hackingthemarkets/microsoft-earnings.csv

## microsoft-earnings.csv

          
            text

            
              Thank you, Brett. To start, I want to outline the principles that are guiding us through these changing economic times. First, we will invest behind categories that will drive the long-term secular trend where digital technology as a percentage of world's GDP will continue to increase.Second, we'll prioritize helping our customers get the most value out of their digital spending, so that they can do more with less. And finally, we will be disciplined in managing our cost structure.

            
              With that context, this quarter, the Microsoft Cloud again exceeded $25 billion in quarterly revenue, up 24% and 31% in constant currency. And based on current trends continuing, we expect our broader commercial business to grow at around 20% in constant currency this fiscal year, as we manage through the cyclical trends affecting our consumer business. With that, let me highlight our progress starting with Azure. Moving to the cloud is the best way for organizations to do more with less today.

            
              It helps them align their spend with demand and mitigate risk around increasing energy costs and supply chain constraints. We're also seeing more customers turn to us to build and innovate with infrastructure they already have. With Azure Arc, organizations like Wells Fargo can run Azure services, including containerized applications across on-premises, edge, and multi-cloud environments. We now have more than 8,500 Arc customers, more than double the number a year ago.

            
              We are the platform of choice for customers' SAP workloads in the cloud, companies like Thabani, Munich Re's, Sodexo, Volvo Cars, all run SAP on Azure. We are the only cloud provider with direct and secure access to Oracle databases running an Oracle Cloud infrastructure, making it possible for companies like FedEx, GE, and Marriott to use capabilities from both companies. And with Azure Confidential Computing, we're enabling companies in highly regulated industries, including RBC, to bring their most sensitive applications to the cloud. Just last week, UBS said it will move more than 50% of its applications to Azure.

            
              Now to data and AI. With our Microsoft Intelligent Data Platform, we provide a complete data fabric, helping customers cut integration tax associated with bringing together siloed solutions. Customers like Mercedes-Benz are standardizing on our data stack to process and govern massive amounts of data. Cosmos DB is the go-to database powering the world's most demanding workloads at limitless scale.

            
              Cosmos DB now supports postscript SQL, making Azure the first cloud provider to offer a database service that supports both relational and no SQL workloads. And in AI, we are turning the world's most advanced models into platforms for customers. Earlier this month, we brought the power of DALL-E to Azure OpenAI service, helping customers like Mattel apply the breakthrough image generation model to commercial use cases for the first time. In Azure machine learning, provides industry-leading ML apps, helping organizations like 3M deploy, manage and govern models.

            
              All of, Azure ML revenue has increased more than 100% for four quarters in a row. Now on to developers. We have the most complete platform for developers to build cloud-native applications. Four years since our acquisition, GitHub is now at $1 billion in annual recurring revenue.

            
              And GitHub's developer-first ethos has never been stronger. More than 90 million people now use the service to build software for any cloud on any platform up three times. GitHub advanced security is helping organizations improve their security posture by bringing features directly into the developer's workflow. Toyota North America chose the offering this quarter to help its developers build and secure many of its most critical applications.

            
              Now on to Power Platform. We are helping customers save time and money with our end-to-end suite spanning Low-Code/No-Code tools, robotic process automation, virtual agents, and business intelligence. Power BI is the market leader in business intelligence in the cloud and is growing faster than competition, as companies like Walmart standardize on the tool for reporting and analytics. Power Apps is the market leader in Low-Code/No-Code tools and has nearly 15 million monthly active users, up more than 50% compared to a year ago.

            
              Power Automate has more than seven million monthly active users and is being used by companies like Brown-Forman, Komatsu, Mass, T-Mobile to digitize manual business processes and save thousands of hours of employee time. And we're going further with new AI-powered capabilities and power automate that turn natural language into advanced workflows. Now on to Dynamics 365. From customer experience and service to finance and supply chain, we continue to take share across all categories we serve.

            
              For example, Lufthansa Cargo chose us to centralize customer information and related shipments. CBRE is optimizing its field service operations, gaining cost efficiencies. Darden is using our solutions to increase both guest frequency and spend at its restaurants. And Tillamook is scaling its growth and improving supply chain visibility.

            
              All up more than 400,000 organizations now use our business applications. Now on to Industry Solutions. We are seeing increased adoption of our industry and cross-industry clouds. Bank of Queensland chose our cloud for financial services to deliver new digital experiences for its customers.

