“We expect COGS of USD 26.35 billion to USD 26.55 billion or growth of 21% to 22%.”

In context

“er-margin businesses. Operating expenses increased 4% and 3% in constant currency, and operating income increased 18% and 16% in constant currency. Operating margins increased 3 points year-over-year to 30% driven by the higher gross margin noted earlier. Now moving to our Q2 outlook, which unless specifically noted otherwise, is on a U.S. dollar basis. Based on current rates, we expect FX to increase total revenue growth by 2 points. Within the segments, we expect FX to increase revenue growth by 2 points in Productivity and Business Processes and Intelligent Cloud and 1 point in More Personal Computing. We expect FX to increase COGS and operating expense growth by 1 point. Starting with the total company, we expect revenue of USD 79.5 billion to USD 80.6 billion or growth of 14% to 16%. We expect COGS of USD 26.35 billion to USD 26.55 billion or growth of 21% to 22%. And operating expense of USD 17.3 billion to USD 17.4 billion, growth of 7% to 8%. Operating margins should be relatively flat year-over-year and down sequentially, aligned with historic seasonality. Now other income and expense. The combination of OpenAI's conversion to a public benefit corp and the ongoing nature of our partnership will result in increased volatility. Therefore, going forward, we'll provide our outlook, excluding any impact from our investments in OpenAI. On that basis, in Q2, other income and expense is estimated to be roughly $100 million as interest income will more than offset interest expense. And we expect our Q2 effective tax rate to be approximately 19%. Next, capital expenditures. With accelerating demand and a growing RPO balance, we're increasing our spend on”