Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. 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. 12.80%. Time: 8:30 a.m. Pacific Time 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. If you are an admin, please authenticate by logging in again. Total capitalized costs to obtain a contract were immaterial during the periods presented and are included in other current and long-term assets in our consolidated balance sheets. 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. Over 42 million people across every continent have accessed free training through our skills initiative. Our consolidated financial statements and accompanying notes are prepared in accordance with GAAP. Microsoft Corporation, Sandra E. Peterson 2,3 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. Our Office of Responsible AI ensures that we put these principles into practice, and our Responsible AI Resources Center shares guidelines and tools to help our customers and the developer community do the same. We strive to obtain information as early as possible about changing usage patterns and hardware advances that may affect software and hardware design. And Microsoft Mesh enables developers to build immersive, multiuser, cross-platform mixed reality apps. Any shareholder can join the Annual Meeting, while shareholders of record as of September 30, 2021, will be able to vote and submit questions during the meeting. ", Microsoft, Microsoft's revenue from 2012 to 2022 financial years, by segment (in billion U.S. dollars) Statista, https://www.statista.com/statistics/273482/segment-revenue-of-microsoft/ (last visited March 01, 2023), Microsoft's revenue from 2012 to 2022 financial years, by segment (in billion U.S. dollars) [Graph], Microsoft, July 26, 2022. Securities held in our equity investments portfolio are subject to market price risk. As of June 30, 2021, an aggregate of 251 million shares were authorized for future grant under our stock plans. 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. Enterprise Services, including Enterprise Support Services, Microsoft Consulting Services, and . 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. As a Premium user you get access to the detailed source references and background information about this statistic. We have completed our assessment and concluded that adoption of the new standard will not have a material impact on our consolidated financial statements. Please do not hesitate to contact me. We have committed $9.5 billion for the construction of new buildings, building improvements, and leasehold improvements as of June 30, 2021. Our competitors are developing new software and devices, while also deploying competing cloud-based services for consumers and businesses. Microsoft Revenue by Segment. Stock-based compensation expense and related income tax benefits were as follows: Stock awards entitle the holder to receive shares of Microsoft common stock as the award vests. We are also at the forefront of the enterprise metaverse, a new infrastructure layer made possible through the convergence of the digital and physical worlds. Typical Corporate scale customers are similar to Managed accounts, with: High revenue: USD100K+ -or-High potential: USD100K+ -or- Commercial competitors for our server applications for PC-based distributed client-server environments include CA Technologies, IBM, and Oracle. 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. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Due to the various benefits from and the nature of our SA program, judgment is required to assess the pattern of delivery, including the exercise pattern of certain benefits across our portfolio of customers. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2021, based on the criteria established in Internal Control Integrated Framework (2013) issued by COSO. 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. As of June 30, 2021, 2020, and 2019, we had accrued interest expense related to uncertain tax positions of $4.3 billion, $4.0 billion, and $3.4 billion, respectively, net of income tax benefits. In fiscal year 2021, we closed our Microsoft Store physical locations and opened our Microsoft Experience Centers. Certain forecasted transactions, assets, and liabilities are exposed to foreign currency risk. Azure Synapse Analytics, a limitless analytics service, brings together data integration, enterprise data warehousing, and big data analytics for immediate business intelligence and machine learning needs. Press releases on quarterly earnings, product and service announcements, legal developments, and international news. The fair values of these investments approximate their carrying values. We have not received a proposed assessment for the unresolved key transfer pricing issues and do not expect a final resolution of these issues in the next 12 months. We believe use of a discounted cash flow approach is the most reliable indicator of the fair values of the businesses. 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. Our leases have remaining lease terms of 1 year to 15 years, some of which include options to extend the leases for up to 5 years, and some of which include options to terminate the leases within 1 year. Machine Translation Market 2023 Structure Along With Size, Trends, Revenue, Market segments, Forecast to 2029 Published: Feb. 16, 2023 at 12:44 a.m. Assets are not allocated to segments for internal reporting presentations. We have distribution agreements covering one or more of our products with virtually all the multinational OEMs, including Dell, Hewlett-Packard, Lenovo, and with many regional and local OEMs. Building and running cloud-based services in ways that unleash new experiences and opportunities for businesses and individuals. Marketing Solutions competes with online and offline outlets that generate revenue from advertisers and marketers, and Sales Solutions competes with online and offline outlets for companies with lead generation and customer intelligence and insights. Devices, including Surface and PC accessories. Opportunities to sign up for email alerts to have information pushed in real time. The gamer remains at the heart of the Xbox ecosystem. On September 18, 2019, our Board of Directors approved a share repurchase program authorizing up to $40.0 billion in share repurchases. 