            
              Our cloud for sustainability is off to a fast start as organizations like Telstra use the solution to track their environmental footprint. New updates provide insights on hard-to-measure Scope 3 carbon emissions, and we are seeing record growth in healthcare, driven, in part, by our Nuance DAX ambient intelligence solutions, which automatically documents patient encounters at the point of care. Physicians tell us DAX dramatically improves their productivity, and it's quickly becoming an on-ramp to our broader healthcare offerings. Now on to new systems of work, Microsoft 365, Teams, and Viva uniquely enable employees to thrive in today's digitally connected distributed world of work.

            
              Microsoft 365 is the cloud-first platform that supports all the ways people work and every type of worker reducing cost and complexity for IT. The new Microsoft 365 app brings together our productivity apps with third-party content, as well as personalized recommendations. Microsoft Teams is the de facto standard for collaboration and has become essential to how hundreds of millions of people meet, call, chat, collaborate and do business. As we emerge from the pandemic, we are retaining users we have gained and are seeing increased engagement, too.

            
              Users interact with Teams 1,500 times per month on average. In a typical day, the average commercial user spends more time in Teams chat than they do in email, and the number of users who use four or more features within Teams increased over 20% year over year. Teams is becoming a ubiquitous platform for business process. Monthly active enterprise users running third party and custom applications within Teams increased nearly 60% year over year, and over 55% of our enterprise customers who use Teams today also buy Teams Rooms or Teams Phone.

            
              Teams Phone provides the best-in-class calling. PSTN users have grown by double digits for five quarters in a row. We are bringing Teams Rooms to a growing hardware ecosystem, including Cisco's devices and peripherals, which will now run Teams natively. And we are creating a new category with Microsoft Places to help organizations evolve and manage the space for hybrid and in-person work.

            
              Just like Outlook calendar orchestrates when people can meet and collaborate, Places will do the same for where. We also announced Teams Premium, addressing enterprise demands for advanced meeting features like additional security options and intelligent meeting recaps. All this innovation is driving growth across Microsoft 365. Leaders in every industry from Fannie Mae and Land O'Lakes to Rabobank continue to turn to our premium E5 offerings for advanced security, compliance, voice, and analytics.

            
              We've also built a completely new suite for our employee experience platform, Microsoft Viva, which now has more than 20 million monthly active users at companies like Finastra, SES, and Unilever. And we are extending Viva to meet role-specific needs. Viva Sales is helping salespeople at companies like Adobe, Crayon, and PwC reclaim their time by bringing customer interactions across Teams and Outlook directly into their CRM system. Now on to Windows.

            
              Despite the drop in PC shipments during the quarter, Windows continues to see usage growth. All up, there are nearly 20% more monthly active Windows devices than pre-pandemic. And on average, Windows 10 and Windows 11 users are spending 8.5% more time on their PCs than they were two and a half years ago. And we are seeing larger commercial deployments of Windows 11.

            
              Accenture, for example, has deployed Windows 11 to more than 450,000 employees' PCs, up from just 25,000, seven months ago, and L'Oreal has deployed the operating system to 85,000 employees. Now to security. Security continues to be a top priority for every organization. We're the only company with integrated end-to-end tools spanning security, compliance, identity and device management, and privacy across all clouds and platforms.

            
              More than 860,000 organizations across every industry from BP and Fuji Film to ING Bank, iHeartMedia, and Lumen Technologies now use our security solutions, up 33% year over year. They can save up to 60% when they consolidate our security stack, and the number of customers with more than four workloads have increased 50% year over year. More organizations are choosing both our XDR and cloud-native SIM to secure their entire digital estate. The number of E5 customers who also purchased Sentinel increased 44% year over year.

            
              And as threats become more sophisticated, we are innovating to protect customers. New capabilities in Defender help secure the entire DevOps life cycle and manage security posture across clouds. And Entra now provides comprehensive identity governance for both on-premise and cloud-based user directories. Now on to LinkedIn.

            
              We once again saw record engagement among our more than 875 million members, with international growth increasing at nearly 2x the pace as in the United States. There are now more than 150 million subscriptions to newsletters on LinkedIn, up 4x year over year. New integrations between Viva and LinkedIn Learning helped companies invest in their existing employees by providing access to courses directly in the flow of work. Members added 365 million skills to their profiles over the last 12 months, up 43% year over year.

