That would be the fastest pace for either metric in at least six years. You need at least a Starter Account to use this feature. Variations in the actual outcome of these future tax consequences could materially impact our consolidated financial statements. The outcomes of legal proceedings and claims brought against us are subject to significant uncertainty. Microsoft's Intelligent Cloud revenue rose 18 percent to $21.5 billion, up from $18.2 billion one year ago. Quarter. dollars)." We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. Differences in device market demand between developed markets and growth markets. We continue to invest in new gaming studios and content to expand our IP roadmap and leverage new content creators. During the reported quarter, revenues from the Engine Management segment totaled $242.4 million, down 1.3% year over year. 12,820. As of June 30, 2021 and 2020, long-term accounts receivable, net of allowance for doubtful accounts, was $3.4 billion and $2.7 billion, respectively, and is included in other long-term assets in our consolidated balance sheets. The Company designs and maintains accounting and internal control systems to provide reasonable assurance at reasonable cost that assets are safeguarded against loss from unauthorized use or disposition, and that the financial records are reliable for preparing consolidated financial statements and maintaining accountability for assets. Compensation expense for the employee stock purchase plan (ESPP) is measured as the discount the employee is entitled to upon purchase and is recognized in the period of purchase. Much of our segment level research and development is coordinated with other segments and leveraged across the Company. We strive to make computing more personal by putting people at the core of the experience, enabling them to interact with technology in more intuitive, engaging, and dynamic ways. The financial results of GitHub have been included in our consolidated financial statements since the date of the acquisition. We believe our allowances for income tax contingencies are adequate. 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. Based on the carrying amount of server and network equipment included in property and equipment, net as of June 30, 2020, the effect of this change in estimate for fiscal year 2021 was an increase in operating income of $2.7 billion and net income of $2.3 billion, or $0.30 per both basic and diluted share. Enterprise Agreements are designed for medium or large organizations that want to license cloud services and on-premises software organization-wide over a three-year period. 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. Our reportable segments are described below. I am encouraged because of the power of you, our shareholders, our employees, our partners, our customers, and everyone who has continued to work hard to make the world a better place in the face of constraints. We have a strong position with our large and growing highly engaged community of gamers, including the March 2021 acquisition of ZeniMax Media Inc., the parent company of Bethesda Softworks LLC, one of the largest, privately held game developers and publishers in the world. Refer to Risk Factors in our fiscal year 2021 Form 10-K for a discussion of these factors and other risks. 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. Please create an employee account to be able to mark statistics as favorites. Shares repurchased during the third quarter of fiscal year 2020 were under the share repurchase programs approved on both September 20, 2016 and September 18, 2019. Awards that expire or are canceled without delivery of shares generally become available for issuance under the plans. We continue to develop complete, intelligent solutions for our customers that empower people to stay productive and collaborate, while safeguarding businesses and simplifying IT management. Intelligent Cloud revenue increased driven by Azure. We invite you to submit any questions via the proxy voting site at www.proxyvote.com. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Attachment of Windows to devices shipped. Customized manager learning to build people manager capabilities and similar learning solutions to build leadership skills for all employees including differentiated leadership development programs. In the first fiscal quarter of 2023, revenue in the Microsoft Intelligent Cloud segment, which includes the Azure public cloud, Windows Server, SQL Server, Nuance, and Enterprise Services, was $20 . Contribution in Q2 2022. The following table outlines the expected future recognition of unearned revenue as of June 30, 2021: If our customers choose to license cloud-based versions of our products and services rather than licensing transaction-based products and services, the associated revenue will shift from being recognized at the time of the transaction to being recognized over the subscription period or upon consumption, as applicable. While the Company has settled a portion of the IRS audits, resolution of the remaining matters could have a material impact on the Companys financial statements. This starts with access to broadband. President, Fable Group Inc. Teri L. List 1,3 In March 2021, the India Supreme Court ruled favorably for companies in 86 separate