“Customer demand for our differentiated solutions should drive another quarter of strong growth.”

In context

“income expense was negative $283 million, significantly more favorable than anticipated due to foreign currency remeasurement and net gains on investments. Our losses on investments accounted for under the equity method were as expected. Our effective tax rate was approximately 19%. And finally, we returned $9 billion to shareholders through dividends and share repurchases. Now moving to our Q2 outlook, which unless specifically noted otherwise, is on a U.S. dollar basis. First, FX. With the weaker U.S. dollar and assuming current rates remain stable, we expect FX to increase total revenue and segment level revenue growth by less than 1 point. We expect FX to have no meaningful impact to COGS or operating expense growth. Our outlook has many of the trends we saw in Q1 continue through Q2. Customer demand for our differentiated solutions should drive another quarter of strong growth. In commercial bookings, we expect strong growth on a growing expiry base driven by increased long-term commitments to our platform and strong execution across core annuity sales motions. As a reminder, larger long-term Azure contracts, which are more unpredictable in their timing, can drive increased quarterly volatility in our bookings growth rate. Microsoft Cloud gross margin percentage should be roughly 70%, down year-over-year, driven by the impact of scaling our AI infrastructure. We expect capital expenditures to increase on a sequential basis, given our cloud and AI demand signals. As I said last quarter, we will stay aligned and, if needed, adjust to the demand signals we see. As a reminder, there can be quarterly spend variability from cloud infrastructure build-outs and the timi”