The competitive position of Linux has also benefited from the large number of compatible applications now produced by many commercial and non-commercial software developers. To address this, we provide a complete chain of software development tools across every cloud and client platform. Windows IoT extends the power of Windows and the cloud to intelligent systems by delivering specialized operating systems, tools, and services for use in embedded devices. Our cloud business benefits from three economies of scale: datacenters that deploy computational resources at significantly lower cost per unit than smaller ones; datacenters that coordinate and aggregate diverse customer, geographic, and application demand patterns, improving the utilization of computing, storage, and network resources; and multi-tenancy locations that lower application maintenance labor costs. Windows OEM and devices revenue was particularly . Earnings Release FY23 Q1. We intend to request shareholder approval for a successor ESPP with a January 1, 2022 effective date and ten-year expiration of December 31, 2031 at our 2021 Annual Shareholders Meeting. ET. Equity investments with readily determinable fair values are measured at fair value. Xbox hardware revenue increased 92% driven by higher price of consoles sold due to the Xbox Series X|S launches. These amounts are primarily included in Server products and cloud services, Office products and cloud services, and LinkedIn in the table above. With Azure Stack, organizations can extend Azure into their own datacenters to create a consistent stack across the public cloud and the intelligent edge. To build a more inclusive economy, we also have a responsibility to help close the Disability Divide, which impacts more than 1 billion people with disabilities around the world. Date: Tuesday, November 30, 2021 The fair value of stock awards was estimated on the date of grant using the following assumptions: During fiscal year 2021, the following activity occurred under our stock plans: As of June 30, 2021, there was approximately $12.0 billion of total unrecognized compensation costs related to stock awards. Changes in these factors could materially impact our consolidated financial statements. Identification and treatment of contract terms that may impact the timing and amount of revenue recognized (e.g., variable consideration, optional purchases, and free services). We have not engaged in any related party transactions or arrangements with unconsolidated entities or other persons that are reasonably likely to materially affect liquidity or the availability of capital resources. Satya Nadella Given the complexity and the subjective nature of the transfer pricing issues that remain unresolved with the IRS, evaluating managements estimates relating to their determination of uncertain tax positions required extensive audit effort and a high degree of auditor judgment, including involvement of our tax specialists. The estimated useful lives of our property and equipment are generally as follows: computer software developed or acquired for internal use, three to seven years; computer equipment, two to four years; buildings and improvements, five to 15 years; leasehold improvements, three to 20 years; and furniture and equipment, one to 10 years. Organizational tools such as Collections, Vertical Tabs, and Immersive Reader help you make the most of your time while browsing, streaming, searching, sharing, and more. We have several partnerships with other companies, including Verizon Media Group, through which we provide and monetize search queries. Securities held in our equity investments portfolio are subject to price risk. We built on this pledge by adding commitments to be water positive by 2030, zero waste by 2030, and to protect ecosystems by developing a Planetary Computer. Microsoft Online Subscription Agreements are designed for small and medium organizations that want to subscribe to, activate, provision, and maintain cloud services seamlessly and directly via the web. Operating Partner, $ 42,959. Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Management is responsible for the preparation of the consolidated financial statements and related information that are presented in this report. Microsoft reported its fiscal year 2021 Q3 results today, revealing that it's pulled in a hefty $41.7 billion in revenue over the last quarter . Once technological feasibility is established, software costs are capitalized until the product is available for general release to customers. To achieve our vision, our research and development efforts focus on three interconnected ambitions: Reinvent Productivity and Business Processes. The earnings provide a further lift to Microsoft after it agreed to acquire gaming giant Activision Blizzard in a $68.7 billion, all-cash deal. This is why we were the first major tech company to support GDPRthe EUs privacy law that is the standard for privacy legislation around the worldand why we are strong advocates for passage of comprehensive federal privacy legislation in the United States. The number of shares the PSU holder receives is based on the extent to which the corresponding performance goals have been achieved. LinkedIn revenue is mainly affected by demand from enterprises and professional organizations for subscriptions to Talent Solutions, Learning Solutions, Sales Solutions, and Premium Subscriptions offerings, as well as member engagement and the quality of the sponsored content delivered to those members to drive Marketing Solutions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties that may cause actual results to differ materially. We describe risks and uncertainties that could cause actual results and events to differ materially in Risk Factors, Managements Discussion and Analysis of Financial Condition and Results of Operations, and Quantitative and Qualitative Disclosures about Market Risk in our fiscal year 2021 Form 10-K. Quarter. To sign up for this free service, visit the Annual Report site on the Investor Relations website at: http://www.microsoft.com/investor/AnnualReports/default.aspx. The TCJA significantly changes existing U.S. tax law and includes numerous provisions that affect our business. Our objectives for holding derivatives include reducing, eliminating, and efficiently managing the economic impact of these exposures as effectively as possible. Adjusted net income and adjusted diluted earnings per share (EPS) are non-GAAP financial measures which exclude tax benefits related to an India Supreme Court decision on withholding taxes in fiscal year 2021. We expect to recognize approximately 50% of this revenue over the next 12 months and the remainder thereafter. 