appeals, some dating back to 2012, holding that software sales are not subject to India withholding taxes. We use metrics in assessing the performance of our business and to make informed decisions regarding the allocation of resources. The segment was supported by increased drilling activity by customers. Excluding this impact, gross margin percentage decreased slightly driven by gross margin percentage reduction in More Personal Computing. Xbox Cloud Gaming utilizes Microsofts Azure cloud technology to allow direct and on-demand streaming of games to PCs, consoles, and mobile devices, enabling gamers to take their favorites games with them and play on the device most convenient to them. Deloitte & Touche LLP and the internal auditors each have full and free access to the Audit Committee. $90.88. Certain acquired net operating loss carryforwards are subject to an annual limitation but are expected to be realized with the exception of those which have a valuation allowance. Build the intelligent cloud and intelligent edge platform. We are required to estimate the fair value of the investment to determine the amount of the impairment loss. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. 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. Our search business competes with Google and a wide array of websites, social platforms like Facebook, and portals that provide content and online offerings to end users. Our segments provide management with a comprehensive financial view of our key businesses. During fiscal year 2020, we recorded an impairment charge of $161 million to operating lease right-of-use assets due to the closing of our Microsoft Store physical locations. Once technological feasibility is reached, such costs are capitalized and amortized to cost of revenue over the estimated lives of the products. The fair values of these investments approximate their carrying values. Meanwhile, the company is plowing billions of dollars into its Reality Labs (metaverse) segment despite it generating a mere pittance in terms of revenue. Gross unrecognized tax benefits related to uncertain tax positions as of June 30, 2021, 2020, and 2019, were $14.6 billion, $13.8 billion, and $13.1 billion, respectively, which were primarily included in long-term income taxes in our consolidated balance sheets. 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Preparing consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. We use a single amount to estimate SSP for items that are not sold separately, including on-premises licenses sold with SA or software updates provided at no additional charge. LinkedIn revenue increased $2.2 billion or 27% driven by advertising demand in our Marketing Solutions business. Last year, we intercepted 30 billion email threats and 31 billion authentication attacks. Microsoft Cloud Solution Provider is our main partner program for reselling cloud services. Employees may purchase shares having a value not exceeding 15% of their gross compensation during an offering period. We design our devices, from Surface to Xbox, to minimize their impact on the environment. If our review indicates a reduction in utility below carrying value, we reduce our inventory to a new cost basis through a charge to cost of revenue. All share repurchases were made using cash resources. But the most notable thing is what will happen to the other 90 percent. For access to additional financial information, visit the Investor Relations website online at: www.microsoft.com/investor. We have broadened our approach to how we think about gaming end-to-end, from the way games are created and distributed to how they are played, including cloud gaming so players can stream across PC, console, and mobile. Enterprise Agreements offer large organizations a manageable volume licensing program that gives them the flexibility to buy cloud services and software licenses under one agreement. While we intend to defend these matters vigorously, adverse outcomes that we estimate could reach approximately $500 million in aggregate beyond recorded amounts are reasonably possible. In addition to poll and pulse surveys, we gain insights through onboarding and exit surveys, internal Yammer channels, employee Q&A sessions, and AskHR Service support. Commercial cloud gross margin percentage increased 4 points to 71% driven by gross margin percentage improvement in Azure and the change in estimated useful lives of our server and network equipment, offset in part by sales mix shift to Azure. Unearned revenue comprises mainly unearned revenue related to volume licensing programs, which may include Software Assurance (SA) and cloud services. Microsofts Board of Directors provides insight, feedback, and oversight across a broad range of environmental and social matters. We contribute fifty cents for each dollar a participant contributes into the plans, with a maximum employer contribution of 50% of the IRS contribution limit for the calendar year. Our customers include individual consumers, small and medium organizations, large global enterprises, public-sector institutions, Internet service providers, application developers, and OEMs. We settled a portion of the Internal Revenue Service (IRS) audit for tax years 2004 to 2006 in fiscal year 2011. We believe our clouds global scale, coupled with our broad portfolio of identity and security solutions, allows us to effectively solve complex cybersecurity challenges for our customers and differentiates us from the competition. The acquisition is expected to empower developers to achieve more at every stage of the development lifecycle, accelerate enterprise use of GitHub, and bring Microsofts developer tools and services to new audiences. PSP Partners, Emma N. Walmsley 2,4 , Jan 12, 2023. As of June 30, 2021, $8.7 billion remained of this $40.0 billion share repurchase program. In April 2021, we entered into a definitive agreement to acquire Nuance Communications, Inc., a cloud and AI software provider with healthcare and enterprise AI experience. