With Dynamics 365, were building a new generation of business applications to meet this challenge. Windows 10 serves the enterprise as the most secure and productive operating system. "Microsoft's Revenue from 2012 to 2022 Financial Years, by Segment (in Billion U.S. Cactus' Rental revenues were $27.3 million, up from $19.2 million in the year-ago quarter. In addition to computing device market volume, Windows OEM revenue is impacted by: Windows Commercial revenue, which includes volume licensing of the Windows operating system and Windows cloud services such as Microsoft Defender Advanced Threat Protection, is affected mainly by the demand from commercial customers for volume licensing and Software Assurance (SA), as well as advanced security offerings. Azure is a trusted cloud with comprehensive compliance coverage and AI-based security built in. Office Commercial products and cloud services revenue increased $4.0 billion or 13%. Sales and marketing included an unfavorable foreign currency impact of 2%. Microsoft's revenue rose 2% to $52.7 billion in the three months ended Dec. 31, compared with the average analyst estimate of $52.94 billion, according to Refinitiv IBES. There were no changes in our internal control over financial reporting during the quarter ended June 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. 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. Azure revenue grew 50% due to growth in our consumption-based services. The adoption of the standard did not have a material impact on our consolidated financial statements. , Oct 10, 2022. Customer mix between consumer, small and medium businesses, and large enterprises. We also compete with other providers of entertainment services such as video streaming platforms. They also support new startups, improve educational and health outcomes, and empower human ingenuity. If the cost of an investment exceeds its fair value, we evaluate, among other factors, general market conditions, credit quality of debt instrument issuers, and the extent to which the fair value is less than cost. You need a Statista Account for unlimited access. Statista. Our skills initiative brings together learning resources, certification opportunities, and job-seeker tools from LinkedIn, GitHub, and Microsoft Learn, and is built on data insights drawn from LinkedIns Economic Graph. Debt in the table above is comprised of senior unsecured obligations and ranks equally with our other outstanding obligations. Economic Conditions, Challenges, and Risks. All repurchases were made using cash resources. We perform a qualitative assessment on a periodic basis. Directly accessible data for 170 industries from 50 countries and over 1 million facts: Get quick analyses with our professional research service. These non-GAAP financial measures presented should not be considered a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP. Revenue allocated to SA is generally recognized ratably over the contract period as customers simultaneously consume and receive benefits, given that SA comprises distinct performance obligations that are satisfied over time. Cost of revenue is allocated in certain cases based on a relative revenue methodology. Foreign currency risks related to certain non-U.S. dollar-denominated investments are hedged using foreign exchange forward contracts that are designated as fair value hedging instruments. The Company engaged Deloitte & Touche LLP, an independent registered public accounting firm, to audit and render an opinion on the consolidated financial statements and internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Nearly 250 million people use Teams every month. The specific hardware warranty terms and conditions vary depending upon the product sold and the country in which we do business, but generally include parts and labor over a period generally ranging from 90 days to three years. We are accelerating adoption of AI innovations from research to products. We expect to recognize approximately 50% of this revenue over the next 12 months and the remainder thereafter. Gains and losses representing hedge components excluded from the assessment of effectiveness are recognized in other income (expense), net. Microsoft generated $51.728 billion in revenue during Q2 2022, across the following three segments. Executive Vice President and Chief Financial Officer, Alice L. Jolla Open agreements are a simple, cost-effective way to acquire the latest Microsoft technology. With Windows 11the biggest update to our operating system in a decadewere reimagining everything from the platform to the store to help people and organizations be more productive, connected, and secure, and to build a more open ecosystem for developers and creators. 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). 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. Our effective tax rate for fiscal years 2021 and 2020 was 14% and 17%, respectively. There were 63 patent infringement cases pending against Microsoft as of June 30, 2021, none of which are material individually or in aggregate. PepsiCo, Charles W. Scharf 2,3 The fair value of stock awards is based on the quoted price of our common stock on the grant date less the present value of expected dividends not received during the vesting period. Commercial competitors for our server applications for PC-based distributed client-server environments include CA Technologies, IBM, and Oracle. 6 . Windows, including Windows OEM licensing (Windows OEM) and other non-volume licensing of the Windows operating system; Windows Commercial, comprising volume licensing of the Windows operating system, Windows cloud services, and other Windows commercial offerings; patent licensing; Windows IoT; and MSN advertising. Our consolidated financial statements and accompanying notes are prepared in accordance with GAAP. We must also protect the institutions and processes of democracy. In this new hybrid work environment, having a digital employee experience platform will be key to business success. Seattle, Washington 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. For access to additional financial information, visit the Investor Relations website online at: www.microsoft.com/investor. By bringing the operating system to the cloud, were enabling organizations to stream the full Windows experience to their employees personal or corporate device with just a few clicks. The valuation allowance disclosed in the table above relates to the foreign net operating loss carryforwards and other net deferred tax assets that may not be realized. 