: This hybrid work is going to be with us for a period of time, and that's where some of the sort of architectural product strength of ours will be very useful to our customers. You know, even just take Teams. Teams is not just about having lots and lots of video media. It's not -- Teams is not just about having lots and lots of video meetings. Teams is about actually getting work done, where meetings and video are one part.

Satya Nadella: Things will start coming back in terms of economic activity, and we'll have to keep adjusting the dial. This hybrid work is going to be with us for a period of time. That's where some of the sort of architectural product strength of ours will be very useful to our customers. For example, even just take Teams.

Satya Nadella: Thank you, Keith, for the question. Overall, the perspective we take, the approach we take is really to be there for our customers at their time of most acute need. So we don't go in there with the mindset of, "What does it mean for our revenue?" I mean, this thing that I'd always say, which is when our customers do well, we'll do well on a long-term basis. That's at the core of our business model. That's the core of how we approach it.

Hours would be very useful to our customers are you now even just big teams. It's not teams is not just about having lots and lots of video meetings.

Satya Nadella: Teams is about actually getting work done where meetings and video is one part. So that's, for example, something the utility of it will only increase for our customers as some people come back to work, some people are remote, you have to collaborate without any fatigue. So that's the second phase. And then the third phase is where there is going to be structural change. There's no turning back, for example, in telemedicine, right? If you look at even what has happened in this first phase with AI bots powering telemedicine triage, that's going to change, I think, what healthcare outcomes look like. Same thing in education. Digital twins, this is something I think I talked about maybe even the last journey.

Satya Nadella: Teams is about actually getting work done, where meetings and video are one part. So that's, for example, something the utility of which will only increase for our customers as some people come back to work, some people are remote, and you have to collaborate without any fatigue. So that's, for example, something the utility of which will only increase for our customers as some people come back to work, some people are remote, and you have to collaborate without any fatigue. So that's that second phase.

Satya Nadella: Streams are up 158% since February, and the combination of LinkedIn Sales Navigator and Dynamics 365 gives sales professionals tools for more effective remote selling. Now on to games.

Teams is about actually getting work done where meetings and video is one part.

So that's one example is helping the utility of it will only increase for our customers that some people come back to walk. Some people are them. All do you have to collaborate without any city. So that's the second phase and then the third faces where that is gonna be structural change. There is no donning back water example, in Tele medicine right. If you look at even what has happened in this first phase.

Satya Nadella: So that's the second phase. And then the third phase is where there is going to be structural change. And then the third phase is where there is going to be structural change. There's no turning back, for example, in telemedicine, right?

Satya Nadella: There's no turning back, for example, in telemedicine, right? If you look at what has happened in this first phase with AI bots powering telemedicine triage, that's going to change, I think, what healthcare outcomes look like. That's going to change, I think, what health care outcomes look like. Same thing in education.

Satya Nadella: People everywhere are turning to gaming to sustain human connection while practicing social distancing, and we continue to deliver new exclusive first and third-party content to attract and retain gamers. We saw all-time record engagement this quarter, with nearly 90 million active users of Xbox Live, led by the strength of on and off content. Xbox Game Pass has more than 10 million subscribers, and we are seeing increased monetization of in-game content and services. And our Project xCloud gaming service now has hundreds of thousands of users in preview across seven countries, with eight more launching in the coming weeks. Now on to Azure.

Satya Nadella: Same thing happens in education. Same thing happens in education.

Satya Nadella: Digital twins, this is something I think I talked about maybe even on the last journey. Digital twins. This is something I think I talked about maybe in the last earnings call even.

Satya Nadella: If you look at what has happened in this first phase with AI bots powering telemedicine triage. That said, Keith, I think there are 3 phases here, and there's overlap. For example, the phase we are mostly in right now is that first respond space, where from a business continuity perspective, people want to be able to work remotely, want to be able to conduct remote operations. That's what's leading to increased demand for Teams or increased demand for remote desktop and security, and what have you. So that's sort of, I would say, a phase we are in broadly.

Phase with anti Bot powering our telemedicine tree arch.

Satya Nadella: And, of course, there are certain sectors like the health care sector. There is even education, obviously, as well as some of the public sector organizations. They all have surge demand, or even in some segments of retail, where there is surge demand. And so that's something that we are scaling to meet their needs.

It's going to change I think what healthcare outcomes looked like same thing in education Digital Twins. This is something I think I talked about maybe you in the last earnings even.

Satya Nadella: This is what anybody who has a digital twin is able to first remote the control plane, is able to automate, is able to simulate. That's huge for anybody who's into manufacturing or is trying to model out and plan their supply chain.

Satya Nadella: This is what anybody who has a digital twin is able to first remotely control the control plane, is able to automate, is able to simulate. That's huge for anybody who's into manufacturing or is trying to model out and plan their supply chain.

This is what anybody who has a digital twin he's able to fluids remote control plane is able to automate is able to simulate that's huge for anybody who is into manufacturing or is trying to model out and plan. The supply chain. So I think that there are ways for us to participate in more to ultimately will be productivity.

Satya Nadella: This is what anybody who has a digital twin is able to, first, remote control the control plane, is able to automate, is able to simulate. That's huge for anybody who's into manufacturing or is trying to model out and plan their supply chain.

Satya Nadella: So I think that there are ways for us to participate in what will ultimately be productivity growth.

Satya Nadella: So I think that there are ways for us to participate in what ultimately will be productivity growth, but 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.

Satya Nadella: So I think that there are ways for us to participate in what ultimately will be productivity growth, but in the immediate term, we're mostly building out the relationships, adding new customers, and increasing intensity and usage in existing relationships, which all, in the long term, will play out in terms of economics for us as well. But in the immediate term, we are mostly building out relationships, adding new customers, and increasing intensity in usage in existing relationships, which all, in the long term, will play out in terms of economics for us as well.

Satya Nadella: Now more than ever, organizations are relying on Azure to stay up and running, driving increased usage. We have more data center regions than any other cloud provider, and this quarter, we announced new regions in Mexico as well as in Spain. We are the only cloud that extends to the edge with consistency across operating models, development environments, and infrastructure stacks. Now Azure Edge Zones extends Azure to the network edge, connecting directly with the carrier's 5G network to enable immersive real-time experiences that require ultra-low latency, and our acquisition of Affirm Networks will help operators deploy and maintain 5G networks and services cost-effectively and securely. From BlackRock to Coca-Cola to Genesis, leading companies in every industry are choosing Azure.

No.

But our immediate dumb, they're mostly building out the relationships, adding new customers, adding density in usage in existing relationships, which all in the long dumb all will play out in <unk> in terms of economics for us as well.

Satya Nadella: And maybe just to add on to that, the way you might think about that, Keith, is the first stage for many of the licensing protocols was to include trial offers for many of our customers who were in need of the specific things we just discussed and, over time, being able to convert that into a monetization engine or, for example, to take some of the usage surge we've seen even across our consumer properties or even in gaming or Office 365, which is now Microsoft 365 for Consumers.

Speaker Change: And maybe just to add on to that, the way you might think about that, Keith, is the first stage for many of the licensing protocols was to include trial offers for many of our customers who were in need of the specific things we just discussed, and over time being able to convert that into a legal process.

Speaker Change: And maybe just to add to that, the way you might think about that, Keith, the first stage for many of the licensing protocols was to include trial offers for many of our customers who were in need of the specific things we just discussed, and over time, to be able to convert that into a legal process.

Maybe just to add on to that and the way you might think about that Keith is.

Speaker Change: Then I believe, as we work out here, so if you think about the next phase of recovery, it's more like a dial. Things will start coming back in terms of economic activity, and we'll have to keep adjusting the dial.

Speaker Change: This hybrid work is going to be with us for a period of time, and that's where some of the sort of architectural product strength of ours will be very useful to our customers.

Speaker Change: Even just take Teams. It's not -- Teams is not just about having lots and lots of video meetings. Teams is about actually getting work done, where meetings and video are one part. So that's, for example, something the utility of which will only increase for our customers as some people come back to work, some people are remote, and you have to collaborate without any fatigue. So that's that second phase.

Speaker Change: This hybrid work is going to be with us for a period of time, and that's where some of the sort of architectural product strength of ours will be very useful to our customers.

The first stage for many of the licensing protocols was to include trial offers.

For many of our customers who were in need of that specific things, we just discussed and over time being able to convert that.

[music].

Speaker Change: into a monetization engine or, for example, to take some of the usage surge we've seen even across our consumer properties or even in gaming or Office 365, which is now Microsoft 365 for consumers. I think there's a lot of opportunity here for us to continue to add value, and when you add value, long-term customer value certainly goes up.

Speaker Change: into a monetization engine or, for example, to take some of the usage surge we've seen across our consumer properties or even in gaming or Office 365, which is now Microsoft 365 for consumers.

Into a monetization engine or for example to take some of the uses surge we've seen even across our consumer properties.

Speaker Change: I think there's a lot of opportunity here for us to continue to add value, and when you add value, long-term customer value certainly goes up. I think there's a lot of opportunity here for us to continue to add value. And when you add value, long-term customer value certainly goes up.

Or even in gaming or office 365, which is now Microsoft 365 for consumers I think there's a lot of opportunity here for us to continue to add value and when you add value long term customer value certainly goes up.

Satya Nadella: The NBA is using Azure and our AI capabilities to build their own direct-to-consumer experiences. And the world's largest companies, like AB InBev and Mars, continue to migrate their SAP workloads to our cloud. In AI, customers are applying a comprehensive portfolio of tools and services and infrastructure to address unique challenges, including those created by COVID-19. In healthcare, we are seeing compute data and AI come together to help speed up responses from testing to therapeutics and vaccine development. Healthcare providers have created more than 1,400 bots using our Healthcare Bot Service, helping more than 27 million people access critical healthcare information. The Centers for Disease Control is using the Healthcare Bot to help people self-assess for coronavirus symptoms. Adaptive biotechnology is using our tools to decode the immune system's response to the virus.

Excellent.

Speaker Change: Thanks.

Speaker Change: Thanks, Keith. Operator, we'll take the next question.

Thank you operator, we'll take next question please.

Speaker Change: Thank you. Our next question comes from the line of Mark Moerdler with Bernstein Research.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Mark Moerdler with Bernstein Research.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Mark Moerdler with Bernstein Research.

Thank you. Our next question comes mine of Mark Moerdler with Bernstein Research. Please proceed with your question.

Speaker Change: Our next question comes from the line of Mark Moerdler with Bernstein Research. And then the third phase is where there is going to be structural change. There's no turning back, for example, in telemedicine, right? If you look at what has happened in this first phase with AI bots powering telemedicine triage. That's going to change, I think, what health care outcomes look like. Same thing in education.

Mark Your line is lies.

Mark L. Moerdler: Mark, your line is live.

Mark L. Moerdler: Mark, your line is live. Sorry, I apologize.

Mark L. Moerdler: Thank you for taking my questions. Congratulations, Satya and Amy, on the quarter and how you've been able to shift the business over many years to position it so well in these difficult times. We understand there are supply chain issues that have been impacting server deliveries in the quarter, and the changes in demand have been massive. During the quarter, there were disruptions in Azure, Xbox Live, and Team, we heard.

Sorry, I apologize.

Mark L. Moerdler: Sorry, I apologize. Thank you for taking my questions. Congratulations, Satya and Amy, on the quarter and how you've been able to shift the business over many years to position it so well into these difficult times. We understand there are supply chain issues that have been impacting server deliveries in the quarter, and the changes in demand have been massive. During the quarter, there were disruptions in Azure, Xbox Live, and Team, we heard. How is Microsoft coping with these sudden demands from work from home? Do you have enough capacity? How quickly can you add capacity? Can you give us a sense of how you deal with that on the Azure and the overall business side?

Thank you for taking my questions Congratulations to you and Amy on the quarter and how you've been able to shift the business over many years position. It so well into these difficult times.

Mark L. Moerdler: How is Microsoft coping with these sudden demands from work from home? Do you have enough capacity? How quickly can you add capacity? Can you give us a sense of how you deal with that on the Azure platform and the overall business side?

Mark L. Moerdler: Congratulations, Satya and Amy, on the quarter and how you've been able to shift the business over many years to position it so well in these difficult times. We understand there are supply chain issues that have been impacting server deliveries in the quarter, and the changes in demand have been massive.

I understand their supply chain issues have been impacting server deliveries in the quarter and the changes in demand have been massive during the quarter. There were disruptions in Azure X. box live and team we heard how's Microsoft coping with the sudden demands from work from home would do you have enough capacity. How quickly can you add capacity can you give a sense of how you do.

Mark L. Moerdler: Digital twins. This is something I think I talked about maybe in the last earnings call even. This is what anybody who has a digital twin is able to first, remotely control the control plane, is able to automate, is able to simulate. That's huge for anybody who's into manufacturing or is trying to model out and plan their supply chain. So I think that there are ways for us to participate in what ultimately will be productivity growth. But in the immediate term, we are mostly building out the relationships, adding new customers, and increasing intensity in usage in existing relationships, which all, in the long term, will play out in terms of economics for us as well.

Satya Nadella: And ImmunityBio is using more than 24 petaflops of computing power on our cloud to help researchers build models in days instead of months. Enterprises are using our speech services to manage a record influx of customer service inquiries, including Post Italian, which is using it to automatically respond to nearly 170,000 calls per day. All up, 6 million hours of speech were transcribed in March alone.

Mark L. Moerdler: During the quarter, there were disruptions in Azure, Xbox Live, and Teams, we heard. How is Microsoft coping with these sudden demands from work from home? Do you have enough capacity? How quickly can you add more capacity? Can you give us a sense of how you deal with that on the Azure side and the overall business side?

You will that on the the Azure and the overall business side. Thank you.

Mark L. Moerdler: Yes. Maybe I'll start, and Amy, you can add to this.