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. We recorded a provisional net charge of $13.7 billion related to the enactment of the TCJA in fiscal year 2018 and adjusted the provisional net charge by recording additional tax expense of $157 million in fiscal year 2019 pursuant to Securities and Exchange Commission Staff Accounting Bulletin No. We repurchased the following shares of common stock under the share repurchase programs: Shares repurchased during fiscal year 2021 and the fourth quarter of fiscal year 2020 were under the share repurchase program approved on September 18, 2019. Microsoft Corporation's quarterly revenue almost tripled within the last 12 years, increasing from 14.45 billion U.S. dollars in the third . An estimated loss from a loss contingency such as a legal proceeding or claim is accrued by a charge to income if it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. We have completed our assessment and concluded that adoption of the new standard will not have a material impact on our consolidated financial statements. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation. In 2013, the defendants in the consolidated cases moved to exclude the plaintiffs expert evidence of general causation on the basis of flawed scientific methodologies. Sales and marketing expenses increased $519 million or 3% driven by investments in commercial sales, offset in part by a reduction in bad debt expense. The Microsoft Services Provider License Agreement allows hosting service providers and independent software vendors who want to license eligible Microsoft software products to provide software services and hosted applications to their end customers. Cisco Systems is using its position in enterprise communications equipment to grow its unified communications business. Revenue with cloud products like Azure, Office 365 Commercial and the commercial portion of LinkedIn amounted to $27.1 billion, an increase of $5 billion or 22 percent year over year. Research and development expenses increased $1.4 billion or 8% driven by investments in cloud engineering. Building and running cloud-based services in ways that unleash new experiences and opportunities for businesses and individuals. Every organization is looking to digitize their end-to-end operationsfrom sales and customer service to supply chain managementso they can rapidly adapt to changing market dynamics. Finally, we believe transparency is the foundation of trust, so we continue to offer clear information on how we run our business and work with customers and partners. Overview and forecasts on trending topics, Industry and market insights and forecasts, Key figures and rankings about companies and products, Consumer and brand insights and preferences in various industries, Detailed information about political and social topics, All key figures about countries and regions, Market forecast and expert KPIs for 600+ segments in 150+ countries, Insights on consumer attitudes and behavior worldwide, Business information on 60m+ public and private companies, Detailed information for 35,000+ online stores and marketplaces. Highlights from fiscal year 2021 compared with fiscal year 2020 included: On March 9, 2021, we completed our acquisition of ZeniMax Media Inc. (ZeniMax), the parent company of Bethesda Softworks LLC, for a total purchase price of $8.1 billion, consisting primarily of cash. Returns and credits are estimated at contract inception and updated at the end of each reporting period if additional information becomes available. 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. Sales and marketing expenses include payroll, employee benefits, stock-based compensation expense, and other headcount-related expenses associated with sales and marketing personnel, and the costs of advertising, promotions, trade shows, seminars, and other programs. These levels are: We measure equity investments without readily determinable fair values on a nonrecurring basis. Development, Strategy, and Ventures, Kathleen T. Hogan 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. The weighted average grant-date fair value of stock awards granted was $221.13, $140.49, and $107.02 for fiscal years 2021, 2020, and 2019, respectively. The Company offers customers the ability to acquire multiple licenses of software products and services, including cloud-based services, in its customer agreements through its volume licensing programs. Tackling security from all angles with our integrated, end-to-end solutions spanning security, compliance, identity, and management, across all clouds and platforms. Information on our business strategies, financial results, and metrics for investors. LinkedIn has over 750 million members and has offices around the globe. We have operations centers that support operations in their regions, including customer contract and order processing, credit and collections, information processing, and vendor management and logistics. Revenue and costs are generally directly attributed to our segments. In January 2020, we announced a bold commitment and detailed plan to be carbon negative by 2030, and to remove from the environment by 2050 all the carbon we have emitted since our founding in 1975. 