Microsoft Corporation (MSFT) Earnings Call Transcript & Summary

Hi. Good morning and good afternoon, depending on where you are. It's Kirk Materne with the Evercore software research team. We're really excited to have Chris Capossela with us from Microsoft. Chris is the Head of Marketing at Microsoft, and we're delighted to host him for a fireside chat. There is an opportunity to ask questions. I'll run through some Q&A with Chris, and then I'll open it up to your questions. So please use the Q&A function within Zoom webinar to ask questions, and I'll relay them to Chris if we have time at the end. So Chris, thanks for doing this. I was hoping maybe just to level set because I'm sure not everybody has had the chance to meet you before. Can you just give us some idea of your background and your roles and responsibilities at Microsoft.

Pleased to have the opportunity to participate in the chat. As you mentioned, I'm the Chief Marketing Officer at Microsoft. I have a fancy title Executive Vice President. I get to work directly with Satya Nadella. He's my boss. Amy Hood, obviously, our CFO, is a key peer of mine and partner of mine in our daily work here at the company. I look after marketing for all of our products. So that means all the things you would associate with marketing, I think, product positioning, messaging, naming. We also do all the pricing and licensing and sort of the business models for all of our products inside of marketing with very close partnership with finance. Obviously, things like advertising and communications, PR, analyst relations, all of those types of things, events, our websites. I also get to look after 3 different sales forces. The sales force that calls on advertisers like myself to compete with Google with our Bing ad products. That's a very large business that doesn't get a lot of attention, but that's an exciting business for us. Another sales force I run is our retail sales force that calls on retail partners like a Best Buy or a Walmart or an Amazon all around the world to sell our consumer products through their stores. And then finally, the Microsoft Stores team is in my sort of remit, which is the team that runs microsoft.com. We do billions of dollars of Xbox transactions and Surface and Windows and Office. So I wear kind of 2 hats, marketing for the whole company and then some more consumer-related or advertiser-related sales teams are what I do. I've been at Microsoft almost 30 years, which is kind of crazy. I joined right out of college. And I've done jobs in engineering, believe it or not, I was a computer science and economics major, operations, sales and marketing.

That's great. That's great. 30 years at one company, I think it's going to be, not too many of us have been able to accomplish that. So that's super. Chris, given you span a lot of parts of the business, I was hoping maybe we'd start on commercial and then toggle back to consumer, not to flip-flop back and forth too often. So maybe I'll start with commercial because I think from an investor perspective, that obviously gets a lot of attention. And one of the things you all obviously play into are a lot of the themes around digital transformation, whether it's cloud, AI. And you have products within all of those areas really that can help address those opportunities and frankly challenges for a lot of your customers. But how do you think about putting together marketing messages that help your clients think about the challenges but actually have products that really address them today? Meaning, there's almost like where you won't talk about sort of how do you not boil the -- clients want to boil the ocean. But the reality is, you have to address these things on sort of a step-by-step basis. So how do you think about that broadly, maybe just to start, and then we'll dive in a little bit.

Yes. Great. So I'm hearing a decent amount of noise from some construction outside my house. So I'm going to just sort of pull this mic closer. Can you hear me okay?

Yes. We're good. Thanks. That's good. We hear a little vibration, but all good.

It's probably a little louder on my end. I apologize for that.

No problem.

I would say, look, figuring out your marketing message is always, it's always sort of a big challenge. Satya has made my job relatively straightforward in that he's made it really clear that he wants us to be the empowerment company, the empowerment brand. So he said many times, hey, if you want to be a cool kid, don't come to work for Microsoft. If you want to make our customers cool, come work for Microsoft. So we really try to put the customer at the center of our marketing. And that means figuring out what customers want to talk about. If you look at the way we go to market, we have what we call 10 solution areas or customer solution areas, which is where all our marketing and all our sales activities are organized around. A solution area might include something like data and AI. It includes something like modern work, the tools we use to collaborate every day. It includes something like security. So we have 5 or 6 of these that are very commercially oriented and 3 or 4 of these that are very consumer oriented, and there's some overlap between them. But having that clarity on what are the addressable markets you participate in that customers want to talk to you about, do you have differentiation in each one of these? And is there growth associated with each one? We ask those questions in designing these sort of 10 solution areas. Now we have 10. In a couple of years, maybe we'll have 12 or 13. The 10 that we have can drive huge amounts of growth, but we're always looking for that next tier. Where is the next $20 billion of growth going to come from, not the next $5 billion of growth. So I would say the short answer I can give you is that we do a lot of work to figure out the solution areas where we have differentiated technology that applies to a customer problem that has a large total addressable market, where we're actually a relatively small share player so we can grow pretty dramatically. Does that context make sense to you?

