Microsoft Corp at Citi Global TMT Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Tyler Radke - Citi - Analyst : Arun, I thought, just to kick things off, for folks who haven't met you -- everyone here knows who Microsoft is, but you've had a really interesting career, I think, at Microsoft. More than 20 years running security, SQL server and now Azure Data platform. Give us an overview of your journey at Microsoft? And what are the areas you're focused on?

Question: Tyler Radke - Citi - Analyst : Awesome. Awesome. And look, there's a ton of products within your purview and particularly, within Azure Data, databases, data integration products. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 5:20PM, MSFT.OQ - Microsoft Corp at Citi Global TMT Conference You talked about Power BI, some of the business intelligence products. Give us the vision for how all these products come together? What are the elements of unification that you're working towards?

Question: Tyler Radke - Citi - Analyst : I love how you led off with the customer example because I think that's what a lot of folks in the room are interested in. And I guess, I'd love your perspective on comparing this rush to modernize your data estate now relative to other data things. Like 10, 15 years ago, it was all about big data, then it was about cloud. Like what is different this time about those types of conversations with customers? And obviously, what's different on the product side, too, in terms of Fabric and how you're approaching it?

Question: Tyler Radke - Citi - Analyst : Got it. Got it. And it certainly seems like a pretty compelling consolidation message for customers. I know that's a big theme that we're hearing from IT executives. I guess I'm wondering how you are positioning Fabric in the context of also some really strong partnerships with ISVs? Out at Microsoft build, we were out there in Seattle, and you highlighted companies like Snowflake, Databricks, MongoDB. How do you think about where to partner versus pushing your own cloud native services? And how does that work for customers if they're trying to consolidate?

Question: Tyler Radke - Citi - Analyst : Right. And I think with Fabric, it's been about 1.5 years since the announcement out at build in May last year, what the customer feedback and reception been? Any adoption statistics you can share with us?

Question: Tyler Radke - Citi - Analyst : Right. And as you think about the cost savings, I mean, those are some pretty impressive numbers, is that primarily cost savings from other hyperscalers and other competitive products maybe some of those which you partner with? Or how do you think about where that budget for Fabric is coming from? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 5:20PM, MSFT.OQ - Microsoft Corp at Citi Global TMT Conference

Question: Tyler Radke - Citi - Analyst : Yes. Yes. It sounds like great scale for a product that's only about 1.5 years old --

Question: Tyler Radke - Citi - Analyst : I'd love to hear from you just the significance of the engineering organization that you have working on Fabric. And then also what you're most excited about, maybe what customers are most excited about in terms of what's coming on the road map?

Question: Tyler Radke - Citi - Analyst : Great. Great. I'd love to zoom out and to get your perspective, since you've been in the space a long time, like where we are in this data modernization and GenAI journey, right? You talked about how, obviously, you need good data to flow into LLMs and build copilots and everything. If we use the analogy of a baseball game, I know that's overused, but where are we in terms of that maturity curve of that data modernization? And then conversely, as you start to think about GenAI use cases, POCs and everything, where do you think we are in that stage of adoption? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 5:20PM, MSFT.OQ - Microsoft Corp at Citi Global TMT Conference

Question: Tyler Radke - Citi - Analyst : Right. Right. That's helpful color. And obviously, GitHub CoPilot is -- race is a big success story. I'd love your perspective. Just as you think about some of Microsoft's traditional data products, be it on the data warehouse side, with Synapse, maybe it's called Fabric now. I don't want to -- but just as you think about the role of, say, a traditional data warehouse or transactional SQL-based databases, as we start thinking about emerging GenAI architecture, LLMs, a lot of JSON documents, right, vector databases, what role do those play? I mean do you still think there's a huge growth curve ahead for data warehouses and traditional databases? Or do you think we're entering this massive tectonic shift?

Question: Tyler Radke - Citi - Analyst : They've never been that patient.

Question: Tyler Radke - Citi - Analyst : Right. Right. So we talked a lot about how a lot of positive receptivity to Fabric, and we're well along this data modernization journey. I'm curious on the constraints, right? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 5:20PM, MSFT.OQ - Microsoft Corp at Citi Global TMT Conference What are the biggest roadblocks that you see for customers in terms of not being able to go down this modernization journey? And then also on the GenAI front, we talked a little bit about prioritization, but would love your perspective on those three things.

Question: Tyler Radke - Citi - Analyst : Got it. That makes sense. I'm curious, so as we connect all the dots together, we talked a lot about Fabric and the whole Azure data platform, which I think is really unique versus anyone out there. How does this all add up to your Microsoft's overall GenAI strategy in your competitive position? Can you bring it all together and just talk about how this ties in with the goals around GenAI?

Question: Tyler Radke - Citi - Analyst : Right. And as we think about that positioning as one of the best position hyperscaler for the world of AI. Certainly, the numbers from Microsoft have been very impressive with Azure growth north of 30%. And commercial bookings up in the high teens last quarter. One of the things we've been hearing is just how the AI positioning or GenAI positioning is actually just contributing to more share gains within the core sets of services. I'm curious, is that something you're seeing? And how significant is the Azure data platform as part of these commercial bookings strengths that we've seen?

Question: Tyler Radke - Citi - Analyst : Right. Right. One of the things you mentioned earlier is honing in on that developer focus. And obviously, developers are even less patients these days in terms of things they demand. As you think about like making sure that you have relevance with that next-generation development. I know that's always been a focus for Microsoft. But what are some of the things that you're doing in your organization to make sure that you don't lose that momentum? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 05, 2024 / 5:20PM, MSFT.OQ - Microsoft Corp at Citi Global TMT Conference

Question: Tyler Radke - Citi - Analyst : Yes, so bigger picture question, obviously, GenAI has bursted onto the scene over the last couple of years. It's been pretty transformative to watch. As you think about the next five years, what are some of the things that you're excited about? What are some of the things that maybe you think the market is not talking about, whether we're too distracted with GenAI or anything else? What are you most looking forward to?

Question: Tyler Radke - Citi - Analyst : Yes. Great. Well, I know we got a couple of minutes left, but I did want to turn it back to you if there was anything that you wanted to cover that we didn't address, and maybe just leave the audience the main takeaways. And what the focus is from your end into year-end?

Question: Tyler Radke - Citi - Analyst : All right. Thank you very much.