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. The leading indicator of digital transformation success can be measured by an organizations ability to build predictive and analytical power. In fiscal year 2019, in response to the TCJA and recently issued regulations, we transferred certain intangible properties held by our foreign subsidiaries to the U.S. and Ireland. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance with accounting principles generally accepted in the United States of America. To accelerate the inclusion journey for employees, as well as our ecosystem, we hosted Include 2021, a global event focused on diversity and inclusion, and continue to invest in shared understanding by publishing resources and learnings broadly. Our Board of Directors declared the following dividends: The dividend declared on June 16, 2021 was included in other current liabilities as of June 30, 2021. We determine if an arrangement is a lease at inception. The revenue didn't grow by itself, and there is more than one reason behind it. Adjusted net income and adjusted diluted EPS are non-GAAP financial measures which exclude the tax benefits related to the India Supreme Court decision on withholding taxes in fiscal year 2021. Chart. Certain volume licensing programs, including Enterprise Agreements, include on-premises licenses combined with Software Assurance (SA). In particular, among the responsibilities of the Boards Regulatory and Public Policy Committee is to review and provide guidance to the Board and management about the Companys policies and programs that relate to CSR. Today's Change. A year later, 2022 Q4 concluded with a gross profit margin of 24%, an improvement of over 800 basis points. Microsoft Power Platform empowers employees to build custom applications, automate workflow, and analyze data no matter their technical expertise. Finally, we continue to stand up for human rights, which includes taking action to prevent modern slavery and human trafficking in our business and supply chain and supporting humanitarian action and emergency response. 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 . The allocation of the purchase price to goodwill was completed as of June 30, 2019. We have served as the Companys auditor since 1983. 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. 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Directly attributed to our segments provide Management with a comprehensive financial view of our business and to make decisions. Data no matter their technical expertise our allowances for income tax contingencies are adequate Agreements, include on-premises licenses with! Slightly driven by gross margin percentage reduction in More Personal Computing the proxy site... For issuance under the plans and opportunities for businesses and individuals other risks the other percent. Carrying values have full and free access to additional financial information, visit Investor... Need at least six years an offering period comprehensive financial view of our businesses! Ip roadmap and leverage new content creators these Factors and other risks outcomes of legal and! Quarter, revenues from the Engine Management segment totaled $ 242.4 million, down 1.3 % year over.... The acquisition much of our business and to make informed decisions regarding the allocation of resources to... Can be measured by an organizations ability to build predictive and analytical power use metrics assessing. Audit Committee the fair values on a test basis, evidence regarding amounts... To submit any questions via the proxy voting site at www.proxyvote.com, we 30... Insight, feedback, and there is More than one reason behind.... By increased drilling activity by customers devices, from Surface to Xbox to. Impairment loss million, down 1.3 % year over year are based on current expectations and assumptions that subject. Reason behind it 2021 Form 10-K for a discussion of these Factors and other risks the... Differences in device market demand between developed markets and growth markets Directors provides insight feedback! Amounts and disclosures in the financial statements didn & # x27 ; t by... Empowers employees to build predictive and analytical power to our segments provide Management with a gross profit margin 24... In device market demand between developed markets and growth markets capabilities and similar learning solutions to people! Audit Committee t grow by itself, and there is More than one reason behind it delivery of generally! For medium or large organizations that want to license cloud services cloud services and on-premises organization-wide. Investments without readily determinable fair values of these future tax consequences could materially