Yes. No. That helps. I think I was just trying to think about how you approach that because there's obviously different opportunities and then different sort of ways you might want to go to market for each of the different products that I think it helps bring it in.

You'll see our messaging change. That can happen quickly, but the core solution areas that we compete in, app developer, sort of app developer go-to-market, infrastructure go-to-market, those types of things will be pretty consistent year over year over year. And when I think about FY '22, there's no doubt that for us, a big, big priority is going to be security. A big, big priority is going to be helping companies return to more of a hybrid work model in the way they approach work, what we call modern work. And so hybrid is going to be a big focus. And then, of course, the Windows PC is going to be a huge focus, and that cuts across a few different solution areas.

That's helpful. And so within that context, I guess, on the commercial side, over the last few years, obviously, with the shift to the cloud, it's interesting you all obviously have more per user pricing in sort of the Office 365, Microsoft 365 area, but then you have consumption-based pricing when it comes to Azure. When you think about, because you are involved on the pricing side, how do you think about that? I mean, we wrote a report earlier this week about some of the opportunities you guys have in things like voice and security. And people were like, well, how big they could be? Well, how big they could be and how you all price it, it could be different, meaning it's part of a broader solution. So how do you all think about pricing on maybe the Microsoft 365 side? And then how maybe do you think about it differently when it comes to consumption-based pricing with something like Azure?

Yes. That's such a big question that we have a team that literally focuses on this as their full time job. And it's been amazing to see us transition from the original Microsoft where our pricing and licensing and our entire business model was very optimized for software for physical distribution of goods, literally like boxed software and seller-led transactions, much more of a push model, sort of a supply-led model. And with the move to the cloud 10, 12 years ago, we realized, obviously, a lot of customers talk to us about this all the time. With the move to the cloud, you sort of start to realize, oh, that sort of device-based model is really going to shift. It's going to become far more digital, and it's going to really evolve to a user subscription model and a consumption-based model, both of which have more of a pay as you go, use first and pay later. So freemium becomes really, really important and most of our services you can get started with for free. And then eventually, we ask you to pay a subscription or pay as you go, and that's required a huge amount of engineering. And of course, it's less supply-led and it's much more demand-led. Customers just expect to come to microsoft.com and be able to stand up an Azure virtual machine using whatever operating system they want just by swiping a credit card and getting started, not even initially paying for the first 30 or 60 days or they want to be able to take their existing Windows Server license and just be able to move that server to our cloud without having to rebuy that license. And those are all really sophisticated business model things that we've developed over the past bunch of years. Spot pricing has become a reality for us. If we don't have somebody using all of our capacity at a particular time of day, we now, algorithmically, will change the price of what a VM will cost if you're willing to be evacuated from that VM for somebody who is paying a higher price to have access to that 24/7. So the consumption models are very, very sophisticated, and the user subscription models, I think, are a little more straightforward for people to understand. But Kirk, one of the cool things, I don't know how much you want to nerd out on this today because this is an area I absolutely love. One of the very cool things is, we're starting to see blends between these 2 things. So for example, when you buy Microsoft 365, a user-based subscription, you get a certain amount of our Power Platform technology, Power Apps, Power BI, et cetera, but it is gated. It is governed and limited. And if you need more compute, let's say, you need more powerful servers or more powerful cores to power your Power BI, then you would then buy consumption on top of what you already own from your user-based subscription. So you'd sort of surge your capability for that part of the M365 subscription. And so I actually think the future you're going to see far more blending. It won't be as simple as, oh, that's a user-based model. Oh, that's a consumption-based model. I think you'll get a lot for user-based, but if you want more, like more compute, then you'll surge for a period of time, pay us the consumption, then you'll be done with that surge, maybe you're closing the books for a quarter and you'll need more Power BI juice, so to speak. And that means that customers really, I think, will have much more of a blend to work with. So the business model of the company, I think it's totally fascinating. And it has moved to user-based and consumption-based. But I think you should expect more of a blend over time as opposed to just the simple binary choice.