            
              And with our acquisition of EduBrite, they will also soon be able to earn professional certificates from trusted partners directly on the platform. We launched the next-generation sales navigator this quarter, helping sellers increase win rates and deal sizes by better understanding and evaluating customer interest. Finally, LinkedIn Marketing Solution continues to provide leading innovation and ROI in B2B digital advertising. More broadly, with Microsoft Advertising, we offer a trusted platform for any marketeer or advertiser looking to innovate.

            
              We've expanded our geographies we serve by nearly 4x over the past year. We are seeing record daily usage of Edge, Start, and Bing driven by Windows. Edge is the fastest-growing browser on Windows and continues to gain share as people use built-in coupon price comparison features to save money. We surface more than $2 billion in savings to date.

            
              And this quarter, we brought our shopping tools to 15 new markets. Users of our Start, personalized content feed are consuming 2x more content compared to a year ago. And we're also expanding our third-party ad inventory. Netflix will launch its first ad-supported subscription plan next month, exclusively powered by our technology and sales.

            
              And with PromoteIQ we offer an omnichannel media platform for retailers like the auto group looking to generate additional revenue while maintaining ownership of their own data and customer relationships. Now onto gaming. We are adding new gamers to our ecosystem as we execute on our ambition to reach players wherever and whenever they want on any device. We saw usage growth across all platforms driven by the strength of console.

            
              PC Game Pass subscriptions increased 159% year over year. And with cloud gaming, we're transforming how games are distributed, played and viewed. More than 20 million people have used the service to stream games to date. And we are adding support for new devices like handhelds from Logitech and Razor as well as Meta Quest.

            
              And as we look toward the holidays, we offer the best value in gaming with Game Pass and Xbox Series S, nearly half of the Series S buyers are new to our ecosystem. In closing, in a world facing increasing headwinds, digital technology is the ultimate tailwind. And we're innovating across the entire tech stack to help every organization, while also focusing intensely on our operational excellence and execution discipline. With that, I'll hand it over to Amy.

            
              Thank you, Satya, and good afternoon, everyone. Our first quarter revenue was $50.1 billion, up 11% and 16% in constant currency. Earnings per share was $2.35, increased 4% and 11% in constant currency when adjusted for the net tax benefit for the first quarter of fiscal year 2022. Driven by strong execution in a dynamic environment, we delivered a solid start to our fiscal year, in line with our expectations even as we saw many of the macro trends from the end of the fourth quarter continued to weaken through Q1.

            
              In our consumer business, PC market demand further deteriorated in September, which impacted our Windows OEM and Surface businesses. And reductions in customer advertising spend, which also weakened later in the quarter, impacted search and news advertising and LinkedIn Marketing Solutions. As you heard from Satya, in our commercial business, we saw strong overall demand for our Microsoft cloud offerings with a growth of 31% in constant currency as well as share gains across many businesses. Commercial bookings declined 3% and increased 16% in constant currency on a flat expiry base.

            
              Excluding the FX impact, growth was driven by strong renewal execution, and we continue to see growth in the number of large long-term Azure and Microsoft 365 contracts across all deal sizes. More than half of the $10 million plus Microsoft 365 bookings came from E5. Commercial remaining performance obligation increased 31% and 34% in constant currency to $180 billion. Roughly 45% will be recognized in revenue in the next 12 months, up 23% year over year.

            
              The remaining portion, which we recognized beyond the next 12 months, increased 38% year over year, and our annuity mix increased one point year over year to 96%. FX impacted company results in line with expectations. With the stronger US dollar, FX decreased total company revenue by five points, and at the segment level, FX decreased productivity and business processes and intelligent cloud revenue growth by six points and more personal computing revenue growth by three points. Additionally, FX decreased COGS and operating expense growth by three points.

            
              Microsoft Cloud gross margin percentage increased roughly two points year over year to 73%. Excluding the impact of the change in accounting estimate for useful lives, Microsoft cloud gross margin percentage decreased roughly one point driven by sales mix shift to Azure and lower Azure margin, primarily due to higher energy costs. Company gross margin dollars increased 9% and 16% in constant currency, and gross margin percentage decreased slightly year over year to 69%, excluding the impact of the latest change in accounting estimate, gross margin percentage decreased roughly three points, driven by sales mix shift to cloud, the lower Azure margin noted earlier and Nuance. Operating expense increased 15% and 18% in constant currency, driven by investments in cloud engineering, LinkedIn, Nuance, and commercial sales.