213.43. And, finally, our comprehensive portfolio of AI tools, frameworks, and infrastructure enables developers to build solutions that comprehend speech, make predictions, provide insights, and support decision-making. Machine Translation Market 2023 Structure Along With Size, Trends, Revenue, Market segments, Forecast to 2029 Published: Feb. 16, 2023 at 12:44 a.m. The Companys management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report of Management on Internal Control over Financial Reporting. Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. From GitHub to Visual Studio, we provide a developer tool chain for everyone, no matter the technical experience, across all platforms, whether Azure, Windows, or any other cloud or client platform. We also compete with other providers of entertainment services such as video streaming platforms. Refer to Managements Discussion and Analysis of Financial Condition and Results of Operations for further discussion regarding the impact of COVID-19 on our fiscal year 2021 financial results. The Independent Software Vendor Royalty program enables partners to integrate Microsoft products into other applications and then license the unified business solution to their end users. . These costs include our internal sales force compensation program and certain partner sales incentive programs as we have determined annual compensation is commensurate with annual sales activities. Our revenue fluctuates quarterly and is generally higher in the second and fourth quarters of our fiscal year. The segment amounts included in MD&A are presented on a basis consistent with our internal management reporting. Unearned revenue is generally invoiced annually at the beginning of each contract period for multi-year agreements and recognized ratably over the coverage period. Such costs related to software development are included in research and development expense until the point that technological feasibility is reached, which for our software products, is generally shortly before the products are released to production. SA is included. Determination of stand-alone selling prices for each distinct performance obligation and for products and services that are not sold separately. These estimates and assumptions are affected by managements application of accounting policies, as well as uncertainty in the current economic environment due to COVID-19. Refer to Risk Factors in our fiscal year 2021 Form 10-K for a discussion of these factors and other risks. This is not possible without trust. Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to those reports, as soon as reasonably practicable after we electronically file that material with or furnish it to the Securities and Exchange Commission (SEC) at www.sec.gov. We determine the allowance based on known troubled accounts, historical experience, and other currently available evidence. Windows OEM Pro revenue decreased 9% and Windows OEM non-Pro revenue grew 21%. We will continue to invest in sales, marketing, product support infrastructure, and existing and advanced areas of technology, as well as continue making acquisitions that align with our business strategy. Revenue from sales of Windows Pro licenses sold through the OEM channel, which primarily addresses demand in the commercial market, Revenue from sales of Windows non-Pro licenses sold through the OEM channel, which primarily addresses demand in the consumer market, Windows Commercial products and cloud We believe our server products provide customers with advantages in performance, total costs of ownership, and productivity by delivering superior applications, development tools, compatibility with a broad base of hardware and software applications, security, and manageability. To ensure our AI technologies are used responsibly and to avoid unintended consequences, we take a principled approach built on fairness, reliability and safety, privacy and security, inclusiveness, transparency, and accountability. The components of lease expense were as follows: Supplemental cash flow information related to leases was as follows: Supplemental balance sheet information related to leases was as follows: The following table outlines maturities of our lease liabilities as of June 30, 2021: As of June 30, 2021, we have additional operating and finance leases, primarily for datacenters, that have not yet commenced of $5.4 billion and $7.3 billion, respectively. Product and Service Development, and Intellectual Property. Goodwill is tested for impairment at the reporting unit level (operating segment or one level below an operating segment) on an annual basis (May 1 for us) and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. Costs incurred internally in researching and developing a computer software product are charged to expense until technological feasibility has been established for the product. Microsoft has introduced a Hybrid Workplace Flexibility Guide to better support managers and employees as they adapt to new ways of working that shift paradigms, embrace flexibility, promote inclusion, and drive innovation. Devices face competition from various computer, tablet, and hardware manufacturers who offer a unique combination of high-quality industrial design and innovative technologies across various price points. In its 2022 financial year, Microsoft generated 63.4 billion U.S. dollars from its productivity and business processes segment and a further 75.3 billion . Our products include operating systems, cross-device productivity applications, server applications, business solution applications, desktop and server management tools, software development tools, and video games. In addition to LinkedIns free services, LinkedIn offers monetized solutions: Talent Solutions, Marketing Solutions, Premium Subscriptions, Sales Solutions, and Learning Solutions. It has helped us become more empathetic toward our colleagues and enabled us to work together as a teamas One Microsoft. In response, we will invest $20 billion over the next five years to advance our security solutions. LVMH Revenue By Segment. You can only download this statistic as a Premium user. Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. The past year has also made clear how essential PCs are to work, learning, and life at home. At times, we may hold options, futures, and swap contracts. Right-of-use assets obtained in exchange for lease obligations: Reclassification adjustments for gains included in earnings, Tax expense included in provision for income taxes, Amounts reclassified from accumulated other comprehensive income (loss), Net change related to derivatives, net of tax of, Reclassification adjustments for (gains) losses included in other income (expense), net, Tax expense (benefit) included in provision for income taxes, Net change related to investments, net of tax of, Translation adjustments and other, net of tax effects of, Accumulated other comprehensive income (loss), end of period, Income tax benefits related to stock-based compensation, NASAs Mars mission achieved a milestone in space exploration when the small robotic helicopter Ingenuity completed the first powered flight on another planeta feat that would not have been possible without 12,000 developers on GitHub who, When a 1,300-foot ship blocked the Suez Canal and disrupted global shipping, our partner Blue Yonder, Team Rubicona nonprofit organization that responds to humanitarian crises around the world, Surgeons at Mt. The consolidated financial statements, which include amounts based on managements estimates and judgments, have been prepared in conformity with accounting principles generally accepted in the United States of America. Although management currently believes that resolving claims against us, individually or in aggregate, will not have a material adverse impact in our consolidated financial statements, these matters are subject to inherent uncertainties and managements view of these matters may change in the future. Meanwhile, the company is plowing billions of dollars into its Reality Labs (metaverse) segment despite it generating a mere pittance in terms of revenue. Under the Executive Incentive Plan, the Compensation Committee approves stock awards to executive officers and certain senior executives. Much of our segment level research and development is coordinated with other segments and leveraged across the Company. We applied a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the effective date to align our credit loss methodology with the new standard. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. On April 11, 2021, we entered into a definitive agreement to acquire Nuance Communications, Inc. (Nuance) for $56.00 per share in an all-cash transaction valued at $19.7 billion, inclusive of Nuances net debt. We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. Based on the information currently available, we do not anticipate a significant increase or decrease to our tax contingencies for these issues within the next 12 months. We support the fundamental rights of all people. Microsoft's revenue 2008-2023, by fiscal quarter. Time: 8:30 a.m. Pacific Time Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Debt investments with continuous unrealized losses for less than 12 months and 12 months or greater and their related fair values were as follows: Unrealized losses from fixed-income securities are primarily attributable to changes in interest rates. Certain cloud services, primarily Office 365, depend on a significant level of integration, interdependency, and interrelation between the desktop applications and cloud services, and are accounted for together as one performance obligation. Padmasree Warrior 2 Tackling security from all angles with our integrated, end-to-end solutions spanning security, compliance, identity, and management, across all clouds and platforms. Inventing new gaming experiences that bring people together around their shared love for games on any devices and pushing the boundaries of innovation with console and PC gaming by creating the next wave of entertainment. In the Gaming segment, Microsoft's Xbox shares a 20-year rivalry with Sony's PlayStation. The strong success of LinkedIn is a clear indicator of how important this is. Revenue from search advertising is recognized when the advertisement appears in the search results or when the action necessary to earn the revenue has been completed. Build the Intelligent Cloud and Intelligent Edge Platform. Furthermore, we shared a commitment to transparency by subjecting the data in our annual sustainability report to third-party review and to accountability by including progress on sustainability goals as a factor in determining executive pay. Our consumer businesses also benefited from the remote environment, with continued demand for PCs and productivity tools, as well as strong engagement across our Gaming platform. Office Commercial revenue is mainly affected by a combination of continued installed base growth and average revenue per user expansion, as well as the continued shift from Office licensed on-premises to Office 365. Credit losses relating to available-for-sale debt securities are recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. Microsoft 365 Consumer subscribers increased 22% to 51.9 million. Our short-term investments are primarily intended to facilitate liquidity and capital preservation. Growth of our Gaming business is determined by the overall active user base through Xbox enabled content, availability of games, providing exclusive game content that gamers seek, the computational power and reliability of the devices used to access our content and services, and the ability to create new experiences through first-party content creators. We are exposed to economic risk from foreign exchange rates, interest rates, credit risk, and equity prices. $75.25B. Server products revenue increased 6% driven by hybrid and premium solutions, on a strong prior year comparable that benefited from demand related to SQL Server 2008 and Windows Server 2008 end of support. 12,820. Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases. The segments enable the alignment of strategies and objectives across the development, sales, marketing, and services organizations, and they provide a framework for timely and rational allocation of resources within businesses. Operating income was $20.4 billion GAAP and $21.6 billion non-GAAP, and decreased 8% and 3% . Revenue is up 22 percent, and net income has . As part of our effort to promote a One Microsoft and inclusive culture, we expanded stock eligibility to all Microsoft employees as part of our annual rewards process. Web-based offerings competing with individual applications have also positioned themselves as alternatives to our products and services. Application development is moving beyond professional developers and into the hands of citizen developerseveryone from domain experts, to designers, marketers, salespeople, customer service professionals, teachers, students, and others. Microsoft Edge is our fast and secure browser that helps protect your data, with built-in shopping tools designed to save you time and money. Microsoft MSFT is set to report second-quarter fiscal 2022 results on Jan 25. Compensation cost for stock awards, which include restricted stock units (RSUs) and performance stock units (PSUs), is measured at the fair value on the grant date and recognized as expense, net of estimated forfeitures, over the related service or performance period. Certain income and expenses are not reported in tax returns and financial statements in the same year. Vertically integrated computer manufacturers such as Hewlett-Packard, IBM, and Oracle offer their own versions of the Unix operating system preinstalled on server hardware. A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Executive Vice President and Chief Financial Officer, Alice L. Jolla Microsoft posted the third quarter of its 2021 financial results today, reporting revenue of $41.7 billion and a net income of $15.5 billion. The guidance eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences related to changes in ownership of equity method investments and foreign subsidiaries. Build the intelligent cloud and intelligent edge platform. This study bestows revenue data by type, and during the historical period (2017-2023) and forecast period (2023-2028). Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our consolidated financial statements would be prevented or detected. And we have made a commitment to match 100 percent of our electricity consumption with zero carbon energy purchases 100 percent of the time by 2030. Xbox revenue is mainly affected by subscriptions and sales of first- and third-party content, as well as advertising. We manage credit exposures relative to broad-based indices and to facilitate portfolio diversification. Translation adjustments resulting from this process are recorded to other comprehensive income. , Jan 12, 2023. We have savings plans in the U.S. that qualify under Section 401(k) of the Internal Revenue Code, and a number of savings plans in international locations. Deloitte & Touche LLP has audited our internal control over financial reporting as of June 30, 2021; their report follows. The regional center in Ireland supports the European, Middle Eastern, and African region; the center in Singapore supports the Japan, India, Greater China, and Asia-Pacific region; and the centers in Fargo, North Dakota, Fort Lauderdale, Florida, Puerto Rico, Redmond, Washington, and Reno, Nevada support Latin America and North America. As of June 30, 2021, we had federal, state, and foreign net operating loss carryforwards of $304 million, $1.3 billion, and $2.0 billion, respectively. In, Microsoft. This segment primarily comprises: Azure is a comprehensive set of cloud services that offer developers, IT professionals, and enterprises freedom to build, deploy, and manage applications on any platform or device. To serve the needs of customers around the world and to improve the quality and usability of products in international markets, we localize many of our products to reflect local languages and conventions. Our Enterprise Services business competes with a wide range of companies that provide strategy and business planning, application development, and infrastructure services, including multinational consulting firms and small niche businesses focused on specific technologies. We offer options for organizations that want to purchase our cloud services, on-premises software, and SA. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Localizing a product may require modifying the user interface, altering dialog boxes, and translating text. For certain equipment leases, such as vehicles, we account for the lease and non-lease components as a single lease component. GO RESET FILTER. In Q2 FY 2022, productivity and business processes generated $15.9 billion in revenue, comprising 31% of Microsoft's total revenue. The acquisition has been approved by Nuances shareholders, and we expect it to close by the end of calendar year 2021, subject to the satisfaction of certain regulatory approvals and other customary closing conditions. Net Recognized Gains (Losses) on Investments. Our products are generally sold with a right of return, we may provide other credits or incentives, and in certain instances we estimate customer usage of our products and services, which are accounted for as variable consideration when determining the amount of revenue to recognize. We are continuing our efforts to extend broadband access to millions of people in rural and underserved communities in the United States and around the globe. Our products for software developers compete against offerings from Adobe, IBM, Oracle, and other companies, and also against open-source projects, including Eclipse (sponsored by CA Technologies, IBM, Oracle, and SAP), PHP, and Ruby on Rails. Customers may purchase perpetual licenses or subscribe to licenses, which provide customers with the same functionality and differ mainly in the duration over which the customer benefits from the software. Microsoft's Intelligent Cloud revenue rose 18 percent to $21.5 billion, up from $18.2 billion one year ago. The tax effect of such temporary differences is reported as deferred income taxes. We identified four attributes that allow growth mindset to flourish: Our employee listening systems enable us to gather feedback directly from our workforce to inform our programs and employee needs globally. 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