Speaker Change: Yeah, maybe I'll start, and Amy, you can add to this. 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. You know, if you think about it, the orders of magnitude increase we've seen in usage, in our own case with our applications such as Teams or virtual desktop, have been tremendous. And that's happening, as I said, in different segments with our customers as they move to remote operations and are dealing, in some cases, with their own surge demand or what you've seen even in gaming and other entertainment categories. So I would say this architecture has withheld well. We did have, as you mentioned, some supply chain issues coming into the quarter, which have largely worked themselves out. But we have a data center architecture and a footprint that really supports our customers' needs for both the elasticity of demand they need, but also compliance. So one of the things is data sovereignty and security is not going to go away ever, especially in the geopolitical environment we live in. If anything, it's going to be more important for us to... We support this need for people to scale while keeping them compliant. And so we feel well positioned for that. With that, I'll transition to Amy to add further.

Speaker Change: Yeah, maybe I'll start, and Amy, you can add to this. 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. You know, if you think about it, the orders of magnitude increase we've seen in usage, in our own case with our applications such as Teams or virtual desktop, has been tremendous. And that's happening, as I said, in different segments with our customers as they move to remote operations and are dealing, in some cases, with their own surge demand or what you've seen even in gaming and other entertainment categories. So I would say this architecture has held up well. We did have, as you mentioned, some supply chain issues coming into the quarter, which have largely worked themselves out. But we have a data center architecture and a footprint that really supports our customers' needs for both the elasticity of demand they need and compliance. So one of the things is data sovereignty and security is not going to go away, especially in the geopolitical environment we live in. If anything, it's going to be more important for us to... We support this need for people to scale while keeping them compliant, and so we feel well positioned for that. With that, I'll transition to Amy to add further.

Maybe I'll start and maybe you can add to this overall plus I think I'd say the cotton to cloud architecture, whether it's at the infrastructure level all the SaaS applications with them through six five were azure or have been I think very very helpful in off being able to all as an economy.

Pivot to these new way of looking working from home revolting.

All of our operations you know if you think you bought it the orders of magnitude increase we've seen in usage in our own case without applications, such as teams or which one of desktop have been tremendous and that's happening as I said in different segments with our customers as they move to remote operations and not dealing and.

Speaker Change: 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. And maybe just to add to that, the way you might think about that, Keith, is that the first stage for many I think there's a lot of opportunity here for us to continue to add value, and when you add value, long-term customer value certainly goes up. If you think about it, the orders of magnitude increase we've seen in usage, in our own case with our applications such as Teams or virtual desktop, has been tremendous. And that's happening, as I said, in different segments with our customers as they move to remote operations and are dealing, in some cases, with their own surge demand or what you've seen even in gaming and other entertainment categories. So I would say these architectures have held well. We did have, as you mentioned, some supply chain issues coming into the quarter, which have largely worked themselves out. But we have a data center architecture and a footprint that really supports our customers' needs for both the elasticity of demand they need and compliance.

Amy E. Hood: As Satya discussed, the COVID-19 health crisis is changing the way our employees, customers, partners, and communities live and work together. In a new environment, our team addressed surging usage and remote business process adjustments well. Therefore, in Q3, revenue was $35 billion, up 15% and 16% in constant currency. Gross margin dollars increased 18% and 20% in constant currency. Operating income increased 25% and 28% in constant currency. Earnings per share were $1.40, increasing 23% and 27% in constant currency.

Some cases with their own surge demand or what you've seen even in gaming and other entertainment categories. So I would say this architectures withheld well we did have as you mentioned some supply chain issues are coming into the quarter, which have largely work themselves out, but you have a datacenter architecture enough.

Brent that really supports our customers' needs for both the elasticity of demand than me, but also compliance. So one of the things is data sovereignty and security is not going to go you go away or especially the geopolitical environment, we live and if anything it's going to be more important for us to support this new.

Speaker Change: Our next question comes from Mark Moerdler with Bernstein Research. Congratulations, Satya and Amy, on the quarter and how you've been able to shift the business over many years to position it so well in these difficult times. We understand there are supply chain issues that have been impacting server deliveries in the quarter, and the changes in demand have been massive. During the quarter, there were disruptions in Azure, Xbox Live, and Teams, we heard. How is Microsoft opening with these sudden demands from work from home? Do you have enough capacity? How quickly can you add capacity? Can you give us a sense of how you deal with that on the Azure platform and the overall business side?

Speaker Change: So one of the things is data sovereignty and security is not going away, especially in the geopolitical environment we live in. If anything, it's going to be more important for us to support this need for people to scale while keeping them compliant. And so we feel well positioned for that. With that, I'll transition to Amy to add further. I think, Mark, in many ways, the way you see that capacity show up is in the Q4 CapEx guide.

Need for people to scale, while keeping them compliant and so we feel well positioned for that I've heard that I was transition dream you add for them.

Amy E. Hood: And I think, Mark, in many ways, the way you see that capacity show up is in the Q4 CapEx guide. 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 data centers. Things got a lot better in March, and they're continuing to get better, and so I feel good that we'll have a healthy CapEx number in Q4, but more importantly, continue to get ahead of the surge demand and also just the continuing demand growth we're seeing across the properties.

Amy E. Hood: And I think, Mark, in many ways, the way you see that capacity show up is in the Q4 CapEx guide. And so while we spent $3.9 million in Q3, that was certainly short, in particular on the server side, in terms of getting what we need into the data centers.

And I think mark in many ways the way you see that.

Amy E. Hood: And we saw increased demand from work, play, and learn-from-home scenarios, benefiting Windows OEM, Surface, office consumer, and gaming. However, this was partially offset by a significant reduction in advertising spend, which impacted our search and LinkedIn businesses. In our commercial business in March, we saw healthy Azure consumption and, as Satya mentioned, increased usage across Windows Virtual Desktop, Power Platform, and Microsoft 365, particularly in teams in our advanced security solutions. However, we also saw some changes to our sales dynamics, particularly in the industries and segments most impacted by COVID-19. We saw a slowdown in our transactional business across segments, but particularly in small and medium businesses. In enterprise services, growth rates slowed as consulting projects were delayed.

Amy E. Hood: Things got a lot better in March, and they're continuing to get better, and so I feel good that we'll have a healthy CapEx number in Q4, but more importantly, continue to get ahead of the surge demand and also just the continuing demand growth we're seeing across the properties. And so while we spent $3.9 billion in Q3, that was certainly short, in particular, on the server side, in terms of getting what we need into the data centers. Things got a lot better in March, and they're continuing to get better. And so I feel good that we'll have a healthy CapEx number in Q4 but, more importantly, continue to get ahead of the surge demand, and also there's the continuing demand growth we're seeing across the properties.

Capacity show up in Q4, Capex guide and so while we spent three nine in Q3 that was certainly shore in particular.

Amy E. Hood: Maybe I'll start, and Amy, you can add to this. Overall, first, I think I would say the current cloud architecture, whether it's at the infrastructure level or the SaaS applications with M 365 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. If you think about it, the orders of magnitude increase we've seen in usage, in our own case with our applications such as Teams or virtual desktop, has been tremendous. And that's happening, as I said, in different segments with our customers as they've moved to remote operations and are dealing, in some cases, with their own surge demand, or what you've seen even in gaming and other entertainment categories.

On the server side in terms of getting at and what we need into the data centers I think got a lot better in March and they're continuing to get better.

Amy E. Hood: Yes.

And so I feel good that we'll have a healthy.

Capex number in Q4, but more importantly continued to get ahead of the surge demand and also this the continuing demand growth we're seeing across the property.

Appreciate it thank you congrats.

Speaker Change: Thank you and congrats.

Speaker Change: Thanks, Mark. We'll take the next question.

Thanks, Mark I will take next question. Please.

Speaker Change: Thank you. Our next question comes from the line of Heather Bellini with Goldman Sachs.

Thank you. Our next question comes from line of Heather Bellini with Goldman Sachs. Please proceed with your question.

Speaker Change: Our next question comes from the line of Heather Bellini with Goldman Sachs.

Heather Bellini: Great. Thank you so much for taking the question. I actually had two for you. I was wondering if you could share new logo growth in Azure and Office 365 versus net expansions, just if there's any color you could give on what happened in the quarter. And also, I guess, Satya, how do you think about the adoption curve of Azure and the workloads in the cloud accelerating over the next few years as a result of the changes that may occur from COVID? And any thoughts on if your three-year out view of cloud adoption is increasing as a result of what's going on? Thank you.

Heather Bellini: Great

Heather Bellini: Thank you so much for taking the question. I actually had two for you. I was wondering if you could share new logo growth in Azure and Office 365 versus net expansions, just if there's any color you could give on what happened in the quarter. And also, I guess, Satya, how do you think about the adoption curve of Azure and the workloads in the cloud accelerating over the next few years as a result of the changes that may occur from COVID? And any thoughts on whether your three-year out view of cloud adoption is increasing as a result of what's going on? Thank you.

Heather Bellini: Great

Great. Thank thank you so much for taking my question I actually had two for you I was wondering if you could share new logo grows and in Azure and office 365 versus net expansions just just if there was if there's any color you could give.

Amy E. Hood: And on annual contracts in LinkedIn's talent solutions business, renewals were impacted by the weak job market. Moving to our overall results, commercial bookings increased 7% and 12% in constant currency on a relatively small expiration base and strong prior year comparable. Growth was driven by strong renewal execution consistent with prior quarters, though we saw some impact from the previously mentioned changes in sales dynamics. Commercial remaining performance obligation increased 24% to $89 billion.

Heather Bellini: I actually had 2 for you. I was wondering if you could share new logo growth in Azure and Office 365 versus net expansions. Just that there was -- if there's any color you could give on what happened in the quarter. And also, I guess, Satya, how do you think about the adoption curve of Azure and the workloads in the cloud accelerating over the next few years as a result of the changes that may occur from COVID? And any thoughts on whether your 3-year out view of cloud adoption is increasing as a result of what's going on?

On what happened in the quarter and also I guess.

How do you think about the adoption curve of Azure and the workloads in the cloud accelerating over the next few years as a result of the changes that may occur from coated and any thoughts on if your two year out view of cloud adoption is increasing as a result of what's going thank you.

Heather Bellini: So I would say these architectures withheld well. We did have, as you mentioned, some supply chain issues coming into the quarter, which have largely worked themselves out. But we have a data center architecture and a footprint that really supports our customers' needs for both the elasticity of demand they need and compliance. So one of the things is data sovereignty and security is not going to go away, especially in the geopolitical environment we live in. If anything, it's going to be more important for us to support this need for people to scale while keeping them compliant, and so we feel well positioned for that.

Heather Bellini: With that, I'll transition to Amy to add further. Yes. Maybe, Amy, I'll take the second one first, and then you can take the first one.

Amy E. Hood: Approximately 50% will be recognized in revenue in the next 12 months, in line with prior quarter trends. Our commercial revenue annuity mix increased 2.0 over a year to 92%, and commercial crowd revenue was $13.3 billion, growing 39% and 40% in cost and currency. Commercial cloud growth margin percentage increased four points year over year to 67%, a significant improvement in Azure gross margin percentage, including some benefit from short-term utilization gains as we work through COVID-19 related supply chain constraints, which more than offset sales makeshift to Azure. Company Gross Margin Percentage was 69%, up two points year over year, driven by favorable segment sales mix and improvement across all three of our segments. In line with expectations, FX reduced revenue growth by one point and had no impact on operating expense growth. The FX impact on COPS growth was slightly more favorable than expected and reduced growth by one point. Operating expense grew 10%, slightly below expectations, primarily driven by lower marketing and travel spend in March.

Yeah, maybe I'll take the second one first and then you can take the first one.

Satya Nadella: Yeah, maybe, Amy, I'll take the second one first, and then you can take the first one. I would say the...

Satya Nadella: Yeah, maybe Amy, I'll take the second one first, and then you can take the first one. I would say the...

Satya Nadella: I would say the -- there is no question that moving to the public cloud, even at a time like this, is just capital efficient.

I would say the.

There's no question that moving to the public cloud even at a time like this its just if capital efficient.

Satya Nadella: There is no question that moving to the public cloud, even at a time like this, is just as capital efficient. If you think about for any business, the conversations we are having is even for businesses that are having tough economic cycles, one of the smartest things that anyone can do, and we want to be very helpful in those conversations, is to transition to the efficient frontier as quickly as possible so that they can have more agility, more elasticity, and better unit economics coming out of this, or even while you're in this crisis. So I think the migration to the cloud is absolutely a secular shift, but at the same time, the architecture of the cloud itself is going to have the cloud and the edge. So it's not just about migrating off-premise, but it's going to be able to have an architecture that supports the needs, where edge compute is increasingly going to be very important. That's why even what we are doing on the... Our edge compute, what we did with Affirm Networks, what we did with even the launch of Azure Edge Zones, all speaks to, I think, what is going to be the secular infrastructure architecture going forward.

Satya Nadella: There is no question that moving to the public cloud, even at a time like this, is just as capital efficient.

Satya Nadella: If you think about any business, the conversations we're having are even for businesses that are having tough economic cycles, one of the smartest things that anyone can do, and we want to be very helpful in those conversations, is to transition to the efficient frontier as quickly as possible so that they can have more agility, more elasticity, and better unit economics coming out of this, or even while they're in this crisis. If you think about any business, the conversations we're having are even for businesses that are having tough economic cycles, one of the smartest things that anyone can do, and we want to be very helpful in those conversations, is to transition to the efficient frontier as quickly as possible so that they can have more agility, more elasticity, and better unit economics coming out of this or even while they're in this crisis.

Think about for any business. The conversations we're having is even for businesses that are having tough economic cycles. One of the smallest things that anyone can do and we want to be very helpful. In those conversations used to transition to the efficient frontier as quickly as possible. So that they can out more agility more relaxed a city, but better cannot unit.