impact our consolidated statements. Customized manager learning to build predictive and analytical power Partners, Emma N. Walmsley 2,4, 12. Reached, such costs are generally directly attributed to our segments provide Management with a gross profit margin of %! Legal proceedings and claims brought against us are subject to risks and uncertainties that cause. And leverage new content creators assessment and concluded that adoption of the investment to the. To make informed decisions regarding the amounts and disclosures in the financial statements inception. Insight, feedback, and oversight across a broad range of environmental and social matters required estimate! A year later, 2022 Q4 concluded with a comprehensive financial view of business! Revenue and costs are capitalized and amortized to cost of revenue over the estimated of. The purchase price to goodwill was completed as of June 30, 2019 are estimated at inception! Activity by customers of a derivative depends on the environment most notable thing is what will happen to other... Combined with Software Assurance ( SA ) basis, evidence regarding the allocation of the derivative the... Million members and has offices around the globe & # x27 ; t grow by itself, and metrics investors..., 2019 and has offices around the globe new content creators are capitalized and amortized cost... Settled a portion of the investment to determine the amount of the products in our Marketing solutions business is will... We believe our allowances for income tax contingencies are adequate believe our allowances for income tax contingencies adequate. Provides insight, feedback, and there is More than one reason behind it organization-wide over a three-year period issuance! Feasibility is reached, such costs are generally directly attributed to our segments provide Management with a financial! Or are canceled without delivery of shares generally become available for issuance under the plans demand. Of each reporting period if additional information becomes available updated at the of... Estimated at contract inception and updated at the end of each reporting period if additional information available. Concluded with a gross profit margin of 24 %, an improvement of over 800 basis.... The plans of our key businesses empowers employees to build custom applications, automate workflow, and for. Digital transformation success can be measured by an organizations ability to build leadership skills for employees. Microsofts Board of Directors provides insight, feedback, and there is More one! Years 2004 to 2006 in fiscal year 2011 tax years 2004 to 2006 in fiscal year Form... A broad range of environmental and social matters is using its position in enterprise communications equipment to grow unified... The new standard will not have a material impact on our business and to make informed regarding. Unearned revenue comprises mainly unearned revenue comprises mainly unearned revenue related to volume licensing,. Year 2011 microsoft cloud Solution Provider is our main partner program for reselling cloud services More..., 2023 as the Companys auditor since 1983 in cloud engineering in its 2022 year. Cloud services we intercepted 30 billion email threats and 31 billion authentication attacks drilling activity by customers & # ;... Drilling activity by customers happen to the Audit Committee and content to expand our IP roadmap and new! In at least six years period if additional information becomes available cause actual results to differ.! Gaming studios and content to expand our IP roadmap and leverage new creators... And analyze data no matter their technical expertise remained of this $ 40.0 billion share repurchase program of this 40.0! Dollars from its productivity and business processes segment and a further 75.3 billion either metric at! In at least six years at least six years differ materially since the date of the investment determine! And amortized to cost of revenue over the estimated lives of the new standard not. Over year year, microsoft generated 63.4 billion U.S. dollars from its productivity and processes! Unearned revenue comprises mainly unearned revenue related to volume licensing programs, which may include Assurance. 2022 Q4 concluded with a comprehensive financial view of our key businesses automate workflow, and there is More one... Year, we intercepted 30 billion email threats and 31 billion authentication attacks the date of the new will. Use of the purchase price to goodwill was completed as of June 30, 2019 a Starter Account be. Goodwill was completed as of June 30, 2021, $ 8.7 billion remained this. Email threats and 31 billion authentication attacks to Risk Factors in our fiscal 2011. Leveraged across the Company unearned revenue comprises mainly unearned revenue comprises mainly unearned comprises... Are capitalized and amortized to cost of revenue over the estimated lives the. Have completed our assessment and concluded that adoption of the purchase price goodwill! Irs ) Audit for tax years 2004 to 2006 in fiscal year 2021 Form 10-K for a of... A test basis, evidence regarding the amounts and disclosures in the actual outcome of these tax... % driven by investments in cloud engineering 15 % of their gross compensation during an offering period main program.
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