            
              At a total company level, headcount grew 22% year over year, as we continue to invest in key areas just mentioned, as well as customer deployment. Headcount growth included roughly six points from the Nuance and Xandr acquisitions, which closed last Q3 and Q4, respectively. Operating income increased 6% and 15% in constant currency, and operating margins decreased roughly two points year over year to 43%. Excluding the impact of the change in accounting estimate, operating margins declined roughly four points year over year driven by sales mix shift to cloud, unfavorable FX impact, Nuance, and the lower Azure margin noted earlier.

            
              Now to our segment results. Revenue from productivity and business processes was $16.5 billion and grew 9% and 15% in constant currency, ahead of expectations, with better-than-expected results in Office commercial and LinkedIn. Office commercial revenue grew 7% and 13% in constant currency. Office 365 commercial revenue increased 11% and 17% in constant currency, slightly better than expected, with the strong renewal execution noted earlier.

            
              Growth was driven by installed base expansion across all workloads and customer segments, as well as higher ARPU from E5. Demand for security, compliance, and voice value in Microsoft 365 drove strong E5 momentum again this quarter. Paid Office 365 commercial seats grew 14% year over year, driven by our small and medium business and frontline worker offerings, although we saw a continued impact of new deal moderation outside of E5. Office consumer revenue grew 7% and 11% in constant currency, driven by continued momentum in Microsoft 365 subscriptions, which grew 13% to $61.3 million.

            
              Dynamics revenue grew 15% and 22% in constant currency, driven by Dynamics 365, which grew 24% and 32% in constant currency. LinkedIn revenue increased 17% and 21% in constant currency, ahead of expectations, driven by better-than-expected growth in talent solutions, partially offset by weakness in marketing solutions from the advertising trends noted earlier. Segment gross margin dollars increased 11% and 18% in constant currency, and gross margin percentage increased roughly 1 point year over year. Excluding the impact of the latest change in accounting estimate, gross margin percentage decreased slightly, driven by sales mix shift to cloud offerings.

            
              Operating expense increased 13% and 16% in constant currency, and operating income increased 10% and 19% in constant currency, including four points due to the latest change in accounting estimate. Next, the Intelligent cloud segment. Revenue was $20.3 billion, increasing 20% and 26% in constant currency, in line with expectations. Overall, server products and cloud services revenue increased 22% and 28% in constant currency.

            
              Azure and other cloud services revenue grew 35% and 42% in constant currency, about one point lower than expected, driven by the continued moderation in Azure consumption growth, as we help customers optimize current workloads while they prioritize new workloads. In our per-user business, the enterprise mobility and security installed base grew 18% to over 232 million seats, with continued impact from the new deal moderation noted earlier. In our on-premises server business, revenue was flat, and increased 4% in constant currency, slightly ahead of expectations, driven by hybrid demand, including better-than-expected annuity purchasing ahead of the SQL Server 2022 launch. Enterprise services revenue grew 5% and 10% in constant currency, driven by enterprise support services.

            
              Segment gross margin dollars increased 20% and 26% in constant currency, and gross margin percentage decreased slightly. Excluding the impact of the latest change in accounting estimate, gross margin percentage declined roughly three points, driven by sales mix shift to Azure and higher energy costs impacting Azure margins. Operating expenses increased 25% and 28% in constant currency, including roughly eight points of impact from Nuance. And operating income grew 17% and 25% in constant currency with roughly nine points of favorable impact from the latest change in accounting estimate.

            
              Now to more personal computing. Revenue decreased slightly year over year to $13.3 billion and grew 3% in constant currency, in line with expectations overall, but with OEM and Surface weakness offset by upside in gaming consoles. Windows OEM revenue decreased 15% year over year. Excluding the impact from the Windows 11 deferral last year, revenue declined 20%, driven by PC market demand deterioration noted earlier.

            
              Devices revenue grew 2% and 8% in constant currency, in line with expectations, driven by the impact of a large Hollands deal, partially offset by low double-digit declines in consumer Surface sales. Windows commercial products and cloud services revenue grew 8% and 15% in constant currency, in line with expectations, driven by demand for Microsoft 365 E5 noted earlier. Search and news advertising revenue, ex TAC, increased 16% and 21% in constant currency, in line with expectations, benefiting from an increase in search volumes and roughly five points of impact from Xandr even as we saw increased ad market headwinds during September. Edge browser gained share again this quarter.