Satya Nadella: So I think the migration to the cloud is absolutely a secular shift, but at the same time, the architecture of the cloud itself is going to have the cloud and the edge. So it's not just about migrating off-premise, but it's going to be able to have an architecture that supports the needs of the business, where edge compute is increasingly going to be very important. That's why even what we are doing on the... Our edge compute, what we did with Affirm Networks, what we did with even the launch of Azure Edge Zones, all speak to, I think, what is going to be the secular infrastructure architecture going forward. So I think the migration to the cloud is absolutely a secular shift. But at the same time, the architecture of the cloud itself is going to be -- have the cloud and the edge. So it's not just about migrating off-premise, but it's going to be able to have an architecture that supports the needs of an increasingly important edge compute. That's why even what we are doing with our edge compute, what we did with Affirmed Networks, and what we did with the launch of Azure Edge Zones all speak to, I think, what is going to be the secular infrastructure architecture going forward.

It economics.

Coming out of this all or even while you're in this crisis. So I think the migration to the cloud is absolutely a secular shift but at the same time the architecture of the common itself is going to be.

Satya Nadella: I think, Mark, in many ways, the way you see that capacity show up is in the Q4 CapEx guide. 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 data centers. Things got a lot better in March, and they're continuing to get better. And so I feel good that we'll have a healthy CapEx number in Q4, but more importantly, continue to get ahead of the surge demand, and also there's the continuing demand growth we're seeing across the properties.

The cloud and yet so it's not just about migrating off premise, but it's going to be able to have an architecture that supports the needs where edge computing is increasingly going to be very important thats why even what you're doing on to our edge compute what we did with if I'm networks, what we did with even the launch of Azure edge zones of.

Satya Nadella: Our next question comes from the line of Heather Bellini with Goldman Sachs. I actually had 2 for you. I was wondering if you could share new logo growth in Azure and Office 365 versus net expansions. Just that there was -- if there's any color you could give on what happened in the quarter. And also, I guess, Satya, how do you think about the adoption curve of Azure and the workloads in the cloud accelerating over the next few years as a result of the changes that may occur from COVID? And any thoughts on whether your 3-year out view of cloud adoption is increasing as a result of what's going on? And to your first question on really expanding the customer base versus adding seats or consumption within that customer base, we actually saw both this quarter again, 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.

Speaks to I think what is going to be the secular infrastructure architecture going forward.

Amy E. Hood: Operating margins expanded this quarter as a result of higher gross margins and disciplined decisions to invest in strategic and high-growth areas. Now to our segment. In line with expectations, revenue from productivity and business processes was $11.7 billion, increasing 15% and 16% in constant currency. Office commercial revenue grew 13% and 15% in constant currency. Office 365 commercial revenue grew 25% and 27% in constant currency, again driven by installed-based growth across all workloads and customer segments, as well as higher ARPU with strong upsell to E5. And Office 365 commercial seats grew 20% to nearly 258 million with an increasing mix from Microsoft 365. Office consumer revenue grew 15% and 17% in constant currency, driven by growth in Office 2019 and Office 365 subscription revenue. Office 365 consumer subscribers grew to 39.6 million, benefiting from the increased demand noted earlier. Dynamics revenue grew 17% and 20% in constant currency, driven by Dynamics 365 growth of 47% and 49% in constant currency. LinkedIn revenue increased 21% and 22% in constant currency, as early quarter momentum was slightly offset by the slowdown in advertising.

Satya Nadella: And to your first question on really expanding the customer base versus adding seats or consumption within that customer base, we actually saw both this quarter again. 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. But outside of that, Heather, it didn't really show a different pattern than I would have normally expected in terms of a breakdown between those. One difference I will say is I'm

Satya Nadella: And to your first question on really expanding the customer base versus adding seats or consumption within that customer base, we actually saw both this quarter again.

And to your first question on really expanding the customer base.

Satya Nadella: 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. But outside of that, Heather, it didn't really show a different pattern than I would have normally expected in terms of a breakdown between those. But outside of that, Heather, it didn't really show a different pattern than I would have normally expected in terms of a breakdown between those.

Versus adding seats or consumption within that customer base and we actually saw both this quarter again.

Satya Nadella: One difference I will say is that I'm Yes.

Satya Nadella: Maybe, Amy, I'll take the second one first, and then you can take the first one. I would say the -- there is no question that moving to the public cloud, even at a time like this, is just as capital efficient. If you think about any business, the conversations we're having are even for businesses that are having tough economic cycles, one of the smartest things that anyone can do, and we want to be very helpful in those conversations, is to transition to the efficient frontier as quickly as possible so that they can have more agility, more elasticity, and better unit economics coming out of this or even while they're in this crisis. So I think the migration to the cloud is absolutely a The one difference I will say is just because there was so much deployment done in the past 4 weeks, especially around Teams and some of the other workloads, there's certainly a distinction that a lot of that was expanding the footprint as opposed to deployment much faster than I think many enterprises had initially planned to do so.

The way you would've seen a little bit of weakness I guess in on premises office commercial do the transactional weakness and maybe SMB, but outside of that whether it didn't really show a different pattern.

Then I would have normally expected in terms of up about break down between those that one difference I will say is.

Satya Nadella: And just because there was so much deployment done in the past four weeks, especially around teams and some of the other workloads, there's certainly a distinction that a lot of that was expanding the footprint as opposed to deployment much faster than I think many enterprises had initially planned to do so.

Just because there was so much deployment died.

In the past four weeks, especially around teams and somebody other workloads.

Theres certainly a distinction that a lot of that was expanding the footprint as appose of deployment much faster than I think many enterprises had initially planned to do so.

Speaker Change: Great, thank you.

Great. Thank you.

Speaker Change: Thanks, Heather. Operator, we'll move to the next question.

Thanks, Operator, we'll moving next question please.

Speaker Change: Thank you. Our next question comes from the line of Brent Thill with Jefferies. Please proceed.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Brent Thill with Jefferies. Please proceed.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Brent Thill with Jefferies. Please proceed.

Thank you. Our next question comes from line of Brent Thill with Jefferies. Please proceed with your question.

Speaker Change: Our next question comes from the line of Brent Thill with Jefferies.

Brent Thill: Good afternoon. Satya, I was curious if you could share the next chapter of Teams, what you think it looks like, and maybe speak to the monetization halo that you're seeing with the rest of the product line spinning off of the great adoption, which seems to be doubling every time you give us the stats. Thanks for getting our firm up on Teams basically in a couple weeks.

Brent Thill: Good afternoon,

Brent Thill: Satya, I was curious if you could share the next chapter of Teams, what you think it looks like, and maybe speak to the monetization halo that you're seeing with the rest of the product line spinning off of the great adoption, which seems to be doubling every time you give us the stats. Satya, I was curious if you could share the next chapter of Teams and what you think it looks like, and maybe speak to the monetization halo that you're seeing with the rest of the product line spinning off of the great adoption, which seems to be doubling every time you give us the stats.

Brent Thill: Good afternoon,

Good afternoon.

I was curious if you could share on the next chapter.

And what you think it looks like and maybe speak to the monetization halo that you're seeing with the rest of the product line spinning off of the great adoption, which seems to be doubling every time you give us that.

Brent Thill: Thanks for getting our firm up on Teams in basically just a couple weeks. Thanks for getting our firm up on Teams in basically just a couple of weeks.

Brent Thill: But at the same time, the architecture of the cloud itself is going to be -- have the cloud and the edge. So it's not just about migrating off-premise, but it's going to be able to have an architecture that supports the needs of an increasingly important edge compute is increasingly going to be very important. That's why even what we are doing with our edge compute, what we did with Affirmed Networks, and what we did with the launch of Azure edge zones all speak to, I think, what is going to be the secular infrastructure architecture going forward.

Thanks for getting our firm up on teams basically in a couple of weeks.

Amy E. Hood: Segment gross margin dollars increased 16% and 18% in constant currency, and gross margin percentage increased one point year over year as improvements in Office 365 and LinkedIn margins more than offset an increase in cloud revenue mix. Operating expense increased 12% and 13% in constant currency, driven by continued investment in LinkedIn and cloud engineering, and operating income increased 20% and 23% in constant currency. Next, the Intelligent Cloud segment. Revenue was $12.3 billion, increasing 27% and 29% in constant currency, ahead of expectations driven by continued customer demand for our hybrid offering. On a significant basis, server products and cloud services revenue increased 30% and 32% in constant currency.

Thanks.

Satya Nadella: Thanks, Brent. Overall, 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 a modern way of working. We always felt that we needed to have, in some sense, best-in-class functionality in each of the modalities, right, whether it's meetings or chat, collaboration or business process. But the most important thing is to bring these together so that people can get more done, teams of people and organizations can get more done. And that's what you see play out, even in this pandemic, if you look at it. Of course, there's no question meetings are most important. We do a lot of them. But at the same time, what is happening in a meeting is the important context that can't get lost. That's what's going to have continuity, whether it's the whiteboard you created, it's the OneNote you shared. It's the document you edited together. It's a business process alert that you are responding to. Thinking that through holistically is the most important thing. And that's where our focus will be. In fact, some of the stats I shared even around some of the number of business process applications that are getting integrated. 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. That ability to digitize at high rates and do it in the context of how people work and collaborate, I think, speaks to the power of the Teams platform. And when Teams does well, all of Microsoft 365 does well.

Satya Nadella: Thanks, Brent.

Satya Nadella: Overall, the way we've always approached teams is as a user experience, and I would say the framework was to sort of incorporate what's a modern way of working. We always felt that we needed to have, in some sense, best-in-class functionality in each of the modalities, right, whether it's meetings or chat, collaboration, or business processes. But the most important thing is to bring them all together so that people can get more done, teams of people, and organizations can get more done.

Satya Nadella: Thanks, Brent.

Brent overall for the way we've always approached teams is as the user experience and though I would say off scaffolding wants to sort of incorporated Watson modern way of book you always felt that we needed to have in some sense best in class functionality each of the.

Satya Nadella: And that's what you see play out, even in this pandemic, if you look at it. Of course, there's no question meetings are most important. We do a lot of them. But at the same time, what is happening in a meeting is the important context that can't get lost. That's what's going to have continuity, whether it's the whiteboard you created, it's the OneNote you shared, or it's the document you edited together. It's a business process alert that you are responding to. Thinking that through holistically is the most important thing. And that's where our focus will be.

Satya Nadella: In fact, some of the stats I shared around some of the number of business process applications that are getting integrated. One of the most exciting things to me that happened even in this COVID response was that 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, PPE because there was no ERP system that did that. That ability to digitize at high rates and do it in the context of how people work and collaborate, I think, speaks to the power of the Teams platform. And when Teams does well, all of Microsoft 365 does well.

Modalities right, but it is meetings or chat.

Collaboration all business process, but at the most important thing is to bring these together so that people can get more done teams of people than organizations can get more Don and that's what do you see play out even in this pandemic. If you look at it of course, there's no question meetings on most important.

Satya Nadella: Thanks, Brent. Overall, the way we've always approached Teams is as a user experience, and I would say, a framework to sort of incorporate what's a modern way of working. We always felt that we needed to have, in some sense, best-in-class functionality in each of the modalities, right, whether it's meetings or chat, collaboration or business process. And to your first question on really expanding the customer base versus adding seats or consumption within that customer base, we actually saw both this quarter again, the way you would have seen a little bit of weakness, I guess, in on-premises Office commercial due to transactional weakness But outside of that, Heather, it didn't really show a different pattern than I would have normally expected in terms of a breakdown between those. But the most important thing is to bring these together so that people can get more done, teams of people, and organizations can get more done. And that's what you see play out even in this pandemic, if you look at it. Of course, there's no question; meetings are most important. We do a lot of them. But at the same time, what is happening in a meeting is the important context that can't get lost. That's what's going to have continuity, whether it's the whiteboard you created, it's the one note you shared, it's the document you edited together, it's a business process alert that you are responding to.

Do a lot of them, but at the same time what is happening in a meeting is the important context that can get lost that's what's going to have continuity.

Satya Nadella: The one difference I will say is just because there was so much deployment done in the past 4 weeks, especially around Teams and some of the other workloads, there's certainly a distinction that a lot of that was expanding the footprint as opposed to deployment much faster than I think many enterprises had initially planned to do so. Thinking that through holistically is the most important thing. And that's where our focus will be. In fact, some of the stats I shared even around some of the number of business process applications that are getting integrated, one of the most exciting things to me that happened even in this COVID response, 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, PPE because there was no ERP system that did

The whiteboard you created the one note you shared.

Amy E. Hood: Azure revenue grew 59% and 61% in constant currency, driven by continued strong growth in our consumption-based business. In our per user business, our enterprise mobility install base grew 34% to over 134 million seats with continued benefit from Microsoft 365. And our on-premises server business grew 11% and 12% 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. Enterprise services revenue increased 6% and 7% in constant currency as growth in premier support services more than offset the consulting delays.

The document you added together, it's a business process alert that you are responding to thinking that through Holistically is the most important thing and that's where our focus will be in fact, all the stats I shared even around some of the number of business process applications that are getting integrated one of the most exciting things to me that happened.

Satya Nadella: Our next question comes from the line of Brent Thill with Jefferies.

Satya Nadella: Satya, I was curious if you could share the next chapter of Teams and what you think it looks like, and maybe speak to the monetization halo that you're seeing with the rest of the product line spinning off of the great adoption, which seems to be doubling every time you give us the stats. Thanks for getting our firm up on Teams basically in a couple of weeks.

Satya Nadella: That ability to digitize at high rates and do it in the context of how people work and collaborate, I think, speaks to the power of the Teams platform. And when Teams does well, all of Microsoft 365 does well.

Even in this covered response with people who are able to use power platform to build new applications in hours.