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. We monitor pay equity and career progress across multiple dimensions. And to preserve and protect journalism, were helping strengthen local news ecosystems, restore trust in news, and provide cybersecurity and legal security for journalists. We use derivative instruments to manage risks related to foreign currencies, interest rates, equity prices, and credit; to enhance investment returns; and to facilitate portfolio diversification. Organizations also license our products and services indirectly, primarily through licensing solution partners (LSP), distributors, value-added resellers (VAR), and retailers. Zacks Equity Research. For those uncertain tax positions that had not been effectively settled, we evaluated whether management had appropriately considered new information that could significantly change the recognition, measurement or disclosure of the uncertain tax positions. We report our financial performance based on the following segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. We allocate goodwill to reporting units based on the reporting unit expected to benefit from the business combination. Tech as a percentage of total GDP will double from 5 to 10 percent by 2030. To address this, we provide a complete chain of software development tools across every cloud and client platform. $ 33,773. If we have plans to sell the security or it is more likely than not that we will be required to sell the security before recovery, then a decline in fair value below cost is recorded as an impairment charge in other income (expense), net and a new cost basis in the investment is established. Operating income grew 32 percent to $70 billion. Our Search business, including Bing and Microsoft Advertising, is designed to deliver relevant online advertising to a global audience. We believe that our audit provides a reasonable basis for our opinion. We are required to estimate the fair value of the investment to determine the amount of the impairment loss. Nine of these cases were filed in 2002 and are consolidated for certain pre-trial proceedings; the remaining cases are stayed. In August 2018, the trial court issued an order striking portions of the plaintiffs expert reports. Our objectives for holding derivatives include reducing, eliminating, and efficiently managing the economic impact of these exposures as effectively as possible. In fiscal year 2020, Microsoft reduced its carbon emissions by 587,000 metric tons and purchased the removal of 1.3 million metric tons of carbon. Securities held in our equity investments portfolio are subject to market price risk. And in the first year of our commitment to address inequity and racial injustice, we are well on our way to doubling the number of Black and African American, Hispanic, and Latinx employees in leadership positions at Microsoft in the United States by 2025. We evaluated the reasonableness of managements estimate of stand-alone selling prices for products and services that are not sold separately. 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. 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. We use different programs designed to provide flexibility for organizations of various sizes. We have the opportunity to redefine what customers and partners can expect and are working to deliver new solutions that reflect the best of Microsoft. President, Fable Group Inc. Teri L. List 1,3 Through our Democracy Forward Program, were working across sectors to safeguard electoral processes and defend against disinformation. The company's Xbox Game Pass gaming subscription revenue during the year was . We have audited the internal control over financial reporting of Microsoft Corporation and subsidiaries (the Company) as of June 30, 2021, based on criteria established in Internal Control Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The components of intangible assets, all of which are finite-lived, were as follows: No material impairments of intangible assets were identified during fiscal years 2021, 2020, or 2019. Azure SQL Database makes it possible for customers to take SQL Server from their on-premises datacenter to a fully managed instance in the cloud to utilize built-in AI. The mix of income before income taxes between the U.S. and foreign countries impacted our effective tax rate as a result of the geographic distribution of, and customer demand for, our products and services. Certain of our counterparty agreements for derivative instruments contain provisions that require our issued and outstanding long-term unsecured debt to maintain an investment grade credit rating and require us to maintain minimum liquidity of $1.0 billion. Microsoft Product and Services Agreements are designed for medium and large organizations that want to license cloud services and on-premises software as needed, with no organization-wide commitment, under a single, non-expiring agreement. Level 3 investments are valued using internally-developed models with unobservable inputs. Quarterly smartphone market share worldwide by vendor 2009-2022, Apple iPhone unit sales worldwide 2007-2018, by quarter, Global market share held by smartphone operating systems 2009-2018, by quarter, Virtual reality (VR) - statistics & facts, Research expert covering the consumer electronics industry, Profit from additional features with an Employee Account. 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. Research and development expenses also include third-party development and programming costs, localization costs incurred to translate software for international markets, and the amortization of purchased software code and services content. We have operating and finance leases for datacenters, corporate offices, research and development facilities, Microsoft Experience Centers, and certain equipment. The decrease from the federal statutory rate in fiscal year 2021 is primarily due to earnings taxed at lower rates in foreign jurisdictions resulting from producing and distributing our products and services through our foreign regional operations centers in Ireland and Puerto Rico, tax benefits relating to stock-based compensation, and tax benefits from the India Supreme Court decision on withholding taxes. 