Yes. That's really helpful. I think it's interesting to see that having some expertise on both ends of it might become more important for most software companies over time. And I think we see that with a lot of the bigger names talking about that. Maybe just one quick follow-up on sort of the Microsoft 365 side as you mentioned security being one of the areas that you guys were focusing on also from a marketing perspective. So when you have a new product that perhaps people aren't as aware of for Microsoft like security and some of the offerings in that area. And you can probably throw voice and some other areas in there. How do you think about price? I mean, do you try to lead with low prices to kind of get people on it and try it out? I guess, I'm sure the marketing strategy and the pricing strategy has to go hand-in-hand. So is that a fair assumption? And when we think about these things that you all are obviously trying to dive deeper into, do you use pricing? Do you use aggressive pricing to, not to fool people in anything, but just to get them to try it out so that they can understand also the power of the platform from a broader perspective?

Well, the cool thing about the cloud is that there's sort of an expectation that there's a freemium approach for just about everything. And so almost no matter who you look at that we compete with, there's an element of, hey, you're going to be able to get something for free. And then over time, companies like us try to earn the right to have you sort of pay for something. In the case of some of our big products, as it relates to security, to your exact question, we know from talking to customers, if customers buy e-mail from us through Microsoft 365 or they're buying, obviously, Word, Excel, PowerPoint, they expect that to come with some level of security. They don't expect us to say, hey, you bought an e-mail from us, but it's totally insecure e-mail. And now you have to buy our security product, too. So in the case of security, what we tried to do is to say, for a lot of our core workloads, if you buy e-mail from us, if you buy Windows from us, and you're willing to buy that on an enterprise level, that's going to come with security built into it. It's kind of crazy for us to sell you e-mail that's insecure. It doesn't mean that it has every security capability that we could possibly think of. But it's certainly going to include, let's say, secure e-mail. And then there may be more sophisticated things. For us, we think of security, we also think about compliance and we think about management and identity as all sort of one solution area. A lot of companies think of security as one thing. We actually think it's a little bit broader than that. So if you buy e-mail from us, you're going to get a good level of security, but you might not get all the compliance capabilities that you'll want for legal discovery or for the sophisticated compliance needs that a larger company might need. And then that would be an additional product with a higher price. So I think about it, we think about security specifically that way. We shouldn't sell you an insecure operating system and say, here is Windows. It's not very secure, now pay us more to secure it. We're going to have a base level of security in there, then there's always going to be another tier that you may want to buy into, depending on your threat posture around security and compliance.

Okay. That's helpful. Another thing I want to touch upon from the commercial side is obviously sort of the verticalization of the business. You all have been building out really not only marketing but products that go after addressing sort of the last mile, if you will, of business transformation in certain verticals. And obviously, some of that last mile might be the most important stuff when it gets down to it for the businessperson. So from a marketing perspective, how are you thinking about that? Where are you in terms of verticalizing products? Obviously, most of your products are horizontal by nature, but obviously adding in vertical functionality. And then speaking, I'd imagine, directly to the business owner, not just to the IT person, is something that I think would unlock new pools of spend for you all as we go forward. So can you just talk about that generally?

Yes. It's such a good one. Thank you for asking. I would say, as soon as Satya pushed the company to focus much more on empowerment, Judson and Jean-Philippe, our sort of sales leaders, they were the ones who really said, hey, if we're serious about that, we need to get far deeper and understand how Azure can be applied to the financial services industry. How Azure can be applied to the health care industry, to the retail industry, et cetera. So for us, it was sort of a natural transformation from and taking very horizontal products like Microsoft 365, like Azure, like Dynamics 365, the Power Platform, et cetera, and starting to more deeply partner with the biggest companies in the world in each one of these industries and understand how we can make our horizontal platform the platform that they build on. And one of the first things you hear is, of course, that we need the best ISVs in the world who have very specialized needs or very specialized solutions to be building on the Microsoft Cloud. So I would say that as you think about what we're doing in industries, generally available right now is the Microsoft Cloud for Healthcare. We're in public preview with the Microsoft Cloud for Retail and the Microsoft Cloud for Financial Services. We've announced the Microsoft Cloud for Manufacturing and the Microsoft Cloud for Nonprofit. Those are not yet in public preview. But you see us taking our horizontal cloud assets, partnering with very important ISVs by vertical and then going to market in a way where our sales and marketing is far more tuned to the problems customers have. I don't think you'll ever see us be a deeply vertical software company. It's always going to be, hey, these are the horizontal platforms we have, and we have incredible partners that we can go to market with. And as those partners win, so does the Microsoft Cloud. And that, I think, is the key thing for investors to understand. It's still very much a horizontal play for us, but we are doing more to make sure our solutions and our partners' solutions meet the needs of the biggest industry verticals that have the biggest compute needs, shall I say. I'm not sure if that gets to your core question, but feel free to ask a follow-up.