Satya Nadella: Thanks, Brent. Overall, the way we've always approached teams is as a user experience, and I would say, the framework was to sort of incorporate what's a modern way of working. We always felt that we needed, in some sense, best-in-class functionality in each of the modalities, right, whether it's meetings or chat, collaboration, or business processes. But the most important thing is to bring these together so that people can get more done, teams of people, and organizations can get more done. And that's what you see play out even in this pandemic, if you look at it. Of course, there's no question; meetings are most important. We do a lot of them. But at the same time, what is happening in a meeting is the important context that can't get lost. That's what's going to have continuity, whether it's the whiteboard you created, it's the one note you shared, it's the document you edited together, it's a business process alert that you are responding to. Thinking that through holistically is the most important thing. And that's where our focus will be. In fact, some of the stats I shared even around some of the number of business process applications that are getting integrated, one of the most exciting things to me that happened even in this COVID response where people were able to use Power Platform to build new applications in hours, put that into Teams, and then get their first-time workers to be able to track, say, PPE because there was no ERP system that did That ability to digitize at high rates and do it in the context of how people work and collaborate, I think, speaks to the power of the Teams platform. And when Teams does well, all of Microsoft 365 does well.

Got into teams and then get their first five workers to be able to track sake BB.

Because there was no ERP system that did that that ability to digitize at high rates and do it in the context of how people work and collaborate I think speaks to the power of the teams platform and it went teams does well all of Microsoft 365 does well.

Amy E. Hood: Segment gross margin dollars increased 30% and 32% in constant currency, and gross margin percentage increased 2.0 over year, as another quarter of significant improvement in Azure gross margins more than offset the growing mix of Azure IaaS and PaaS revenue. Operating expense increased 19%, primarily driven by continued investments in Azure, and operating income grew 42% and 46% in constant currency. Now, to more personal computing. Revenue was $11 billion, increasing 3% and 4% in constant currency, ahead of the revised expectations from our mid-quarter guidance update, as better-than-expected Windows OEM, Surface, and gaming revenue more than offset lower-than-expected search revenue.

Great. Thanks, Brent operator, we're moving next question please.

Speaker Change: Great. Thanks Brent. Operator, we'll move to the next question.

Speaker Change: Great. Thanks, Brent.

Speaker Change: Operator, we'll move to the next question.

Speaker Change: Thank you. Our next question comes from the line of Phil Winslow with Wells Fargo. Please proceed.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Phil Winslow with Wells Fargo. Please proceed.

Speaker Change: Our next question comes from the line of Phil Winslow with Wells Fargo.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Phil Winslow with Wells Fargo. Please proceed.

Speaker Change: Our next question comes from the line of Phil Winslow with Wells Fargo.

Thank you. Our next question comes from line of Phil Winslow with Wells Fargo. Please proceed with your question.

Phil Winslow: Hey, thanks guys for taking my question, and I'm glad to hear that you all are well, and I hope the same for your families. Satya, in your prepared remarks, you mentioned how Microsoft continues to broaden its relevancy with developers from GitHub, Visual Studio, Visual Studio Code, DevOps, DevServer, and most recently, obviously, a multi-cloud infrastructure as code with Azure Arc. Just two questions on this topic. Firstly, Satya, how do you think about how much of that DevOps lifecycle Microsoft needs to address directly versus partnering with third parties or maybe open source? 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 CI-CD pipeline products impacting Azure's competitive position near and longer term?

Phil Winslow: Hey, thanks guys for taking my question, and I'm glad to hear that you all are well, and I hope the same for your families.

Hey, Thanks, guys for taking my question Im glad to hear that that youre willing to hope for your families.

During your prepared remarks, you mentioned, how Microsoft continues to broaden its relevancy with developers from get out visual studio visual for your code dumpster and most recently, obviously multi cloud infrastructures code with Azure arc just two questions on this topic first we saw it how do you think about how much of that Dev ops lifecycle, Microsoft needs to address directly respond with third parties or maybe open.

Phil Winslow: Firstly, Satya, how do you think about how much of that DevOps lifecycle Microsoft needs to address directly versus partnering with third parties or maybe open source? 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 CI-CD pipeline products impacting Azure's competitive position in the near and longer term?

Phil Winslow: And I'm glad to hear that you all are well, and I hope the same for your families.

For US and then secondly for such and Amy If covered 19 is really creating service guys. The opportunity for the cloud in digital transformation. How are you seeing your broadening fee activity pipeline products impacting azures competitive position near and longer term.

Phil Winslow: Firstly, Satya, how do you think about how much of that dev ops life cycle Microsoft needs to address directly versus partnering with third parties or maybe open source? 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 CI/CD pipeline product set impacting Azure's competitive position in the near and longer term?

Satya Nadella: Yeah, first thing, we have always said when we acquired GitHub that we want to be in the developer tools and developer services business as an end, not as a means to some end. And so that's what we're executing on. We care about this. After all, Microsoft was created as a dev tools company first before anything else, and that means a lot to us. And so with GitHub now, we're just really executing on that strategy, which is to start. And that means you have to be true to the developer choices. So this is not about us having anything homogenous from us, but to really respect the heterogeneous choices of developers. All we want to make sure is we bring the very best of our code editing tools to GitHub as the code repository, bring great security capabilities, bring the best of CICD and DevOps, bring even LiveOps, something like Azure PlayFab, all of those tools. But it's not to say that anyone else can't participate. In fact, we have marketplaces on Azure as well as on GitHub. It'll work across clouds. So we will always ensure that it's an open community that supports all of the developer choices. At the same time, we think of this as we're building essentially what we did with Microsoft 365 for knowledge workers and first-line workers, what we're doing with Dynamics 365 for BDMs. We want to do with developers because there are going to be more software developers. And their workflows are going to impact more people outside of software development. So to me, this is a very important SaaS category to be in for its own sake.

Phil Winslow: Yes.

Satya Nadella: Yeah, first thing, we have always said when we acquired GitHub that we want to be in the developer tools and developer services business as an end in itself, not as a means to some end. And so that's what we're executing on. We care about this. After all, Microsoft was created as a developer tools company first before anything else, and that means a lot to us. And so with GitHub now, we're just really executing on that strategy, which is to start. And that means you have to be true to developer choices. So this is not about us having anything homogeneous from us but really respecting the heterogeneous choices of developers.

Yes first thing we have always said and we acquired get hub that we want to be the developer tools and develop a services business.

Amy E. Hood: OEM, as well as surface revenue, benefited from the improved supply chain in China, increased demand from remote scenarios, and continued Windows 7 end-of-support dynamics. However, in OEM non-pro, those dynamics were offset by continued pressure in the entry-level category. Windows commercial products and cloud services were 17% and 18% in constant currency, again driven by Microsoft 365 and demand for advanced security solutions. Search Revenue X-TAC increased 1% below expectations given by significantly reduced advertising spend.

As an and not as a means to some AD and so that's what we are executing on we care about this doctoral Microsoft was created as a Devtools company first before anything else and that means a lot to us.

Satya Nadella: All we want to make sure is that we bring the very best of our code editing tools to GitHub as the code repository, bring great security capabilities, bring the best of CICD and DevOps, bring even LiveOps, something like Azure PlayFab, all of those tools. But it's not to say that anyone else can't participate. In fact, we have marketplaces on Azure as well as on GitHub. It'll work across clouds. So we will always ensure that it's an open community that supports all of the developer choices.

And so they get up now we just really executing on that strategy, which used to start and that means you have to be true to the developer choices. So this is not about us having anything homogenous from us but to really respect the heterogeneous choices are developers all we want to make sure we bring the very best of our quota.

Satya Nadella: At the same time, we think of this as building essentially what we did with Microsoft 365 for knowledge workers and first-line workers, and what we're doing with Dynamics 365 for business process managers. We want to do with developers because there are going to be more software developers. And their workflows are going to impact more people outside of software development. So, to me, this is a very important SaaS category to be in for its own sake.

Satya Nadella: The first thing we have always said when we acquired GitHub is that we want to be in the developer tools and developer services business as an end in itself, not as a means to some end. And so that's what we're executing on. We care about this. After all, Microsoft was created as a developer tools company first before anything else, and that means a lot to us. And so with GitHub now, we're just really executing on that strategy, which is to start. And that means you have to be true to developer choices. So this is not about us having anything homogeneous from us but really respecting the heterogeneous choices of developers. All we want to make sure is that we bring the very best of our code editing tools to GitHub as the code repository, bring great security capabilities, bring the best of CI/CD and dev ops, bring even live operations, something like Azure PlayFab, all of those tools. But that's not to say that anyone else can't participate. In fact, we have marketplaces on Azure as well as on GitHub. It will be -- it will work across the cloud, so we will always ensure that it's an open community that supports all of the developer choices.

Leading tools.

To get off as the quarter depository bring great security capabilities, bringing the best of C.I.C.D. and Dev ops.

Amy E. Hood: And in gaming, revenue declined 1% and was relatively unchanged in constant currency, driven by higher user engagement than expected. Xbox content and services revenue increased 2% on a high prior year comparable, with strong growth in Game Pass subscribers and Minecraft. Segment gross margin dollars increased 6% and 8% in constant currency, and gross margin percentage increased 2 points year-over-year due to higher-margin sales mix. Operating expense declined 3%, driven by a redeployment of engineering resources to higher growth opportunities.

Bring even livewatch something like agile play fab all of those tools, but it's not to say that or anyone else can participate in fact, we have marketplaces on azure as well as on getting up.

Satya Nadella: Our next question comes from the line of Phil Winslow with Wells Fargo. And I'm glad to hear that you all are well, and I hope the same for your families.

It would be to walk across cloud. So we will always ensure that it's an open community that supports all of the developer choices at the same time. We think of this is we are building essentially what we did with Microsoft 365 for knowledge workers in first line workers, what we're doing with dynamics 365 for BD ads, we want to do with developers because.

Satya Nadella: Satya, in your prepared remarks, you mentioned how Microsoft continues to broaden its relevancy with developers from GitHub Visual Studio, Visual Studio Code, Dev Server, and most recently, obviously, a multi-cloud infrastructures code with Azure Arc. Just 2 questions on this topic. Firstly, Satya, how do you think about how much of that DevOps life cycle Microsoft needs to address directly versus partner with third parties or maybe open source? 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 as impacting Azure's competitive position in the near and longer term?

Satya Nadella: At the same time, we think of this as -- we're building essentially what we did with Microsoft 365 for knowledge workers and first-line workers. What we are doing with Dynamics 365 for BDMs, we want to do with developers because there are going to be more software developers, and their workflows are going to impact more people outside of software development. So, to me, this is a very important SaaS category to be in for its own sake.

They're going to be more software developers and their workflows are going to impact more people outside of software development. So to me. This is a very important SaaS category to be and for its own sake.

Amy E. Hood: As a result, operating income grew 15% and 17% in constant currency. Now back to total company results. Capital expenditures, including finance leases, were $3.9 billion, up 15% 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. Cash paid for PP&E was $3.8 billion.

Great.

Satya Nadella: Great.

Satya Nadella: Great

Speaker Change: Thanks, Phil. Operator, we'll move to the next question, please.

So.

Hi, everyone was next question please.

Thank you. Our next question comes from line of Raimo Lenschow with Barclays. Please proceed with your question.

Speaker Change: Thank you. Our next question comes from the line of Raimo Lenschow with Barker.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Raimo Lenschow with Barker.

Speaker Change: Our next question comes from the line of Raimo Lenschow with Barclays.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Raimo Lenschow with Barker.

Speaker Change: Our next question comes from the line of Raimo Lenschow with Barclays.

Speaker Change: transcript Emily Beynon

Raimo Lenschow: Thanks. Thank you and hope you guys are staying safe. I want to focus on dynamics. It's obviously not the biggest part of Microsoft, but it's a very important goal of one. In this sort of environment where there's a lot of uncertainty, with dynamics, you're addressing some very fundamental kind of business apps. What do you see there in terms of customer appetite to kind of go for this at this point? Is that kind of an area because it's now online comparison? Or to on-premise that is seeing more adoption, a faster adoption? Can you talk a little bit about the trends here? Thank you.

Raimo Lenschow: Thanks.

Raimo Lenschow: Thank you, and I hope you guys are staying safe.

Raimo Lenschow: Thanks.

Raimo Lenschow: Thank you, and I hope you guys are staying safe.

Yes.

Raimo Lenschow: I want to focus on dynamics. It's obviously not the biggest part of Microsoft, but it's a very important goal for one. In this sort of environment, where there's a lot of uncertainty and dynamics, you're addressing some very fundamental kinds of business apps.

Thank you and hope you guys think safe.

I wanted to focus on dynamics is what we didn't want to because part of Microsoft, but it's a very important goal fun.

Raimo Lenschow: What do you see there in terms of customer appetite to kind of go for this at this point? Is that kind of an area because it's now an online comparison? Or to on-premise that is seeing more adoption, faster adoption? Can you talk a little bit about the trends here?

Amy E. Hood: Cash flow from operations was $17.5 billion and increased 29% year-over-year, driven by healthy cloud billings and collections. And free cash flow was $13.7 billion, up 25%. Other income and expense was negative $132 million, lower than anticipated, due to FX remeasurement and net recognized losses on investment.

In just sort of environment, where it's a lot of uncertainty.

Raimo Lenschow: Thank you.

Raimo Lenschow: I hope you guys are staying safe.

Raimo Lenschow: I wanted to focus on Dynamics. It's obviously not the biggest part of Microsoft, but it's a very important growth one. In this sort of environment where there's a lot of uncertainty, with Dynamics, you're addressing some very fundamental kinds of business apps.

Raimo Lenschow: I hope you guys are staying safe.

That makes you are addressing some very fundamental kind of business.