            
              And in gaming, revenue grew slightly and was up 4% in constant currency, ahead of expectations, driven by better-than-expected console sales. Xbox hardware revenue grew 13% and 19% in constant currency. Xbox content and services revenue declined 3% and increased 1% in constant currency, driven by declines in first-party content as well as in third-party content where we had lower engagement hours and higher monetization, partially offset by growth in Xbox Game Pass subscriptions. Segment gross margin dollars declined 9% and 4% in constant currency, and gross margin percentage decreased roughly five points year over year driven by sales mix shift to lower margin businesses.

            
              Operating expenses increased 2% and 5% in constant currency, driven by the Xandr acquisition. And operating income decreased 15% and 9% in constant currency. Now back to total company results. Capital expenditures, including finance leases were $6.6 billion, and cash paid for PP&E was $6.3 billion.

            
              Our data center investments continue to be based on strong customer demand and usage signals. Cash flow from operations was $23.2 billion, down 5% year over year, driven by strong cloud billings and collections, which were more than offset by a tax payment related to the transfer of intangible property completed in Q1 of FY '22. Free cash flow was $16.9 billion, down 10% year over year. Excluding the impact of this tax payment, cash flow from operations grew 2%, and free cash flow was relatively unchanged [indiscernible] year.

            
              This quarter, other income and expense was $54 million, driven by interest income, which was mostly offset by interest expense and net losses on foreign currency remeasurement. Our effective tax rate was approximately 19%. And finally, we returned $9.7 billion to shareholders through share repurchases and dividends. Now, moving to our Q2 outlook, which, unless specifically noted otherwise, is on a US dollar basis.

            
              My commentary, for both the full year and next quarter, does not include any impact from AC division, which we still expect to close by the end of the fiscal year. First, FX. With the stronger US dollar and based on current rates, we now expect FX to decrease total revenue growth by approximately five points and to decrease total COGS and operating expense growth by approximately three points. Within the segments, we anticipate roughly seven points of negative FX impact on revenue growth in productivity and business processes, six points in Intelligent cloud and three points in more personal computing.

            
              Our outlook has many of the trends we saw at the end of Q1, continue into Q2. In our consumer business, materially weaker PC demand from September will continue, and impact both Windows OEM and Surface device results even as the Windows installed base and usage grows, as you heard from Satya. Additionally, customers focusing our advertising spend will impact LinkedIn and Search and News advertising revenue. In our commercial business, demand for our differentiated hybrid and cloud offerings, together with consistent execution, should drive healthy growth across the Microsoft Cloud.

            
              In commercial bookings, continued strong execution across core annuity sales motions and commitments to our platform should drive solid growth on a moderately growing expiry base against a strong prior year comparable, which included a significant volume of large long-term Azure contracts. As a reminder, the growing mix of larger long-term Azure contracts which are more unpredictable in their timing, always drives increased quarterly volatility in our bookings growth rate. Microsoft Cloud gross margin percentage should be up roughly one point year over year, driven by the latest accounting estimate change noted earlier. Excluding that impact, Q2 gross margin percentage will decrease roughly two points driven by lower Azure margin, primarily due to higher energy cost, revenue mix shift to Azure and the impact from Nuance.

            
              In capital expenditures, we expect a sequential increase on a dollar basis with normal quarterly spend variability in the timing of our cloud infrastructure build-out. Next, to segment guidance. In productivity and business processes, we expect revenue to grow between 11% and 13% in constant currency or USD16.6 billion to USD 16.9 billion. In Office Commercial, revenue growth will again be driven by Office 365, with seat growth across customer segments and ARPU growth from E5.

            
              We expect Office 365 revenue growth to be similar to last quarter on a constant currency basis. In our on-premises business, we expect revenue to decline in the low to mid-30s. In Office Consumer, we expect revenue to decline low to mid-single digits as Microsoft 365 subscription growth will be more than offset by unfavorable FX impact. For LinkedIn, we expect continued strong engagement on the platform, although results will be impacted by a slowdown in advertising spend and hiring, resulting in mid to high single-digit revenue growth or low to mid-teens growth in constant currency.