No. I think that helps. And actually, it kind of dovetails with another one, which would be, as you mentioned, having ISVs adopt your platform, build on top of your platform, developers go hand-in-hand with that, obviously. And obviously, GitHub was an important acquisition, I think, in terms of getting to the crux of talking to developers perhaps a little bit more directly. Where do you think you are in that journey with it? I mean, look, Microsoft's always had tons of developers, but I'd say the first maybe tranche of big Internet companies was built on maybe another platform. I think going forward, you obviously want the next big tranche to be on yours. Kind of where do you think you are on that journey with developers? What's been going right? What are some of the things that are going to differentiate you, I guess, from a marketing, pricing perspective over the next couple of years?

Yes. I mean, as you said, our very first product as a company was a product for developers. It was a BASIC programming product. And Windows, of course, succeeded in large part because developers chose to build their applications for Windows. And now I'd say that a lot of our cloud success with Azure has actually been enterprises taking their existing infrastructure and migrating that infrastructure to the cloud. The next opportunity for us or a very big opportunity for us is to actually make the Microsoft Cloud the platform of choice for ISVs and developers, not just ISVs, but also developers at every enterprise company in the planet. And there's no doubt that the developer, the software developer, is sort of the creator of this part of the creator economy. And so we were really excited with the GitHub acquisition because it's essentially the business application, if you want, it's almost the SaaS tool that every developer wants to use. And it's the collaboration tool that every developer uses. And so if you think about the tech sector not being the sector that has the most developers, it's really going to be every large company. I mean more companies are hiring developers than high tech, if you look at all the industries, right? If you go talk to the automotive industry, they're hiring huge numbers of developers. Talk to the energy industry, huge numbers of developers. So for us, the developer, as an audience, is a super, super interesting business opportunity for us. GitHub is the business application. It is the CRM tool of the salesperson. And so it's just absolutely core to what we're doing. I'm really happy. I would say, the company is really happy with the growth of GitHub over the past couple of years. The technology integration between GitHub and Microsoft products has been really good, but GitHub has also maintained its own identity, which I think is really, really important. And Nat's done a wonderful job as sort of the CEO inside of Microsoft working for Scott Guthrie who runs a huge, huge part of our engineering stack. So I'd say, look, we are really pumped about GitHub. This is the year, I think, where we're going to tell more of the developer toolchain story because it's not just GitHub. Visual Studio is an incredible set of tools for developers, and we're really happy with the way that business is going. It's growing really, really healthily. We have a whole low-code series of technology called the Power Platform. We think the no code/low code developer is a sort of ignored developer, and we want to serve them super well with Power Apps and the Power Platform integrated into the rest of the Microsoft Cloud. So I think FY '22 is going to be a big, big year for Microsoft, catering to the needs of ISV developers, but also enterprise developers using this entire toolchain, from Visual Studio, to Power Platform, to GitHub, to all the Azure services geared towards developers.

That's helpful. I was going to ask you a question on the low code/no code opportunity. So I'm glad you touched on it because I want to make sure I get to consumer, too, because I feel like us in the financial industry might shortchange your consumer products by too much.

And we didn't even talk about hybrid work and Teams and Microsoft 365.

I only have so much time.

Our commercial business is quite broad, which is actually one of the reasons customers choose us is this very, very broad cloud approach that we have.

I'm going to leave that. We have a couple of questions that I want to try to get to. So first on gaming and consumer, let's just talk about Xbox. And Game Pass is really set up to change, I think, the way people consume content. And you have obviously acquired a number of studios to build out your own content. There's third-party content. Just I guess like because you run marketing and pricing in the consumer market, they're both going to go hand-in-hand. What is kind of the strategy with Game Pass and how is it going thus far? It seems to be going pretty well. So just wondering if you could touch upon that.

