Earnings Release FY24 Q2

Intelligent Cloud

Revenue increased $4.4 billion or 20%.

• Server products and cloud services revenue increased $4.4 billion or 22% driven by Azure and other cloud services. Azure and other cloud services revenue grew 30% driven by growth in our consumption-based services. Server products revenue increased 3% driven by demand for Windows Server and SQL Server running in multi-cloud environments.

• Enterprise and partner services revenue increased $10 million or 1% driven by Enterprise Support Services.

Operating income increased $3.6 billion or 40%.

• Gross margin increased $3.1 billion or 20% driven by growth in Azure. Gross margin percentage was relatively unchanged. Excluding the impact of the change in accounting estimate, gross margin percentage increased 1 point driven by improvement in Azure, offset in part by the impact of scaling our AI infrastructure.

• Operating expenses decreased $504 million or 8% driven by 9 points of favorable impact from the prior year Q2 charge.

Gross margin and operating income included a favorable foreign currency impact of 2% and 3%, respectively.

IMPORTANT NOTICE TO USERS (summary only, click here for full text of notice); All information is unaudited unless otherwise noted or accompanied by an audit opinion and is subject to the more comprehensive information contained in our SEC reports and filings. We do not endorse third-party information. All information speaks as of the last fiscal quarter or year for which we have filed a Form 10-K or 10-Q, or for historical information the date or period expressly indicated in or with such information. We undertake no duty to update the information. Forward-looking statements are subject to risks and uncertainties described in our Forms 10-Q and 10-K.