Microsoft Corporation (NASDAQ:MSFT) Q2 2015 Earnings Conference Call - Final Transcript
Jan 26, 2015 • 05:30 pm ET
Welcome to the Second Quarter Fiscal Year 2015 Microsoft Corporation Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.
I would now like to turn the call over to Chris Suh, General Manager of Investor Relations. Chris, please proceed.
Thank you. Good afternoon and thank you for joining us today. On the call with me today are Satya Nadella, Chief Executive Officer; Amy Hood, Chief Financial Officer; Frank Brod, Chief Accounting Officer; and John Seethoff, Deputy General Counsel.
On our website, microsoft.com/investor, we have posted our press release and a slide deck to provide a summary of our results of the quarter. Unless otherwise specified, all growth comparisons we make on the call today relate to the corresponding period of last year. Additionally any mention of operating expense refers to segment operating expenses as defined in the footnote of our 10-Q and includes research and development, sales and marketing and general and administrative, but excludes integration and restructuring charges.
(Forward-Looking and Cautionary Statements)
And with that, I'll turn the call over to Satya.
Thank you, Chris. Good afternoon everyone. Today I'll focus my topline thoughts on our progress this quarter and the progress we're making in transforming our business. This quarter we reached $26.5 billion in revenue, with an operating income of $7.8 billion. This quarter's results show the product and business transformation underway at Microsoft.
We saw success in a number of our strategic areas including cloud adoption, redefining and revitalizing the Windows Ecosystem and improving economics in our hardware portfolio. We also saw some challenges this quarter. As expected, the one-time benefit of Windows XP end-of-life PC refresh cycle has now tailed off. Additionally, we ran into unexpected issues in select geographies. Where there are execution issues, we will address them. Where there are macroeconomic challenges, we will weather them. With that in mind, I'll walk you through the quarter.
Let's start with our Cloud business, an area where we're extending our leadership position and accelerating our innovation. In commercial cloud, we saw continued customer and revenue growth across a growing footprint of cloud services, Office 365, Azure, Enterprise Mobility Suite and Dynamic CRM Online. In fact this quarter is the sixth consecutive quarter of triple digit revenue growth in commercial cloud and we're now at a run rate of $5.5 billion. Azure services continue to grow in appeal to enterprise IT and developers with rapid improvements across hybrid services, premium cloud storage and virtual machine offerings, enhanced data and data analytics offerings.
Microsoft Enterprise Mobility Suite is one key area of product innovation that I would like to highlight given the growth and the uniqueness of this offering. Microsoft offers a comprehensive solution for all devices that brings together mobile device management, mobile application management, hybrid identity management and data protection into one unified offering through EMS.
Office 365 now includes new application experiences on