Raimo Lenschow: Yes. The first thing we have always said when we acquired GitHub is that we want to be in the developer tools and developer services business as an end in itself, not as a means to some end. And so that's what we're executing on. We care about this. After all, Microsoft was created as a developer tools company first before anything else, and that means a lot to us. And so, with GitHub now, we're just really executing on that strategy, which is to start. And that means you have to be true to the developer choices. So this is not about us having anything homogeneous from us but really respecting the heterogeneous choices of developers.

What do you see there in terms of APA customer appetite to kind of coal four days at this point is that kind of an area because it's now online compared to on premise that seem more adoption and foster adoption or can you talk a little bit about trends Jeff. Thank you.

Raimo Lenschow: What do you see there in terms of customer appetite to kind of go for this at this point? Is that kind of an area, because it's now online compared to on-premise, that is seeing more adoption, fast adoption? Or can you talk a little bit about the trends there? Sure.

Sure I think it's actually a very important to have.

Amy E. Hood: As a reminder, we are required to recognize unrealized gains or losses on our equity portfolio. As a result, our effective tax rate was slightly above 16%, in line with expectations. And finally, we return $9.9 billion to shareholders through share repurchases and dividends, an increase of 33% year over year. Now, let's move to our outlook, starting with our expectations for COVID-19-related impacts. In our consumer business, we expect continued demand across Windows OEM, Surface, and gaming from the shift to remote work, play, and learn from home. Our outlook assumes this benefit remains through much of Q4, though growth rates may be impacted if stay-at-home guidelines ease. We assume advertising spin levels from March do not improve in Q4, which will impact search and LinkedIn.

Speaker Change: Sure, I think it's actually very important to have the ability in a very agile way as a business

Speaker Change: Sure, I think it's actually very important to have the ability in a very agile way as a business I think it's actually very important to have the ability in a very agile way as a business to be able to move on your business process needs.

The ability in a very agile ray as a business to be able to move on your business process needs. So for example, if you ought to retail new now need to do contact list shopping.

Speaker Change: To be able to move on your business process needs. So, 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. These are some of the examples I even used in my script. So, this is what is sort of going to be high priority. So, as long as business applications like ours with Dynamics 365 address the immediate pressing need, these are project starts that will happen because, in some sense, that's the way for economic activity to return. But at the same time, I think business applications that perhaps have longer lead in terms of implementation, people are probably going to take some more time to decide on it. But whereas we think we're well-positioned to capture the new scenarios and Power Apps because we think about Power Platform and Dynamics as both what we do with business applications and we feel that between these two along with Azure are well-positioned to address what are going to be increasing digitization needs where people don't have months to deploy or months to implement and that's where we shine.

Speaker Change: To be able to move on with your business process needs,

Speaker Change: So, 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 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. These are some of the examples I even used in my script. So, this is what is sort of going to be a high priority.

That is something that for example dynamics is going to support odd for you to be able to use even commodity cameras with AI modules with all of it helping.

Speaker Change: So, as long as business applications like ours with Dynamics 365 address the immediate pressing need, these are project starts that will happen because, in some sense, that's the way for economic activity to return. So 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.

Gain a model that supports our shopping inside a physical stores orca site pick up.

Speaker Change: But at the same time, I think business applications that perhaps have a longer lead time in terms of implementation, people are probably going to take some more time to decide on them. But at the same time, I think business applications that perhaps are -- have a longer lead time in terms of implementation, people are probably going to take some more time to decide on them.

Or even remote assistance seasonality examples that even used in my script. So this is what is sort of going to be for high priority. So as long as business applications.

Speaker Change: But whereas we think we're well-positioned to capture the new scenarios and Power Apps because we think about Power Platform and Dynamics as both what we do with business applications, and we feel that between these two, along with Azure, we are well-positioned to address what are going to be increasing digitization needs where people don't have months to deploy or months to implement, and that's where we shine. And Power Apps, because we think about Power Platform and Dynamics as both what we do with business applications, and we feel that these 2, along with Azure, are well positioned to address what are going to be increasing digitization needs, where people don't have months to deploy or months to implement. And that's where we shine. And I think that you would say that we've seen that in our pipeline and, really, in the customer demand scenarios.

Like ours, but dynamics ccxfive address the immediate pressing needs. These a project starts that will happen because in some sense. That's the way for economic activity to read done but at the same time I think business applications that perhaps are have longer lead in terms of implementation. Our people are probably going to take some more time to.

Amy E. Hood: 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 offering. However, we expect the sales dynamic from March to continue, including a significant impact on LinkedIn from the weak job market and increased volatility and new longer lead time deal closures. And commercial bookings, growth from healthy renewal execution on a larger Q4-X3 base will be impacted by some large commitments in the prior year and the previously mentioned sales dynamics. Commercial cloud growth margin percentage will be relatively changed year over year as continued improvement and I ask, and past gross margin percentage will be more than offset by revenue mix shift to Azure. And with the supply chain constraints easing, we expect a material sequential increase in our capital expenditures to support growing usage and demand for our cloud services, next to FX.

Speaker Change: All we want to make sure is that we bring the very best of our code editing tools to GitHub as the code repository, bring great security capabilities, bring the best of CICD and DevOps, bring even LiveOps, something like Azure Playfab, all of those tools, but it's not to say that anyone else can't participate. In fact, we have marketplaces on Azure as well as on GitHub. It will be -- it will work across clouds, so we will always ensure that it's an open community that supports all of the developer choices. At the same time, we think of this as building essentially what we did with Microsoft 365 for knowledge workers and first-line workers. What we are doing with Dynamics 365 for business process managers, we want to do with developers because there are going to be more software developers, and their workflows are going to impact more people outside of So, to me, this is a very important SaaS category to be in for its own sake.

Decide on it but rather as we think we are well positioned to capture the new scenarios and power apps, because we think about power platform and dynamics as both.

What we do with business applications and we feel that between these two along with Azure are well positioned to address what are going to be increasing digitization needs, where people don't have a month skewed to deploy a month three implement and that's where we shine.

Speaker Change: These are some of the examples I even used in my script. So this is what is sort of going to be a high priority.

Speaker Change: Our next question comes from the line of Raimo Lenschow with Barclays.

Speaker Change: and I think that you would say that we've seen that in the in our pipeline and really in the customer demand scenarios so I think what we've seen is really more of a shift to some of these quick time to value deployments and a real change in terms of new long lead time projects there and I think that's that's probably not surprising and the one thing one scenario I

Speaker Change: and I think that you would say that we've seen that in our pipeline and really in the customer demand scenarios, so I think what we've seen is really more of a shift to some of these quick time to value deployments and a real change in terms of new long lead time projects there, and I think that's probably not surprising and the one thing, one scenario I

And I think that he would say that we think that in.

In our pipeline and really in the customer demand scenarios. So I think what we've seen is really more of a shifts to some of these quick time to value deployment.

Speaker Change: I hope you guys are staying safe.

Speaker Change: I wanted to focus on Dynamics. It's obviously not the biggest part of Microsoft, but it's a very important growth area. In this sort of environment where there's a lot of uncertainty, with Dynamics, you're addressing some very fundamental kinds of business apps.

Speaker Change: What do you see there in terms of customer appetite to kind of go for this at this point? Is that kind of an area, because it's now online compared to on-premise, that is seeing more adoption, fast adoption? Or can you talk a little bit about the trends there?

And we'll change in terms as new long lead time projects there.

Speaker Change: So I think what we've seen is really more of a shift to some of these quick time-to-value deployments and a real change in terms of new, long-lead time projects there. And I think that's probably not surprising.

Speaker Change: And the one thing -- one scenario I should mention is, for anyone who's looking to say, "How do I continue to generate revenue?" Remote sales, for example, is going to be a very critical scenario.

I think that that's probably not surprising and the one thing one could argue I should mention is for anyone who is looking to say how do I continue to generate revenue remote sales. For example is going to be a very critical scenario.

Speaker Change: For anyone 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. So those are the types of solutions that are going to be very relevant in times like this.

Speaker Change: For anyone who's looking to say, how do I continue to generate revenue?, remote sales, for example, is going to be a very critical scenario.

Speaker Change: And there's no better solution than the combination of dynamic sales and LinkedIn Sales Navigator to be able to drive, especially B2B sales. So those are the types of solutions that are going to be very relevant in times like this.

Speaker Change: And there's no better solution than the combination of Dynamics Sales and LinkedIn Sales Navigator to be able to drive, especially B2B sales. So those are the types of solutions that are going to be very relevant in times like this.

There is no better solution than the combination, though dot dynamic sales and linked in sales navigator ought to be able to drive in specialty b to b sales. So those are the types of solutions that are going to be very relevant in times like this.

Speaker Change: Sure. I think it's actually very important to have the ability, in a very agile way as a business, to be able to move on your business process needs.

Amy E. Hood: We expect a larger impact on our results due to the stronger U.S. dollar. Based on current rates, FX should now decrease total company, productivity, and business processes, and intelligent cloud revenue growth by approximately 2 points, and decrease more personal computing revenue growth and total company COGS and operating expense growth by approximately 1%. Now, the segment guide, which includes wider ranges than normal given the uncertainty in our business with higher in-quarter sales and revenue recognition. For example, in productivity and business processes, we expect revenue between $11.65 and $11.95 billion. Approximately 80% of this revenue comes from the earn-out on existing contracts and agreement renewals.

Speaker Change: Okay, very clear. Thank you. Congratulations.

Speaker Change: Okay, very clear. Thank you.

Okay, great. Thanks, Glenn Thank you congrats.

Speaker Change: Congratulations!

Speaker Change: Thanks, General. Operator, we'll move to the next question.

Speaker Change: Thanks, General.

Thanks.

Speaker Change: Operator, we'll move to the next question. Our next question comes from the line of Mark Murphy with JPMorgan.

Operator, we're moving next question please.

Speaker Change: Thank you. Our next question comes from the line of Mark Murphy with JP Morgan.

Thank you. Our next question comes from the line of Mark Murphy with JP Morgan. Please proceed with your question.

Speaker Change: transcript Emily Beynon

Mark R. Murphy: Yes, thank you. 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. How do you think that that balances out for bookings and for consumption?

Mark R. Murphy: Yes, thank you.

Mark R. Murphy: I'm interested in whether you see the current environment as a net tailwind or a net headwind for Azure growth, just as we try to weigh the idea of the pandemic as a forcing function to adopt the cloud a little more rapidly versus, on the other hand, potential economic pressure on IT budgets. How do you think that balances out for bookings and for consumption? I'm interested in whether you see the current environment as a net tailwind or a net headwind for Azure growth, just as we try to weigh the idea of the pandemic as a forcing function to adopt the cloud a little more rapidly versus, on the other hand, potential economic pressure on IT budgets. How do you think that balances out for bookings and for consumption?

Mark R. Murphy: Yes, thank you.

Yes. Thank you I'm interested in whether you see the current environment as a net tailwind or a net headwind on as progress 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.

Mark R. Murphy: So this is what is sort of going to be a high priority. So 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. But at the same time, I think business applications that perhaps are -- have a longer lead time in terms of implementation, people are probably going to take some more time to decide on them. But we think we are well positioned to capture the new scenarios.

Mark R. Murphy: And Power Apps, because we think about the Power Platform. Let me start, and Amy, you can add to it. So this is what is sort of going to be a high priority. So 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. But at the same time, I think business applications that perhaps are -- have a longer lead time in terms of implementation, people are probably going to take some more time to decide on them. But whereas we think we are well positioned to capture the new scenarios and Power Apps, because we think about the Power Platform. Let me start, and Amy, you can add to it.

Potential economic pressure on T. budgets, how do you think that that balances out for bookings in for consumption.

I mean, let me start and maybe you can address that are.

Speaker Change: I mean let me start and Amy you can add to it. There are, as you said, many different ins and outs here, but if you step back and ask yourself, say two years from now, is there going to be more being done in the public cloud or hybrid cloud or less? The answer is more. Just because it is more efficient, it is the only way for you to have even the business continuity required in times like this, and your needs going forward of increasing digitization are going to be met with better pricing, better economics at a unit price level for the given business. So that's sort of what we use to forecast out what we commit, both in terms of CapEx, OpEx, innovation. And customer engagement. To your point, ultimately, Microsoft is not immune from what's happening broadly in the world in terms of GDP growth, but at the same time, if there is going to be economic activity, then I would claim that digital as a component of that economic activity is going to increase, and specifically the full stack we have from infrastructure to our SaaS applications are going to be very competitive in that context.

Speaker Change: I mean, let me start, and Amy, you can add to it. Let me start, and Amy, you can add to it.

Speaker Change: There are, as you said, many different ins and outs here, but if you step back and ask yourself, say two years from now, is there going to be more being done in the public cloud or hybrid cloud, or less? There are, as you said, many different ins and outs here. There are, as you said, many different ins and outs.

You said, many different ins and outs you up but if we step back and ask yourself.

Amy E. Hood: The remaining 20% of revenue, primarily from annuity agreements, transactional licensing, and LinkedIn, is subject to more volatility in the current environment. In Office commercial, revenue growth will continue to be driven by Office 365, the strong upsell opportunity, particularly for our advanced security solution. However, growth will be partially offset by continued transactional weakness, some impact from the previously mentioned sales dynamics, and a strong prior year comparable, where four points of growth were from a greater mix of contracts with higher end-period recognition.

Say two years from now is there going to be more being done in the public cloud or hybrid cloud or less the answer is more.

Speaker Change: The answer is more. The answer is more just because it is more efficient. But if you step back and ask yourself, say, 2 years from now, "Is there going to be more being done in the public cloud or hybrid cloud, or less?", the answer is more, just because it is more efficient.