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. $ 35,058. With every new generation of Windows, we also unlock the next generation of hardware innovation across our ecosystem. "Microsoft's revenue from 2012 to 2022 financial years, by segment (in billion U.S. We tested the reasonableness of managements judgments regarding the future resolution of the uncertain tax positions, including an evaluation of the technical merits of the uncertain tax positions. Windows OEM revenue increased slightly driven by consumer PC demand, on a strong prior year OEM Pro comparable that benefited from Windows 7 end of support. Gross margin increased $9.7 billion or 29% driven by growth in Azure and the change in estimated useful lives of our server and network equipment. Additional information on our operating segments and geographic and product information is contained in Note 19 Segment Information and Geographic Data of the Notes to Financial Statements. 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. $ 42,959. 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. Chairman and Chief Executive Officer, Amy E. Hood Operating income increased $3.5 billion or 22%. 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. Cost of revenue includes: manufacturing and distribution costs for products sold and programs licensed; operating costs related to product support service centers and product distribution centers; costs incurred to include software on PCs sold by original equipment manufacturers (OEM), to drive traffic to our websites, and to acquire online advertising space; costs incurred to support and maintain online products and services, including datacenter costs and royalties; warranty costs; inventory valuation adjustments; costs associated with the delivery of consulting services; and the amortization of capitalized software development costs. We regularly reevaluate our estimates to assess the adequacy of the recorded warranty liabilities and adjust the amounts as necessary. Our increasing engagement with open source software will also cause us to license our intellectual property rights broadly in certain situations. The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results, market conditions, and other factors. Cactus' Rental revenues were $27.3 million, up from $19.2 million in the year-ago quarter. Unearned revenue is generally invoiced annually at the beginning of each contract period for multi-year agreements and recognized ratably over the coverage period. In 2014, Microsoft was informed that Chinas State Agency for Market Regulation (SAMR) (formerly State Administration for Industry and Commerce) had begun a formal investigation relating to Chinas Anti-Monopoly Law, and the SAMR conducted onsite inspections of Microsoft offices in Beijing, Shanghai, Guangzhou, and Chengdu. 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. Gross margin percentage increased with the change in estimated useful lives of our server and network equipment. DetailPricingLevelName. Our mission to empower every person and every organization on the planet to achieve more has never been more urgent or more needed. Judgment is required to determine the SSP for each distinct performance obligation. revenue growth, Revenue from Dynamics products and cloud services, including Dynamics 365, comprising a set of intelligent, cloud-based applications across ERP, CRM, Customer Insights, Power Apps, and Power Automate; and on-premises ERP and CRM applications, Revenue from LinkedIn, including Talent Solutions, Marketing Solutions, Premium Subscriptions, Sales Solutions, and Learning Solutions, Server products and cloud services revenue growth, Revenue from Server products and cloud services, including Azure; SQL Server, Windows Server, Visual Studio, System Center, and related Client Access Licenses (CALs); and GitHub. With Xbox Game Pass, we are transforming how people discover, connect, and engage with games. 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. The adoption of the standard did not have a material impact on our consolidated financial statements. $75.25B. Slack provides teamwork and collaboration software. 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. Service and other revenue also includes sales from online advertising and LinkedIn. Service and other revenue includes sales from cloud-based solutions that provide customers with software, services, platforms, and content such as Office 365, Azure, Dynamics 365, and Xbox; solution support; and consulting services. Operating expenses increased $1.9 billion or 12% driven by investments in Azure. The components of basic and diluted EPS were as follows: Anti-dilutive stock-based awards excluded from the calculations of diluted EPS were immaterial during the periods presented. