Microsoft executives interpret financial reports Win10 users update faster than expected

Computer Store News: Microsoft today released its first fiscal quarter 2016 financial results for the fiscal year ending September 30, 2015. The financial report showed that Microsoft's first-quarter revenue was 20.4 billion US dollars, down 12% from the previous fiscal year's 23.2 billion US dollars; net profit measured according to US GAAP was 4.62 billion US dollars, compared with the same period last fiscal year. The US$4.540 billion increased by 1.8%.

After the earnings report, Microsoft CEO Satya · Satya Nadella and CFO Amy · Amy Hood attended the earnings conference call and conducted the earnings report. Interpret and answer questions from analysts.

The following is the main content of the teleconference analyst Q&A:

Morgan Stanley analyst: I want to know about your third quarter Azure and public cloud business performance, it looks like this The business is accelerating growth. From an industry perspective, the accelerated growth of AWS and Amazon's AWS seems to reflect that the company is turning to a public cloud environment. Do you think so? If so, what is the reason behind it?

Nadella: On the whole, we feel that public cloud services help companies to make infrastructure construction smoother, just as we have helped them by bringing servers to businesses. For example, Office 365 has now added 50,000 customers. These customers now have the most advanced server technology. Office 365 is used by them as SaaS (software as a service), so this is where growth is happening. — software application.

I don't know if there will be zero-sum games in the long run, but now we see growth in both aspects in the short to medium term. We don't think of the server business as a legacy of the company's history. The business is a strong foundation for our cloud business.

We are seeing a rapid increase in Azure cloud business growth and customer acceptance, but from our perspective, the two are actually unique phenomena. First, we are paying hybrid cloud services to customers. But we don't think Azure exists in isolation. We treat it with Office 365, Dynamics, and EMS services. Of course, first of all, our cloud infrastructure supports these services.

Credit Suisse Analyst: You mentioned that in the case of major customers and small and medium-sized enterprises, the commercialization of Office 365 has gained a good momentum. Can you tell us about the difference between big customers and small and medium-sized enterprises? Which side is growing faster?

Second, your mention of the current subscription payment model has grown faster than its encroachment on the licensing model. Is this a trend that will continue in the future? Or is it a unique phenomenon this quarter?

Nadella: Office 365 is now about 60 million active users, actually increasing by 66% year-on-year. For SMEs, I mentioned that we are adding 50,000 SMB users every month. Among the users, about 20 million use different types of paid services, and we are constantly taking measures to increase the number of paying users and payment mode choices. Now, both large customers and small and medium enterprises are the driving force for our growth.

Hood: I would like to add that in fact, there is no market lag in the acceptance of new services by SMEs. They also hope to accept and deploy new services immediately. This is what we observed. trend. On the consumer side, our user base has reached 18 million, and the renewal rate of paid subscription users has exceeded the delay rate of new users. This is a very important development for us this quarter.

UBS Analyst: A week ago, Michael · Dell (Dell CEO) and Nadella Instruments mentioned at the event that from his perspective, in terms of enterprise users, their acceptance of Windows 10 And the update speed actually exceeds the previous updates. I am curious as to whether you have seen the glow effect, that is, those users who have upgraded have begun to demand better and better infrastructure services?

Nadella: This is true. We do see that users are getting faster and faster than ever before. Starting with consumer users, 8 million enterprise PCs are now running Windows 10. We expect the deployment of the company to start from next year or the second half of this fiscal year. For your problem, the phenomenon we are seeing now is a very good omen, better than when we first introduced Window 7.

This is very good news for us, we are very focused on providing value to corporate customers, I think Windows 10 has achieved a real breakthrough in terms of security, we are upgrading its corporate PC. The update is very much looking forward to.

Deutsche Bank analysts: About three months ago, it was widely believed that Windows 10’s performance improvement for Microsoft’s performance will not be reflected in FY2016, but it seems to have been at least in the past quarter. In the Windows OEM business, the promotion of Windows 10 has already appeared. I want to know what happened in the past quarter and the positive effect of Windows 10 on Microsoft appeared in advance?

Hood: I think it's mainly from the combination of equipment that OEMs introduced to the market last quarter. You can see this from our non-Pro revenue. For us, we saw some initial phenomena after OEMs accepted Windows 10, the overall price of the equipment is higher, and we are moving towards the holiday season, which has improved the performance of Windows 10 as a whole. We are very encouraged by this and look forward to the future opportunities.