Speaker Change: Just because it is more efficient is the only way for you to have the business continuity required in times like this, and your needs going forward of increasing digitization are going to be met with better pricing, and better economics at a unit price level for the given business. It is the only way for you to have the business continuity required in times like this, and your needs going forward of increasing digitization are going to be met with better pricing, and better economics at a unit price level for the given business. It is the only way for you to have the business continuity required in times like this, and your needs going forward of increasing digitization are going to be met with better pricing, and better economics at a unit price level for the given business.

Just because it is more efficient is the only way for you to have even the business continuity required in times like this.

And your needs of going forward of increasing digitization I'm going to be met.

With better pricing better economics of the unit price level for the given business. So that's sort of what we use to forecast out what we commit both in terms of Capex opex innovation and customer engagement.

Speaker Change: So that's sort of what we use to forecast out what we commit, both in terms of CapEx, OpEx, and innovation. So that's sort of what we use to forecast out what we commit to, both in terms of CapEx, OpEx, innovation, and customer engagement. So that's sort of what we use to forecast out what we commit to, both in terms of CapEx, OpEx, innovation, and customer engagement.

Speaker Change: And customer engagement.

Speaker Change: To your point, ultimately, Microsoft is not immune from what's happening broadly in the world in terms of GDP growth, but at the same time, if there is going to be economic activity, then I would claim that digital as a component of that economic activity is going to increase, and specifically the full stack we have from infrastructure to our SaaS applications is going to be very competitive in that context. But at the same time, if there is going to be economic activity, then I would claim that digital as a component of that economic activity is going to increase. And specifically, the full stack we have from infrastructure to our SaaS applications is going to be very competitive in that context.

Speaker Change: And customer engagement.

To your point I ultimately, Microsoft not immune from what's happening broadly in the world in terms of GDP growth.

Amy E. Hood: 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, LinkedIn. We expect continued strong engagement on the platform. However, a material mix of revenue is driven by customer hiring needs and advertising. Therefore, we expect a significant slowdown to mid-single-digit revenue growth.

But at the same time, if that he's going to be economic activity and then I would claim that digital as a component of that economic activity is going to increase.

Speaker Change: But if you step back and ask yourself, say, 2 years from now, "Is there going to be more being done in the public cloud or hybrid cloud, or less?",

Speaker Change: (technical difficulty) versus, on the other hand, potential economic pressure on IT budgets. How do you think that balances out for bookings and for consumption? (technical difficulty) versus, on the other hand, potential economic pressure on IT budgets. How do you think that balances out for bookings and for consumption?

And specifically the full stack, we have from infrastructure to our SaaS applications are going to be very competitive in that context.

Speaker Change: And I think for me, we are -- it's so clear.

Speaker Change: And I think for me,

I think for me.

Amy E. Hood: It's so clear. I think we talk about our capital investment or our worldview, but it's a tailwind over any long period of time. Satya talked about, you know, two years or three years for sure. And I think the way you're seeing it in something like bookings, for example, would be maybe you don't make as large of a giant commitment and you're more willing to do pay as you go as you just think about making that transition when you don't want to have a giant budget conversation with your department, but you'd rather move to an easier use and pay in the moment. And I think some ways that will be the same thing that we were already seeing is a transition in terms of thinking about that for long term. And so it'll have some impact as big deals always did or didn't on booking.

Amy E. Hood: It's so clear, and I think for me, it's so clear.

So clear I think you talk about our capital investment or our world view.

Amy E. Hood: I think we talk about our capital investment or our worldview, but it's a tailwind over any long period of time. I think we talk about our capital investment or our world view and say it's a tailwind over any long period of time. I think we talk about our capital investment or our world view, but it's a tailwind over any long period of time.

But it's a tailwind over any long period of time Saket talked about two years three years for sure and I think the way you're seeing it and something like bookings for example would be maybe you don't make as large other giant commitment and you're more willing to do pay as you go.

Amy E. Hood: Satya talked about, you know, two years or three years for sure. Satya talked about 2 years or 3 years for sure. Satya talked about 2 years or 3 years for sure.

Amy E. Hood: In Dynamics, we expect low double-digit revenue growth when continued Dynamics 365 momentum is offset slightly by a slowdown in new projects with longer lead times. For Intelligent Cloud, we expect revenue between $12.9 and $13.15 billion. Approximately 80% of this revenue comes from the earn out on existing annuity contracts, agreement renewals, and consumption from existing Azure workloads.

Amy E. Hood: And I think the way you're seeing it in something like bookings, for example, would be maybe you don't make as large of a giant commitment, and you're more willing to do pay as you go as you just think about making that transition when you don't want to have a giant budget conversation with your department, but you'd rather move to an easier use and pay in the moment. And I think the way you're seeing it in something like bookings, for example, would be, maybe you don't make as large of a giant commitment, and you're more willing to pay as you go as you just think about making that transition when you don't want to have a giant budget conversation with your department, but you'd rather move to an easier use and pay in the moment. And I think the way you're seeing it in something like bookings, for example, would be maybe you don't make as large of a giant commitment, and you're more willing to pay as you go as you just think about making that transition when you don't want to have a giant budget conversation with your department, but you'd rather move to an easier use and pay in the moment.

As you just think about making that transition.

Amy E. Hood: And I think in some ways that will be the same thing that we were already seeing, a transition in terms of thinking about that for the long term. And I think in some ways, that will be the same thing that we were already seeing, a transition in terms of thinking about that for the long term. And I think in some ways that will be the same thing that we were already seeing, a transition in terms of thinking about that for the long term.

You don't want to have a giant budget conversation.

With your department, but you'd rather have news to men easier use and pay in the moment and I think some ways that will be the same thing that we were already seeing is a transition in terms of thinking about that for long term and so it will have some impact as big deals always did or didn't on.

Amy E. Hood: And so it'll have some impact, as big deals always did or didn't on booking. And so it will have some impact, as big deals always did or didn't affect bookings. And so it will have some impact, as big deals always did or didn't affect bookings.

Amy E. Hood: To your point, ultimately, Microsoft is not immune from what's happening broadly in the world in terms of GDP growth.

Amy E. Hood: The remaining 20%, which is primarily made up of new annuity agreements, transactional licensing, and enterprise services consulting revenue, is subject to more volatility. In Azure, revenue growth will again be driven by our consumption-based business, with continued strong growth across our customer base. So we expect some moderation in the most impacted industries and segments. And in our per-user business, growth will be impacted by the increasing size of the installed base, as well as the sales dynamics noted earlier. In our on-premises server business, we expect revenue to decline low single digits on a strong prior year comparable, as continued hybrid demand is more than offset by some transactional weaknesses. And in enterprise services, we expect a low single-digit revenue decline driven by continued delays in our consulting business.

Amy E. Hood: But at the same time, if there is going to be economic activity, then I would claim that digital as a component of that economic activity is going to increase. And specifically, the full stack we have from infrastructure to our SaaS applications is going to be very competitive in that context.

Amy E. Hood: And so I would keep that in mind. But other than that, I think obviously, for a worrying longer period of time, it's certainly a tailwind.

Looking.

Amy E. Hood: And so I would keep that in mind, but other than that, I think obviously a worrying longer period of time is certainly a tail end.

And so I would keep that in mind, but other than that I think obviously.

Amy E. Hood: But other than that, I think, obviously, over any longer period of time, it's certainly a tailwind.

For a longer period of time and certainly a tailwind.

Speaker Change: Thank you very much.

Thank you very much.

Speaker Change: Thanks, Mark. Operator, we'll take our last question now.

Thanks, Mark operator, we'll take our last question now please.

Speaker Change: Thank you. Our last question comes from the line of Alex Zukin with RBC Capital Market.

Speaker Change: Thank you.

Speaker Change: Our last question comes from the line of Alex Zukin with RBC Capital Market.

Speaker Change: Thank you.

Speaker Change: Our last question comes from the line of Alex Zukin with RBC Capital Market.

Thank you. Our last question comes from the line of Alex thinking with RBC capital markets. Please proceed with your question.

Speaker Change: Our last question comes from the line of Alex Zukin with RBC Capital Markets.

Hey, guys. Thanks for taking my question.

Alex J. Zukin: Hey, guys. Thanks for taking my question, and glad to hear you're staying safe. 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? And then if you think about your competitive positioning, having both the opportunity to solve remote work challenges from a productivity standpoint and infrastructure challenges from an Azure standpoint, how does the combination of those change some of the competitive dynamics in the market right now?

Alex J. Zukin: Hey, guys.

Alex J. Zukin: Thanks for taking my question, and I'm glad to hear you're staying safe.

Alex J. Zukin: Hey, guys.

Alex J. Zukin: Thanks for taking my question, and I'm glad to hear you're staying safe.

Alex J. Zukin: 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 of teams and offices, maybe versus pre-COVID levels? And then if you think about your competitive positioning, having both the opportunity to solve remote work challenges from a productivity standpoint and infrastructure And I'm glad to hear you're staying safe.

And glad to hear your you're seeing safe subject, given incredible like you're seeing and 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 longer term growth and monetization trajectory on teams and office maybe versus pre coded levels.

Alex J. Zukin: 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 of Teams and Office, maybe versus pre-COVID levels? And then if you think about your competitive positioning, having both the opportunity to solve remote work challenges from a productivity standpoint and infrastructure challenges from an Azure standpoint, how does the combination of those change some of the competitive dynamics in the market right now?

Amy E. Hood: In more personal computing, we expect revenue between $11.3 and $11.7 billion. Roughly 75% of this revenue across OEM, Surface, Search, and gaming is earned in the quarter. In Windows, overall OEM revenue growth should be low to mid-single digits on a strong prior year comparable. 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. For Surface, the continued strong demand should drive revenue growth in the low teens, and Serge XTAC, we expect revenue to decline in the mid 20% range similar to March. And in gaming, we expect revenue growth in the high teens with continued strong user engagement across the platform. Now back to the overall company guide. We expect COGS of $11.55 to $11.75 billion and operating expense of $11.8 to $11.9 billion. Other income and expense should be negative $100 million as interest expense is expected to more than offset interest income.

Alex J. Zukin: Our last question comes from the line of Alex Zukin with RBC Capital Markets.

And then if you think about your competitive positioning having both.

Alex J. Zukin: And I'm glad to hear you're staying safe.

The opportunity to solve remote work challenges from a productivity standpoint, and infrastructure challenges from an answer standpoint, how does the combination of those change some of the competitive dynamics in the market right now.

No. Thank you for that question first full I as I said, a little though the up our teams and the usage of teams is.

Speaker Change: Thank you for that question. You know, first of all, as I said a little earlier, teams and the usage of teams is...

Speaker Change: Thank you for that question. You know, first of all, as I said a little earlier, teams and the use of teams is...

Speaker Change: Thank you for that question. First of all, as I said a little earlier, Teams and the usage of Teams is something that increases the intensity across all of what is Microsoft 365.

Speaker Change: Something that increases the intensity across all of what's Microsoft 365. And to your point about whether it's, you know, and usage leads to monetization. Now, for example, one of the things that we didn't talk as much in, at least in the Q&A section, is on security. If you look at one of the key considerations as people go 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. So that's, again, built in to and in around Teams itself. So to me, we have, and same thing with compliance, right? So it's one thing to have Teams, people working remotely, but information being shared in Teams, that one note you share, does it carry the policies that were set for information protection? See, that's the big advantage we have architecturally in terms of all this having been built with one particular set of architectural principles. So that they can be enforced throughout all of these applications. And we'll obviously want to monetize these as appropriate at different levels of subscription we have for M365. And so we feel well positioned on that. And to your second part, we've always said this, which is we don't, for example, even allocate our capital in building out our cloud infrastructure for Azure or Dynamics 365 or Microsoft 365, or even for that matter, xCloud, all are separate. We think of this as all being built on one common platform in Azure. And that's where our fundamental capital efficiency of that architecture comes from. And yes, from a customer-in perspective, we absolutely want to win each layer based on its own merits. And we will have openness in each layer. But there are great benefits. And Coca-Cola and the deal this quarter is a great example of someone who wants to use, in fact, our security across all these three clouds. And the products across all these three clouds. So that's what we will increasingly do. But that also means we want to be competitive in each layer and open in each layer.

Speaker Change: Something that increases the intensity across all of what's Microsoft 365. First of all, as I said a little earlier, Teams and the usage of Teams is something that increases the intensity across all of what's Microsoft 365.

Something that increases the density across all of what Microsoft 306, five and to your point about whether it's you know and usage leads to monetization. For example, one of the things that we didn't talk as much in that piece into Q and a section is on security.

Speaker Change: And to your point about whether it's, you know, and usage leads to monetization. And to your point about whether it's -- and whether usage leads to monetization. And to your point about whether it's -- and whether usage leads to monetization.

Speaker Change: Now, for example, one of the things that we didn't talk about as much in, at least in the Q&A section, is security. Now, for example, one of the things that we didn't talk about as much, at least in the Q&A section, is security. Now, for example, one of the things that we didn't talk about as much, at least in the Q&A section, is security.

If you look at one of the key considerations as people go to remote walk.

Speaker Change: If you look at one of the key considerations as people go remote work, it is to ensure that 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. If you look at one of the key considerations as people go remote work, it 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. If you look at one of the key considerations as people go remote work, it 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.

To ensure starting with the identity to the device endpoints to the application to the information in the application than the infrastructure behind the App you need that zero Trust architecture. So thats again built in to anything around teams itself.

Speaker Change: So that's, again, built in to and around Teams itself. So that's, again, built in to and around Teams itself. So that's again built in to and around Teams itself.

Speaker Change: So to me, we have, and the same thing with compliance, right? So to me, we have -- and the same thing with compliance, right? So to me, we have -- and the same thing with compliance, right?

So to me the outflow and but same thing with compliance right. So it's grown wanting to have teams people working remotely, but inflammation being shared and teams that one or do you share does it carried the policies that was set for information protection see that's the big advantage, we have architecture lean dumps and all this having been built with one particular.