Yes. Thanks. I'm a huge gamer fan, a huge gamer myself. And I just absolutely love how committed we are to this business. For those of you who aren't really familiar with it, gaming is a massive business. And it used to be the gaming world was sort of split between sort of the PC gamers who were die hard PC-only and console gamers who loved their particular console, whether it's Xbox or PlayStation or Switch or the Wii or what have you. But what we've seen as the technology has gotten better and better, gamers actually game across many platforms. They don't just play on their console or just play on their PCs. So we've really tried to change the business model of the way we approach gaming to put the gamer more at the center so that our promise is that, hey, you can play the games that you love with the people that you love because social is a big, big part of gaming, community is a big part of it across the devices that you love. So with Game Pass, you basically pay a monthly fee for access to hundreds of games. You don't have to buy the game if you don't want to. You can just play that game. And you can play it on the console that it was built for or the PC it was built for. But we're also with our highest tier subscription, we're now hosting consoles in our own data centers and streaming those games to a variety of endpoints, even an Android phone. And soon, we're going to be testing on the iPhone and the iPad through the browser as well as, of course, Windows PCs. So you can think of it as games streaming to many, many endpoints, really billions of different endpoints. And so it's less console-centric or PC-centric, it's far more gaming-centric. And the latest number we've announced is 18 million Game Pass subscribers worldwide. We've only been at it a relatively short period of time. So we're thrilled with that growth. As you saw, Kirk, our Q3, our gaming revenue grew 50%, which is kind of crazy. Some of that is driven by the new console, Xbox Series X and Series S, but a lot of it frankly is driven by subscriptions and content and services on top of those subscriptions. And I'll just share a couple of crazy stats. One of the things we've been blown away with is that, I can look at someone before they're a Game Pass subscriber and after they're a Game Pass subscriber. And we're finding that once somebody subscribes, they're spending 20% more time playing games, so they go even deeper into gaming. They're playing 30% more genres, so they're exploring, just like a Netflix person might explore documentaries or comedy, even if they were an action flick person, 30% more genres. And they're playing 40% more games overall, including games that are outside of the subscription. And so for game developers, Game Pass is an awesome way for them to take their content and get it in front of gamers. It's not just, hey, the consumer wins and the publishers lose. This is a real win-win model, and we're pretty psyched about that, probably more than you wanted on Game Pass. I love it.

No. No. It's great. It's great. I'm sure you have some parents breaking into a cold sweat as you talk about the amount of gameplay, but I realize it's beyond just the millennials. I understand that. So I'm just kidding. I do want to ask a couple of questions just because we have them in. If we have time, I have a couple I have to circle back on, but I want to be mindful of people who made an opportunity or taking the advantage of e-mailing in. So can you just talk about, I mean, the question is on sort of GitHub driving conversion to Azure. Can you just talk about how that's going? And what you see -- because I think when you bought GitHub, it wasn't just about the GitHub revenue by itself. It was really about what you said earlier, the community, driving better awareness of Azure, your technical capabilities within IaaS and PaaS. So can you just talk about that a little bit in terms of how GitHub and Azure, the interplay between the 2?

Yes. So the engineering teams have worked together to do some really beautiful things where right from the GitHub, you can take advantage of a whole bunch of Azure services. You can also take advantage of a whole bunch of our security services. So from in GitHub, you can actually run a bunch of Microsoft security services on your code to figure out if the code you're about to use in your product or inside your company is secure. And that's kind of a beautiful secondary example that it's not just sort of these Azure core developer services. It's also our security services that we can bring to GitHub. And then the opposite is also true, where you can start in a Microsoft, a traditional Microsoft product like Visual Studio and of course, that's deeply integrated into GitHub. So there's sort of roads working in both directions, if you will. For GitHub users, they have very easy, intuitive, seamless access to Microsoft technology. And if you're using Microsoft technology, GitHub is the natural destination for your code to be able to share it. We've done a whole bunch of cool things where you can stand up your own developer rig from our cloud working with GitHub. You'd be surprised how time intensive it is for a developer to set up a custom dev box, believe it or not, to have just the tools that they want. We're actually doing that as a cloud dev box so you can then pick that up at any time. And as a developer, you're not spending 2 days getting that dev box just right, and that's all obviously being instantiated in our cloud and deeply integrated into GitHub. So I think we've only scratched the surface of what's possible here. If you want to use GitHub and not use any of Microsoft's services, of course, you can continue to do that. That will be very important to continue to respect that about the GitHub community, but we want to make it just drop dead easy if you do.

That's super helpful. No, I think it's a great combination, and I appreciate the comment on that. The independence of GitHub too is obviously super important to you guys. I think you've been very forthright about that since you bought it, which I think is important that you don't play games with developers. They have long memories.

Exactly. Right.