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. If you are an admin, please authenticate by logging in again. Executive Vice President, Human Resources. In fiscal year 2020, our U.S. income before income taxes was $24.1 billion and our foreign income before income taxes was $28.9 billion. As of June 30, 2021 and 2020, other receivables due from suppliers were $965 million and $442 million, respectively, and are included in accounts receivable, net in our consolidated balance sheets. $75.25B. SA is optional for customers that purchase perpetual licenses. Managers evaluate and recommend rewards based on, for example, how well we leverage the work of others and contribute to the success of our colleagues. Segment Revenue and Operating Income (In millions) (Unaudited) Three Months Ended September 30, 2022 2021; ElementName IMPORTANT NOTICE TO USERS (summary only, click here for full text of notice); All information is unaudited unless otherwise noted or accompanied by an audit opinion and is subject to the more comprehensive information contained in our SEC reports and filings. Summary. Security, compliance, identity, and management underlie our entire tech stack. The investments we are making in infrastructure and devices will continue to increase our operating costs and may decrease our operating margins. Satya Nadella . As described in our 2020 Proxy Statement, annual performance and compensation reviews of our senior leadership team include an evaluation of their contributions to employee culture and diversity. Changes in inventory levels in the OEM channel. Computing architecture is undergoing radical transformation as the number of connected devices and the volume of data generated at the edge increase dramatically. Currently, you are using a shared account. Segment. In Q3 FY2022, its segment revenue . We consider all highly liquid interest-earning investments with a maturity of three months or less at the date of purchase to be cash equivalents. The Google Cloud revenue segment generated 9.3 percent of the company's revenues, up from 4.3 percent in 2018. . LVMH Revenue By Segment. Today, it is exciting to see how our platforms and tools are enabling people and organizations to achieve remarkable things that would have been unimaginable even a few years ago. The plaintiffs have filed supplemental expert evidence, portions of which the defendants have moved to strike. Through this commitment we can allow everyone the chance to be their authentic selves and do their best work every day. We strive to maximize the potential of our human capital resources by creating a respectful, rewarding, and inclusive work environment that enables our global employees to create products and services that further our mission to empower every person and every organization on the planet to achieve more. We evaluated the appropriateness and consistency of managements methods and assumptions used in the identification, recognition, measurement, and disclosure of uncertain tax positions, which included testing the effectiveness of the related internal controls. Please do not hesitate to contact me. The Company remains under IRS audit, or subject to IRS audit, for tax years subsequent to 2003. And we continue to improve the representation of our ecosystem by engaging with diverse suppliers, financial institutions, and channel partners. Office Commercial (Office 365 subscriptions, the Office 365 portion of Microsoft 365 Commercial subscriptions, and Office licensed on-premises), comprising Office, Exchange, SharePoint, Microsoft Teams, Office 365 Security and Compliance, and Skype for Business. 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. And we continue to expand our opportunity in the creator economy by adding new ways for players to build and monetize their creations in many of our most popular games. The global pandemic has accelerated our capabilities and culture with respect to flexible work. 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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. Certain income and expenses are not reported in tax returns and financial statements in the same year. Our system management solutions compete with server management and server virtualization platform providers, such as BMC, CA Technologies, Hewlett-Packard, IBM, and VMware. Operating expenses that are allocated primarily include those relating to marketing of products and services from which multiple segments benefit and are generally allocated based on relative gross margin. Microsoft Experience Centers are designed to facilitate deeper engagement with our partners and customers across industries. 16,375. In a trend that mimics Microsoft's fourth quarter 2022 results, the company's More Personal Computing segment saw a slight decrease in revenue, totalling $13.3 billion. The AeroTech segment's revenues are expected to increase 10-13% from that reported in 2022. . Its revenue is likely to amount to $51.2 billion. And Microsoft Mesh enables developers to build immersive, multiuser, cross-platform mixed reality apps. Changes in fair value, excluding credit losses and impairments, are recorded in other comprehensive income. 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. Accounting literature also provides guidance on derecognition of income tax assets and liabilities, classification of deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and income tax disclosures. And with Azure for Operators, we provide telecom operators and enterprises with the ultra-low latency cloud computing power at the edge needed for breakthrough scenarios like precision inventory tracking at ports and production lines that automatically adjust to changing demand. Growth depends on our ability to attract new users, understand intent, and match intent with relevant content and advertiser offerings. To navigate it, organizations will need to embrace flexibility across their entire operating model, including the ways people work, the places they inhabit, and how they manage business process. Net realizable value is the estimated selling price less estimated costs of completion, disposal, and transportation. In determining whether a loss should be accrued we evaluate, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss. Service and other revenue also includes sales from online advertising and LinkedIn. Under the TCJA, the transition tax is payable in interest-free installments over eight years, with 8% due in each of the first five years, 15% in year six, 20% in year seven, and 25% in year eight. Refer to Note 16 Stockholders Equity of the Notes to Financial Statements for further discussion. Our commercial business primarily consists of Server products and cloud services, Office Commercial, Windows Commercial, the commercial portion of LinkedIn, Enterprise Services, and Dynamics. We evaluate our reporting units on an annual basis and, if necessary, reassign goodwill using a relative fair value allocation approach. The plaintiffs allege that their handsets either operated outside the FCC Guidelines or were manufactured before the FCC Guidelines went into effect. Office 365 Commercial revenue grew 22% driven by seat growth of 17% and higher revenue per user. 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