Speaker Change: So it's one thing to have Teams, people working remotely, but information being shared in Teams, that one note you share, does it carry the policies that were set for information protection? So it's one thing to have Teams, people working remotely, but information being shared in Teams.

Amy E. Hood: And finally, we expect our Q4 effective tax rate to be approximately 18%, slightly higher than our full year tax rate of 17% due to the geographic mix of the revenue. I'd like to close by sharing a few thoughts as we look beyond Q4 and into the next fiscal year. Our focus remains... on Strategically Managing the Company for the Long-Term with Decisions Optimized for Delivering Greater Customer Value and Long-Term Financial Growth and Profitability. With that, we'll continue to provide increased support to our customers and partners as they navigate the uncertain future ahead, deepening our engagement and adding increased value. We will continue to aggressively expand our cloud infrastructure to support not only the usage surges of today but the growing customer demand for our unique and differentiated cloud offerings in the future.

Speaker Change: See, that's the big advantage we have architecturally in terms of all this having been built with one particular set of architectural principles. But information being shared in Teams, that one note you share, does it carry the policies that were set for information protection? That one note you share, does it carry the policies that were set for information protection?

Speaker Change: So that they can be enforced throughout all of these applications. See, that's the big advantage we have architecturally in terms of all this having been built with one particular set of architectural principles so that they can be enforced throughout all of these applications. See, that's the big advantage we have architecturally in terms of all this having been built with one particular set of architectural principles so that they can be enforced throughout all of these applications.

Let's set of architectural principle, so that they can be enforced throughout all of these applications.

And we'll obviously want to monetize these as appropriate a different levels of subscription be house for them 365, and so we feel well positioned on that and to your second part. We've always said this which is we not be going for example, even allocate our capital in building out our cloud infrastructure for Azure or.

Speaker Change: And we'll obviously want to monetize these as appropriate at the different levels of subscription we have for M365. And we'll obviously want to monetize these as appropriate at the different levels of subscription we have for M365. And we'll obviously want to monetize these as appropriate at the different levels of subscription we have for M 365.

Speaker Change: And so we feel well positioned on that. And so we feel well positioned on that. And so we feel well positioned on that.

Speaker Change: And to your second part, we've always said this, which is we don't, for example, even allocate our capital to building out our cloud infrastructure for Azure or Dynamics 365 or Microsoft 365, or even, for that matter, xCloud. All are separate. And to your second part, we've always said this, which is we don't, for example, even allocate our capital to building out our cloud infrastructure for Azure or Dynamics 365 or Microsoft 365 or even, for that matter, xCloud all separately. And to your second part, we've always said this, which is we don't, for example, even allocate our capital to building out our cloud infrastructure for Azure or Dynamics 365 or Microsoft 365 or even, for that matter, the Cloud. All are separate.

Dynamics to six five or Microsoft three six by what are you went for that matter ex brought on a separate we think of this is all being built on one common platform in Azure.

Speaker Change: We think of this as all being built on one common platform, in Azure. We think of this as all being built on one common platform, in Azure. We think of this as all being built on one common platform, in Azure.

Amy E. Hood: We will continue to make significant investments in the strategic growth opportunities Satya outlined organically and through strategic acquisitions like that of Affirmed Networks this quarter, and we have the flexibility given our strong financial position and free cash flow generation to do all of this and support our commitment to capital return. Microsoft does well when our customers do well, and we are uniquely positioned to continue to invest in and contribute to their future success. With that, Mike, let's go to Q&A. Thanks Amy. We'll now move over to Q&A. Out of respect to others on the call, we request that participants please only ask one question. Operator, can you please repeat your instruction?

And that's where our fundamental capital efficiency of that architecture comes from.

Speaker Change: And that's where our fundamental capital efficiency of that architecture comes from. And that's where our fundamental capital efficiency of that architecture comes from. And that's where our fundamental capital efficiency of that architecture comes from.

Speaker Change: And yes, from a customer-in perspective, we absolutely want to win each layer based on its own merits. And yes, from a customer-end perspective, we absolutely want to win each layer based on its own merits, and we will have openness in each layer. And yes, from a customer perspective, we absolutely want to win each layer based on its own merits, and we will have openness in each layer.

And yes from a customer and perspective, we absolutely want to win each layer based on its own meditz and we would have openness and each layer, but there are great benefits and Coca Cola and.

Speaker Change: And we will have openness in each layer.

Speaker Change: But there are great benefits.

Speaker Change: And Coca-Cola, and the deal this quarter is a great example of someone who wants to use, in fact, our security across all these three clouds. And the products across all these three clouds. And Coca-Cola, and the deal this quarter is a great example of someone who wants to use, in fact, our security across all these 3 clouds and the products across all these 3 clouds.

Speaker Change: But there are great benefits.

And the deals this quarter is a great example, someone who wants to use in fact, our security across all of these three clouds and the products across all these three cloud. So that's what we will increasingly do but that also means we want to be competitive in each led and opened in each layer.

Speaker Change: So that's what we will increasingly do. But that also means we want to be competitive in each layer and open in each layer.

Speaker Change: But that also means we want to be competitive in each layer and open in each layer.

Speaker Change: Thank you for that question.

Speaker Change: And maybe to add that I think in some ways speaks to Alex's question goes back to the very beginning of how we feel the value sits in Microsoft 365.

Speaker Change: and I maybe add that I think in some ways this

Speaker Change: and I may add that I think in some ways this and Alex's question goes back to the very beginning of how we feel the value sits in Microsoft 365, but even more broadly, is that while we've seen a surge in teams now, there was a lot of surge in security and compliance six months ago and six months before that. And Alex's question goes back to the very beginning of how we feel the value sits in Microsoft 365, but even more broadly, is that while we've seen a surge in teams now, there was a lot of surge in security and compliance six months ago and six months before that. And maybe to add that I think, in some ways, it speaks to Alex's question goes back to the very beginning of how we feel the value sits in Microsoft 365.

And I would maybe add that I think in some ways to speak.

Operator: Thank you. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue... You may press star 2 if you'd like to remove your question from the queue.

Speaker Change: And Alex's question goes back to the very beginning of...

Outflows question goes back to the very beginning as is.

Speaker Change: How we feel the value sits in Microsoft 365, but even more broadly, is that while we've seen a surge in teams now, there was a lot of surging in security and compliance six months ago and six months before that. How we feel the value sits in Microsoft 365, but even more broadly, is that while we've seen a surge in teams now, there was a lot of surging in security and compliance six months before that. All the pieces are important to value long-term here, to a company being able to transition through the phases that Satya talked about.

How we feel that value fit in that Microsoft 365, but even more broadly is that while we've seen that a surgeon team now and there was a lot of surging in security and compliance.

Speaker Change: How we feel the value sits in Microsoft 365, but even more broadly, is that while we've seen a surge in teams now, there was a lot of surge in security and compliance six months before that. How we feel the value sits in Microsoft 365, but even more broadly, is that while we've seen a surge in teams now, there was a lot of surge in security and compliance six months before that. But even more broadly, while we've seen a surge in Teams now, there was a lot of surge in security and compliance 6 months ago and 6 months before that.

Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star 2. Our first question comes from Keith Weiss with Morgan Stanley. Please proceed with your question. Very impressive quarter in a difficult time. And I hope all of you and your families are all safe and healthy. Satya, I have a question for you.

Speaker Change: All the pieces are important to value long-term here, to a company being able to transition through the phases that Satya talked about. All the pieces are important to value long-term here, to a company being able to transition through the phases that Satya talked about. And that breadth, in a moment and a period like this, all the pieces are important to value long term here for 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. And that breadth, in a moment and a period like this, all the pieces are important to value long term here for 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.

Six months ago, and six months before that.

We've seen increased usage.

Cross multiple products.

And our line and that includes windows and the PC and so this very holistic and wet commercial opportunity, but also that extend in many ways to consumer opportunities for us as well.

Keith Eric Weiss: You did a really great job of talking about how well the expanded portfolio and the really broad portfolio that Microsoft brings to the market have helped customers during a crisis period and a period that engendered a lot of change within the way organizations were operating. 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 versus, given the customer relationships, 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. Thank you, Keith, for the question. Overall, the perspective we take, the approach we take is really to be there for our customers at their time of most acute need. So we don't go in there with the mindset of, you know, what will it mean for our revenue?

Speaker Change: But even more broadly, while we've seen a surge in Teams now, there was a lot of surge in security and compliance 6 months ago and 6 months before that. So that's what we will increasingly do, but that also means we want to be competitive in each layer and open in each layer. And so this very holistic and commercial opportunity, but also that extends, in many ways, to consumer opportunities for us as well, is connected.

Speaker Change: We've seen increased usage across multiple products in our line, and that includes Windows and the PC. We've seen increased usage across multiple products in our line, and that includes Windows and the PC.

Speaker Change: But there are great benefits.

Speaker Change: And Coca-Cola, and the deal this quarter is a great example of someone who wants to use, in fact, our security across all these 3 clouds and the products across all these 3 clouds.

Speaker Change: But there are great benefits.

Speaker Change: And so this very holistic and [broad] commercial opportunity, but also that extends, in many ways, to consumer opportunities for us as well, is connected.

Is connected and that Brett in a moment and a period like this.

Speaker Change: So I think, in some ways, the breadth of this company and where we've invested over the past few years, it's not just Teams but maybe a few products that have served us well and served our customers well.

All the pieces are important to value long term here.

To a company being able to transition please phases safia talked about.

Speaker Change: 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. So I think in some ways the breadth of this company and where we've invested over the past few years, it's not just teams, but maybe a few products that have served us well and served our customers well.

Speaker Change: 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.

From this initial phase of almost emergency response to a hybrid phase to ultimately what.

Speaker Change: So I think, in some ways, the breadth of this company and where we've invested over the past few years, it's not just teams but maybe a few products that have served us well and served our customers well. So I think, in some ways, the breadth of this company and where we've invested over the past few years, it's not just Teams but maybe a few products that have served us well and served our customers well.

I think we all believe is a very different way and the long term way of working and collaborating together and driving a digital economy. So I think in some ways. The breadth of this company, where we've invested over the past few years. It's not just teams that maybe a few products that has served us well and serve our customers well.

Speaker Change: Thanks, Alex.

Thanks, so much.

Speaker Change: Thank you so much.

Speaker Change: That wraps up the Q&A portion of today's earnings call.

Speaker Change: Thanks, Alex. That wraps up the Q&A portion of today's earnings call. Thank you for joining us today, and we look forward to speaking with all of you soon.

Speaker Change: Thanks, Alex.

Speaker Change: That wraps up the Q&A portion of today's earnings call.

Speaker Change: Thanks, Alex.

Speaker Change: That wraps up the Q&A portion of today's earnings call.

Thanks, Alex that wraps up accumulate portion of today's earnings call. Thank you for joining us today, and we look forward to speaking with all of you soon.

Speaker Change: Thank you for joining us today, and we look forward to speaking with all of you soon. Thank you for joining us today, and we look forward to speaking with all of you soon. Thank you all. Thank you, and stay safe.

Satya Nadella: I mean, this thing that I always say, which is when our customers do well, we'll do well on a long-term basis. That's at the core of our business model. That's the core of how we approach it. That said, Keith, I think there are three phases here, and there's overlap.

Speaker Change: Thank you all. Thank you and stay safe. Stay safe. Thank you.

Speaker Change: Thank you all. Thank you. Thanks. Thank you.

Thank you all thank you and stay safe they say thanks.

Speaker Change: Thank you, and stay safe. Stay safe.

Speaker Change: This concludes today's conference.

Speaker Change: Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Speaker Change: Thank you. Thank you for your participation.

Thank you. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation.

Speaker Change: This concludes today's conference. You may disconnect your lines at this time.

Satya Nadella: For example, the phase we are mostly in right now is that first response phase, where from a business continuity perspective, people want to be able to work remotely, want to be able to conduct remote operations. That's what's leading to increased demand for teams or increased demand for remote, you know, remote desktop and security and what have you. So that's sort of, I would say, the phase we are in broadly. And, of course, there are certain sectors, like the health care sector. There is even education, obviously, as well as some of the public sector organizations that all have surge demand, or even in some segments of retail where there is surge demand.

Satya Nadella: And so that's something that we are scaling to meet their needs. Then, I believe, as we work out here, so if you think about the next phase of recovery, it's more like a dial. Things will start coming back in terms of economic activity, and we'll have to keep, you know, adjusting the dial.

Satya Nadella: Teams is not just about having lots and lots of video meetings. Teams is about actually getting work done, where meetings and video are one part. So that's, for example, something the utility of which will only increase for our customers as some people come back to work, some people are remote, and you have to collaborate without any fatigue. So that's that second phase.

Satya Nadella: And then the third phase is where there is going to be structural change. There's no turning back, for example, in telemedicine, right? If you look at what has happened in this first phase with AI bots powering telemedicine triage, that's going to change, I think, what healthcare outcomes look like. Same thing in education. Digital twins.

Satya Nadella: This is something I think I talked about maybe even in the last earnings call. This is what anybody who has a digital twin is able to first remotely control the control plane, is able to automate, is able to simulate. That's huge for anybody who is into manufacturing or is trying to model out and plan their supply chain. So I think that there are ways for us to participate in what will ultimately be productivity growth. But in the immediate term, we're mostly building out the relationships, adding new customers, and increasing intensity and usage in existing relationships, which all, in the long term, will play out in terms of economics for us as well. And maybe just to add to that, the way you might think about that, Keith, the first stage for many of the licensing protocols was to include trial offers for many of our customers who were in need of the specific things we just discussed, and over I think there's a lot of opportunity here for us to continue to add value, and when you add value, long-term customer value certainly goes up. Thanks. Thanks, Keith.

Amy E. Hood: Operator, we'll take the next question. Thank you. Our next question comes from the line of Mark Moerdler with Bernstein Research. Mark, your line is live.