Very smart on your part. Next one was just around sort of voice and UCaaS as an opportunity for you all and how you think about marketing, but also pricing for some of the services you have from a phone and voice perspective. Can you just touch upon that, a little about maybe the strategy behind that versus partnering and competing because there's a lot of other vendors in there, some of which you obviously partner with. So how are you thinking about that?

Yes. I mean just from a competitor lens, there's no doubt that Cisco is still the competitor or the company we see the most of on the voice side. Zoom is obviously very popular for video conferencing, but not so much on the true voice side. So most of the customers we're talking with all the time these days are really talking about their Cisco technology, the phones that they have, obviously, the routers, the switchers, the telephony that they've built there. And so we're doing a lot of work to make it very easy for you with Microsoft Teams because this is really where Teams shines is it's not just for video conferencing. It's not just for persistent chat. It actually lets you do all of these workloads from video conference, to persistent chat, to telephony, to being able to make IP-based phone calls, to not have to have the telephony infrastructure that many companies use or have had traditionally. Often, companies want to explore this when they're building a new facility, moving to a new location. It's not a rip and replace. It's a, hey, I want to take this set of employees that work in this field office and we want to just make sure they don't have to have any of the traditional infrastructure. Can we please just do it through Teams? So this coming year, you'll hear us making a lot more noise and having more offerings, frankly, around people who still want a physical phone, but it might not be connected to the traditional telephony network. They want it connected to a 100% IP-based network, and they just want it to be an extension of Teams. And so I think that will be more to come on that. I don't have anything to announce today in terms of pricing or licensing. But I would say that this is a really rich area of investment for companies. We think we're going to deliver a lot of value here, and we think we should monetize that value. It shouldn't be something that's just a sort of freebie, so to speak. But consider Teams at the center of this strategy. As I think you know, we have about 145 million daily active users of Teams now, which is almost double a year ago and the rate of innovation that the Microsoft Teams team has released to the world has just been absolutely fantastic. So expect more from us in the area of voice, phones, meeting rooms, along with our partners who build a lot of those devices with us.

That's super. So I'm getting the notification. We got a few minutes left. I'm going to sneak one last one in there just because I think it's a little bit of a higher-level question, and I was just kind of curious about it based on some of your commentary. Low code/no code Power Platform, you have Dynamics, you have more virtualization going on. I mean, it seems to me that the nature of the business application market might change over time. And there's a lot of ways that I think you all can help that come about, citizen developers, business users from a vertical perspective. I guess, just do you think that's fair? I mean, I think I understand where you all are going with that. And is that how you're thinking about marketing maybe longer term around sort of what you historically maybe call business applications, meaning that there's going to be some business applications that, frankly, the companies develop themselves that don't necessarily come out of more codified horizontal solutions? Sorry, I only give you 60 seconds or so to answer that, but just simply curious on that.

I think you're on to it, Kirk. That's exactly right. I think the days of like the sales force CRM big tool are sort of passé. It's much more modular these days. We have something like 26 different Dynamics 365 modules that are very specific to a field service. There's a field service module that you can adopt integrated into your data estate, integrated into the tools that people use on their mobile phone, in many cases, it will be a Microsoft Teams solution. So I think you're right that this is much more about sort of a data plan that you're then attaching modules on to, to solve a particular business process or business application as opposed to the traditional monolithic solution. And that's one of the reasons Dynamics 365 grew 45% for us last quarter year-over-year. This is a business that's on the rise. It's much bigger than it was just a couple of years ago. And we're really starting to see our industry-specific approach go hand-in-hand with Dynamics 365, our data platform and our citizen developer tools. Those all come together in, I think, a really virtuous cycle that if I could be bold, I don't think our competitors have quite understood yet and customers are really embracing.

That's helpful. Now it's going to be interesting to see how that plays out, but you can see the sort of the concentric circles overlapping into having a really interesting, I think, next few years around how apps sort of progress from here. So I appreciate that answer. I'm glad I'm not barking up the wrong tree, frankly. So good to hear. We are literally at time. So Chris, thanks very much for joining us. I'll just mention that Brett Iversen and James Ambrose from IR were on with us. So if you have any follow-up questions for Chris, please follow-up directly with the Microsoft IR team. Otherwise, thank you all for joining us for the event. And if you have any follow-up questions for me at Evercore, feel free to reach out directly. Otherwise, enjoy the rest of your day.

Thanks, everyone.

Thank you.