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Each allocation is measured differently based on the specific facts and circumstances of the costs being allocated. The segment was supported by increased drilling activity by customers. With Azure Arc, customers can deploy Azure data services on-premises, at the edge, or in multicloud environments. The leading indicator of digital transformation success can be measured by an organizations ability to build predictive and analytical power. Satya Nadella . Our ongoing survey data shows employees value the flexibility related to work location, work site, and work hours, and while many indicate they intend to return to a worksite once conditions permit, they also intend to adjust hours or spend some portions of workweeks working remotely. Dilutive potential common shares include outstanding stock options and stock awards. This means the places we go and the things we interact with will increasingly become digitized, creating new opportunities and new breakthroughs. While were proud of our progress, we know we have much more work to do to help our communities, increase representation, and strengthen our culture of inclusion to influence broader, systemic change. The settlement risk related to these investments is insignificant given that the short-term investments held are primarily highly liquid investment-grade fixed-income securities. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Following are the details of the purchase price allocated to the intangible assets acquired: Transactions recognized separately from the purchase price allocation were approximately $600 million, primarily related to equity awards recognized as expense over the related service period. Second quarter revenue is driven by corporate year-end spending trends in our major markets and holiday season spending by consumers, and fourth quarter revenue is driven by the volume of multi-year on-premises contracts executed during the period. A hearing on general causation is scheduled for January and February of 2022. We are accelerating progress toward a more sustainable future by reducing our environmental footprint, advancing research, helping our customers build sustainable solutions, and advocating for policies that benefit the environment. We test goodwill for impairment annually on May 1 at the reporting unit level, primarily using a discounted cash flow methodology with a peer-based, risk-adjusted weighted average cost of capital. In the next three years, well create more data than we did in the past 10. Revenue, classified by the major geographic areas in which our customers were located, was as follows: Revenue from external customers, classified by significant product and service offerings, was as follows: Our commercial cloud revenue, which includes Azure, Office 365 Commercial, the commercial portion of LinkedIn, Dynamics 365, and other commercial cloud properties, was $69.1 billion, $51.7 billion and $38.1 billion in fiscal years 2021, 2020, and 2019, respectively. Server software is integrated server infrastructure and middleware designed to support software applications built on the Windows Server operating system. The Automotive Voice Command System market size, estimations, and forecasts are provided in terms of and revenue (USD millions), considering 2023 as the base year, with history and forecast data . The service gets you the information you need faster and also gives you the power and convenience of online proxy voting. New employee orientation covering a range of topics including company values, culture, and Standards of Business Conduct, as well as ongoing onboarding program. October 12, 2021. Across our solution areas, we are delivering platforms and tools that expand our opportunity to help organizations around the world build their own tech intensity. Revenue and costs are generally directly attributed to our segments. In cases where we allocate revenue to software updates, primarily because the updates are provided at no additional charge, revenue is recognized as the updates are provided, which is generally ratably over the estimated life of the related device or license. 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. Product and Service Development, and Intellectual Property. No one company, industry, or country can solve these challenges alone. No results; Cancel. Refer to Risk Factors in our fiscal year 2021 Form 10-K for a discussion of these factors and other risks. Azure revenue is mainly affected by infrastructure-as-a-service and platform-as-a-service consumption-based services, and per user-based services such as Enterprise Mobility + Security. In July 2020, we completed an assessment of the useful lives of our server and network equipment and determined we should increase the estimated useful life of server equipment from three years to four years and increase the estimated useful life of network equipment from two years to four years. Our EEO-1 report (equal employment opportunity). Foreign currency risks related to certain Euro-denominated debt are hedged using foreign exchange forward contracts that are designated as cash flow hedging instruments. The amortization of these costs is included in cost of revenue over the estimated life of the products. RSUs generally vest ratably over a service period of four years. Announcements of investor conferences, speeches, and events at which our executives talk about our product, service, and competitive strategies. In 2019, the SAMR presented preliminary views as to certain possible violations of Chinas Anti-Monopoly Law. We monitor our foreign currency exposures daily to maximize the economic effectiveness of our foreign currency positions, including hedges. We recorded over $200 million in adjusted EBITDA for the quarter, an improvement of . Equity investments with readily determinable fair values are measured at fair value. In middleware, we compete against Java vendors. 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