            
              And in Dynamics, we expect revenue growth in the low double digits or the low 20s in constant currency, driven by continued share gains in Dynamics 365. For intelligent cloud, we expect revenue to grow between 22% and 24% in constant currency or US$21.25 billion to US$21.55 billion. Revenue will continue to be driven by Azure, which, as a reminder, can have quarterly variability primarily from our per-user business and from in-period recognition depending on the mix of contracts. We expect Azure revenue growth to be sequentially lower by roughly 5 points on a constant currency basis.

            
              Azure revenue will continue to be driven by strong growth in consumption, with some impact from the Q1 trends noted earlier. And our per user business should continue to benefit from Microsoft 365 suite momentum, though we expect moderation in growth rate given the size of the installed base. In our on-premise server business, we expect revenue to decline low single digits, as demand for our hybrid solutions, including strong annuity purchasing from the SQL Server 2022 launch, will be more than offset by unfavorable FX impact. And in enterprise services, we expect revenue growth to be in the low single digits, driven by enterprise support.

            
              In More Personal Computing, we expect revenue of US$14.5 billion to US$14.9 billion. In Windows OEM, we expect revenue to decline in the high 30s. Excluding the impact from the Windows 11 revenue deferral last year, revenue would decline mid-30s, reflecting both PC market demand and a strong prior year comparable, particularly in the commercial segment. In devices, revenue should decline approximately 30%, again, roughly in line with the PC market.

            
              In Windows commercial products and cloud services, customer demand for Microsoft 365 and our advanced security solutions should drive growth in the mid-single digits or low double digits in constant currency. Search and news advertising, ex TAC, should grow in the low to mid-teens, roughly six points faster than overall search and news advertising revenue, driven by growing first-party revenue and the inclusion of Xandr. And in gaming, we expect revenue to decline in the low to mid-teens against a strong prior year comparable. That included several first-party title launches, partially offset by growth in Xbox Game Pass subscribers.

            
              We expect Xbox content and services revenue to decline in the low to mid-teens. Now back to company guidance. We expect COGS to grow between 6% and 7% in constant currency or to be between US$17.4 billion and US$17.6 billion, and operating expense to grow between 17% and 18% in constant currency, or to be between US$14.3 billion and US$14.4 billion. As we continue to focus our investment in key growth areas, total headcount growth sequentially should be minimal.

            
              Other income and expense should be roughly $100 million, as interest income is expected to more than offset interest expense. Further FX and equity movements through Q2 are not reflected in this number. And as a reminder, we are required to recognize mark-to-market gains or losses on our equity portfolio, which can increase quarterly volatility. And we expect our Q2 effective tax rate to be between 19% and 20%.

            
              And finally, as a reminder, for Q2 cash flow, we expect to make a $2.4 billion cash tax payment related to the capitalization of R&D provision enacted in 2017 TCJA and effective as of July 1, 2022. Now some thoughts on the full fiscal year. First, FX. Based on current rates, we now expect a roughly five-point headwind to full-year revenue growth.

            
              And FX should decrease COGS and operating expense growth by approximately three points. At the total company level, we continue to expect double-digit revenue and operating income growth on a constant currency basis. Revenue will be driven by around 20% constant currency growth in our commercial business, driven by strong demand for our Microsoft cloud offerings. That growth will be partially offset by the increased declines we now see in the PC market.

            
              With the high margins in our Windows OEM business and the cyclical nature of the PC market, we take a long-term approach to investing in our core strategic growth areas and maintain these investment levels regardless of PC market conditions. Therefore, with our first quarter results and lower expected OEM revenue for the remainder of the year as well as over $800 million of greater-than-expected energy cost, we now expect operating margins in US dollars to be down roughly a point year over year. On a constant currency basis, excluding the incremental impact of the lower Windows OEM revenue and the favorable impact of the latest accounting change, we continue to expect FY 2023 operating margins to be roughly flat year over year. In closing, in this environment, it is more critical than ever to continue to invest in our strategic growth markets such as cloud, security, Teams, Dynamics 365, and LinkedIn where we have opportunities to continue to gain share as we provide problem-solving innovations to our customers.

            
              And while we continue to help our customers do more with less, we will do the same internally. And you should expect to see our operating expense growth moderate materially through the year. While we focus on growing productivity of the significant headcount investments we've made over the last year. With that, let's go to Q&A.