Earnings Call Deliverable customer growth and interaction following the pandemic. Analyst Information: Cole Boester and TMT SaaS Analysts Growth

Near Term Growth: Overview: ● is reportedly in a deal to buy Ticker: MSFT Discord, a voice and chat Revenue, Net: $41.3 Billion communication platform centered CEO: aro u nd gaming, for $10 billion. Sector: TMT-SaaS ● In 2020, Discord brought in $100 Price: $249.90 million in revenue and doubled its Market Cap: 33.06B valuation to $7 billion. Return on Equity: 42.19% ● As Discord continues to grow, an Return on Assets: 17.22% acquisition could be very advantageous PE Ratio (TTM): 36.56 to Microsoft and could bring up the Microsoft share price. Earnings Update Key Results Long Term Growth: ● Earnings were $2.03 per share, beating ● The continued growth in sales and estimates of $1.64 per share revenue of their cloud services, Azure, ● Revenue was at $43.08B vs. the analyst will continue to make Microsoft more expected $40.18B. profitable as Azure has higher margins ● Microsoft revenue grew 17% on an than the overall business. annualized basis, up from 12% in the previous quarter. Breakdown of Revenue ● Amy Hood, Microsoft’s finance chief, $41.3 Billion expects double-digit revenue growth and ● Their Office Commercial and Cloud “healthy operating-margin expansion” Services revenue increased 11% and Analysis of Key Results their Office Consumer and Cloud ● Amazon has become known as the Services increase 7%. most comprehensive cloud platform on ○ Likely due to more people the market, and essential to the growth working at home and switching of businesses’ digital capability. to digital services. ● Innovations in hybrid computing with ● Their LinkedIn revenue increased 23%. the introduction of services like Azure ○ Likely due to more people HCL extending cloud services to sovereign workloads will bring even seeking employment after a more sources of revenue. harsh recession with high unemployment. Covid-Response ● Their content and services ● Benefits came from at-home learning increased by 40%. and cloud demand come COVID-19. ○ This is because of the launch of ● As a leader in the cloud and with Office their new console, the Xbox 365 as one of the primary workspace Series X which brought Xbox to services, there is likely to be continued the next generation.

Competitive Positioning ● Microsoft’s main competitors are Apple and Google. ○ Microsoft’s EV/EBITDA is 27.69 compared to Apple’s 24.07 and Google’s 22.72. ○ Microsoft’s P/E ratio is 38.13 compared to Apple’s 35.89 and Google’s 38.03. ○ However, Microsoft’s profit margin is 30.96% which is higher than Apple’s 20.91% and Google’s 22.06%. ● Microsoft has a market share of 76.56% in the operating systems market. ● Microsoft has a market share of 46% in the office productivity software market. Strategy ● Continue to nurture Office 365, projected to account for large Productivity and Business Processes revenue. ● Focus on LinkedIn with continued strong engagement to drive revenue growth. ● Continuing to invest strongly in Azure cloud computing, along with driving Office business and LinkedIn allows Microsoft to increase revenue growth in developing areas while continuing to generate revenue from current ventures (Office 365).

Catalyst Watch ● As the Xbox ecosystem continues to expand, Microsoft is hoping to catch up to Sony and Nintendo through offering cheaper models and acquiring new gaming franchises. ● Microsoft’s commercial cloud business will continue to be the main growth driver for Microsoft in 2021.