Mark L. Moerdler: Sorry, I apologize. Thank you for taking my questions. Congratulations, Satya and Amy, on the quarter and how you've been able to shift the business over many years to position it so well in these difficult times. We understand there are supply chain issues that have been impacting server deliveries in the quarter, and the changes in demand have been massive. During the quarter, there were disruptions in Azure, Xbox Live, and Team, we heard. How is Microsoft coping with these sudden demands from work from home? Do you have enough capacity? How quickly can you add more capacity?

Satya Nadella: Can you give a sense of how you deal with that on the Azure and the overall business side? Yeah, maybe I'll start, and Amy, you can add to this. 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. You know, the orders of magnitude increase we've seen in usage, in our own case, with our And that's happening, as I said, in different segments with our customers as they move to remote operations and are dealing, in some cases, with their own surge demand or what you've seen even in gaming and other entertainment categories. So I would say this architecture is being withheld.

Satya Nadella: Well, we did have, as you mentioned, some supply chain issues coming into the quarter, which have largely worked themselves out. But we have a data center architecture and a footprint that really supports our customers' needs for both the elasticity of demand they need and also compliance. So one of the things is data sovereignty and security is not going away, especially in the geopolitical environment we live in. If anything, it's going to be more important for us to support this need for people to scale while keeping them compliant. And so we feel well positioned for that. With that, I'll transition to Amy to add further.

Amy E. Hood: And I think, in many ways, the way you see that capacity show up is in the Q4 CapEx guide. And so while we spent $3.9 million in Q3, that was certainly short, in particular, on the server side, in terms of getting what we need into the data centers. Things got a lot better in March, and they're continuing to get better.

Amy E. Hood: And so I feel good that we'll have a healthy CapEx number in Q4, but more importantly, continue to get ahead of the surge demand. And also, there's the continuing demand growth we're seeing across the property. Thank you. And congrats.

Brent Thill: Thanks, Mark. We'll take the next question. Thank you. Our next question comes from the line of Heather Bellini with Goldman Sachs. Great, thank you so much for taking the questions. I actually had two for you.

Heather Bellini: I was wondering if you could share new logo growth in Azure and Office 365 versus Net Expansion, just if there's any color you could give on what happened in the quarter. And also, I guess, Satya, how do you think about the adoption curve of Azure and the workloads in the cloud accelerating over the next few years as a result of the changes that may occur from COVID? And any thoughts on whether your three-year out view of cloud adoption is increasing as a result of what's going on? Thank you. Yeah, maybe Amy, I'll take the second one first.

Satya Nadella: And then you can take the first one. I would say the, There is no question that moving to the public cloud, even at a time like this, it's just as capital efficient. If you think about any business, the conversations we're having are even for businesses that are having tough economic cycles, one of the smartest things that anyone can do, and we want to be very helpful in those conversations, is to transition to the efficient frontier as quickly as possible so that they can have more agility, more elasticity, and better unit economics coming out of this, or even while they're in this crisis. So I think the migration to the cloud is absolutely But at the same time, the architecture of the cloud itself is going to have the cloud and the edge.

Amy E. Hood: So it's not just about migrating off premises, but it's going to be able to have an architecture that supports the needs of the needs, where edge compute is increasingly going to be very important. That's why even what we are doing with our edge compute, what we did with our firm networks, and what we did with the launch of Azure Edge Zones all speak to, I think, what is going to be the secular infrastructure architecture going forward. And to your first question on really expanding the customer base versus adding seats or consumption within that customer base, we actually saw both this quarter again. The way you would have seen a little bit of weakness, I guess, in the on-premises office commercial due to transactional weakness and maybe S&B. But outside of that, Heather, it didn't really show a different pattern than I would have normally expected in terms of a breakdown between those.

Amy E. Hood: The one difference I will say is... And just because there was so much deployment done in the past four weeks, especially around teams and some of the other workloads, there's certainly a distinction that a lot of that was expanding the footprint as opposed to deployment much faster than I think many enterprises had initially planned to do so. Great, thank you. Thanks, Heather. Operator, we'll move to the next question. Thank you. Our next question comes from the line of Brent Thill with Jefferies. Please proceed. Good afternoon.

Brent Thill: Satya, I was curious if you could share the next chapter of Teams and maybe speak to the monetization halo that you're seeing with the rest of the product line spinning off of the great adoption, which seems to be doubling every time you give us the stats. Thanks for getting our firm up on Teams basically in a couple weeks. Thanks, Brent. Overall, the way we've always approached teams as a user experience, and I would say, the framework was to sort of incorporate what's a modern way of working. We always felt that we needed, in some sense, best-in-class functionality in each of the modalities, right, whether it's meetings or chat, collaboration, or business processes. But the most important thing is to bring these together so that people can get more done, teams of people, and organizations can get more done. And that's what you see play out, even in this pandemic, if you look at it. Of course, there's no question meetings are most important. We do a lot of them.

Satya Nadella: But at the same time, what is happening in a meeting is the important context that can't get lost. That's what's going to have continuity, whether it's the whiteboard you created, it's the OneNote you shared, it's the document you edited together, it's a business process alert that you are responding to. Thinking that through holistically is the most important thing, and that's where our focus will be. In fact, all the stats I shared even around some of the number of business process applications that are getting integrated, one of the most exciting things to me that happened, even in this COVID response, was that 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, PPE, because there was no ERP system that did that. That ability to digitize at And when Teams does well, all of Microsoft 365 does well. Great.

Amy E. Hood: Thanks, Brent. Operator, we'll move to the next question. Thank you. Our next question comes from the line of Phil Winslow with Wells Fargo. Hey, thanks guys for taking my question, and I'm glad to hear that you all are well, and I hope the same for your families.

Phil Winslow: Satya, in your prepared remarks, you mentioned how Microsoft continues to broaden its relevancy with developers from GitHub, Visual Studio, Visual Studio Code, DevOps, DevServer, and most recently, obviously, Multicloud, Infrastructure as Code with Azure Arc. I have just two questions on this topic. Firstly, Satya, how do you think about how much of that DevOps lifecycle Microsoft needs to address directly versus partner with third parties or maybe open source? 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 Yeah, the first thing we have always said when we acquired GitHub is that we want to be in the developer tools and developer services business as an end in itself, not as a means to some end. And so that's what we are executing on. We care about this. After all, Microsoft was created as a developer tools company first before anything else.

Satya Nadella: And that means a lot to us. And so with GitHub now, we're just really executing on that strategy, which is to start, and that means you have to be true to developer choices. So this is not about us having anything homogeneous from us but really respecting the heterogeneous choices of developers. All we want to make sure is that we bring the very best of our code editing tools to GitHub as the code repository, bring great security capabilities, bring the best of CICD and DevOps, bring even LiveOps, something like Azure PlayFab, all of those tools, but it's not to say that anyone else In fact, we have marketplaces on Azure as well as on GitHub. It'll work across clouds.

Satya Nadella: So we will always ensure that it's an open community that supports all of the developer choices. But at the same time, we think of this as building essentially what we did with Microsoft 365 for knowledge workers and first line workers. What we're doing with Dynamics 365 for business managers, we want to do with developers because there are going to be more software developers, and their workflows are going to impact more people outside of software development. So to me, this is a very important SaaS category to be in for its own sake. Great

Phil Winslow: Thanks, Bill. Operator, we'll move to the next question, please. Thank you. Our next question comes from the line of Raimo Lenschow with Barker. Yeah, thanks.

Raimo Lenschow: Thank you. And I hope you guys are staying safe. I want to focus on dynamics.

Satya Nadella: It's obviously not the biggest part of Microsoft, but it's a very important goal fund. In this sort of environment where, you know, there's a lot of uncertainty, you know, with dynamics, you're addressing some very fundamental kinds of business apps. What do you see there in terms of customer appetite to kind of go for this at this point? Is that kind of an area because it's now online compared to on premise that is seeing more adoption, faster adoption? Can you talk a little bit about the trends here?

Satya Nadella: Thank you. Sure, I think it's actually very important to have the ability, in a very agile way as a business, to be able to move on your business process needs. So, 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 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. These are some of the examples I even used in my script.

Satya Nadella: So this is what is sort of going to be a high priority. So 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. But at the same time, I think business applications that perhaps have a longer lead time in terms of implementation, people are probably going to take some more time to decide on them.

Satya Nadella: But we think we're well-positioned to capture the new scenarios and Power Apps because we think about Power Platform and Dynamics as both what we do with business applications. And we feel that between these two, along with Azure, we are well-positioned to address what are going to be increasing digitization needs where people don't have months to deploy or months to implement. And that's where we shine.

Amy E. Hood: And I think that you would say that we've seen that in our pipeline and really in the customer demand scenarios. So I think what we've seen is really more of a shift to some of these quick time to value deployments and a real change in terms of new long lead time projects there. And I think that's probably not surprising.

Satya Nadella: And the one thing one scenario I, For anyone, you know, who's looking to say, how do I continue to generate revenue through 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. So those are the types of solutions that are going to be very relevant in times like this. Okay, very, very clear. Thank you. Congratulations!

Mark R. Murphy: Thanks, General. Operator, we'll move to the next question. Thank you. Our next question comes from the line of Mark Murphy with J.P. Morgan. Please proceed with your question.

Mark R. Murphy: Thank you. Thank you. Thank you. Yes, thank you.

Satya Nadella: There are, as you said, many different ins and outs here. But if you step back and ask yourself, say, two years from now, is there going to be more being done in the public cloud or hybrid cloud or less? The answer is more, just because it is more efficient.

Satya Nadella: It is the only way for you to have the business continuity required in times like this. And your needs, going forward, of increasing digitization are going to be met with better pricing, and better economics at a unit price level for the given business. So that's sort of what we use to forecast out what we commit, both in terms of CapEx, OpEx, innovation, and customer engagement. To your point, ultimately, Microsoft is not immune from what's happening broadly in the world in terms of GDP growth. But at the same time, if there is going to be economic activity, then I would claim that digital as a component of that economic activity is going to increase. And specifically, the full stack we have from infrastructure to our SaaS applications is going to be very competitive in that context. And I think that for me...

Amy E. Hood: It's so clear. I think we talk about our capital investment or our worldview as a tailwind over any long period of time. Satya talked about, you know, two years or three years for sure.

Amy E. Hood: And I think the way you're seeing it in something like bookings, for example, would be maybe you don't make as large of a huge commitment, and you're more willing to pay as you go as you just think about making that transition when you don't want to have a giant budget conversation with your department, but you'd rather move to an easier use and pay in the moment. And I think in some ways that will be the same thing that we were already seeing, a transition in terms of thinking about that for the long term. And so it'll have some impact, as big deals always did or didn't affect bookings. And so I would keep that in mind, but other than that, I think, obviously, over any longer period of time, it's certainly a tailwind.

Mark R. Murphy: Thank you very much. Thanks, Mark. Operator, we'll take our last question now. Thank you.

Alex J. Zukin: Our last question comes from the line of Alex Zukin with RBC Capital Markets. Hey, guys, thanks for taking my question. And I'm glad to hear you're staying safe.

Satya Nadella: 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 of teams and offices, maybe versus pre-COVID levels? And then if you think about, you know, your competitive positioning, having both the opportunity to solve remote work challenges from a productivity standpoint and infrastructure challenges from an Azure standpoint, how does the combination of those change some of the competitive dynamics in the market right now? Thank you for that question.

Satya Nadella: You know, first of all, as I said a little earlier, teams and the usage of teams is something that increases the intensity across all of what's Microsoft 365. And to your point about whether it's, and usage leads to monetization. For example, one of the things that we didn't talk about as much, at least in the Q&A section, is security. If you look at one of the key considerations as people go remote work, it 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. So that's, again, built in to and around Teams itself. So to me, we have, and same thing with compliance, right? So it's one thing to have Teams, people working remotely, but information being shared in Teams, that one note you share, does it carry the policies that were set for information protection?

Satya Nadella: See, that's the big advantage we have architecturally in terms of all this having been built with one particular set of architectural principles so that they can be enforced throughout all of these applications. And we'll obviously want to monetize these as appropriate at the different levels of subscription we have for M365. And so we feel well positioned on that. And to your second point, we've always said this, which is we don't, for example, even allocate our capital to building out our cloud infrastructure for Azure or Dynamics 365 or Microsoft 365, or even for that matter, xCloud. All are separate. We think of this as all being built on one common platform, in Azure. And that's where our fundamental capital efficiency of that architecture comes from.

Satya Nadella: And yes, from a customer end perspective, we absolutely want to win each layer based on its own merits, and we will have openness in each layer. But there are great benefits, and Coca-Cola and the deal this quarter are a great example of someone who wants to use, in fact, our security across all these three clouds and the products across all these three clouds. So that's what we will increasingly do. But that also means we want to be competitive in each layer and open in each layer.

Satya Nadella: And I might add that I think, in some ways, and Alex's question goes back to the very beginning of... I'm going to give you a little bit about how we feel the value sits in Microsoft 365, but even more broadly, is that while we've seen a surge in teams now, there was a lot of surge in security and compliance six months ago and six months before that. We've seen increased usage across multiple products in our line, and that includes Windows and the PC, and so this very holistic and breadth commercial opportunity, but also that extends in many ways to consumer opportunities for us as well, is connected, and that breadth, at a moment and in a period like this, all the pieces are important to value long term here, for a company being able to transition through the phases that Satya talked about, from this So I think, in some ways, the breadth of this company and where we've invested over the past few years, it's not just teams but maybe a few products that have served us well and served our customers well.

Amy E. Hood: Thank you so much. Thanks, Alex. That wraps up the Q&A portion of today's earnings call.

Operator: Thank you for joining us today, and we look forward to speaking with all of you soon. Thank you all. Thank you, and stay safe.

Q3 2020 Earnings Call

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