Over the past year, we introduced hundreds of new features, from new presenter modes to new inclusive meeting experiences, that make it easy for everyone to be full participants in meetings, whether theyre joining from home, the office, a conference room, or a factory floor. Shares of common stock outstanding were as follows: The following table summarizes the changes in accumulated other comprehensive income (loss) by component: We grant stock-based compensation to employees and directors. This global approach helps us remain competitive in local markets and enables us to continue to attract top talent from across the world. 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. Interest rate risks related to certain fixed-rate debt are hedged using interest rate swaps that are designated as fair value hedging instruments to effectively convert the fixed interest rates to floating interest rates. Dilutive potential common shares include outstanding stock options and stock awards. Personalized, integrated, and relevant views of all learning opportunities on our internal learning portal, our external learning portal MS Learn, and LinkedIn Learning that is available to all employees worldwide. Our approach to hybrid work starts with Teamsthe only all-in-one solution that supports meetings, calls, chat, collaboration, and business process automation in day-to-day workflow. Eligible U.S. employees may contribute a portion of their salary into the savings plans, subject to certain limitations. On-premises licenses are considered distinct performance obligations when sold with SA. Certain options and forwards not designated as hedging instruments are also used to manage the variability in foreign exchange rates on certain balance sheet amounts and to manage other foreign currency exposures. Judgment is required to determine the stand-alone selling price (SSP) for each distinct performance obligation. At Microsoft, we push the boundaries of what is possible through a broad range of research and development activities that seek to identify and address the changing demands of customers and users, industry trends, and competitive forces. 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. 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. Segment Revenue and Operating Income (In millions) (Unaudited) Three Months Ended September 30, 2022 2021; ElementName Microsoft has posted at least 16 consecutive quarters of YOY earnings growth since Q3 FY 2018. Cloud usage and demand benefited as customers accelerate their digital transformation priorities. 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. Zoom offers videoconferencing and cloud phone solutions. Windows OEM Pro revenue decreased 9% and Windows OEM non-Pro revenue grew 21%. The financial results of GitHub have been included in our consolidated financial statements since the date of the acquisition. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our Enterprise Mobility + Security offerings also compete with products from a range of competitors including identity vendors, security solution vendors, and numerous other security point solution vendors. When cloud services require a significant level of integration and interdependency with software and the individual components are not considered distinct, all revenue is recognized over the period in which the cloud services are provided. 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. 10,610. us-gaap:OperatingIncomeLoss. The fair value of stock awards vested was $13.4 billion, $10.1 billion, and $8.7 billion, for fiscal years 2021, 2020, and 2019, respectively. 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. , Oct 10, 2022. None of the goodwill is expected to be deductible for income tax purposes. Pricing changes and promotions, pricing variation that occurs when the mix of devices manufactured shifts from local and regional system builders to large multinational OEMs, and different pricing of Windows versions licensed. Revenue, gross margin, and operating income included a favorable foreign currency impact of 2%, 3%, and 4%, respectively. But the most notable thing is what will happen to the other 90 percent. Operating leases are included in operating lease right-of-use (ROU) assets, other current liabilities, and operating lease liabilities in our consolidated balance sheets. Summary. However, just like how . From our CEO and Senior Leadership Team and throughout our organization, people at Microsoft are working to conduct our business in principled ways that make a significant positive impact on important global issues. The ten-month claims period commenced on November 23, 2020 and will close on September 23, 2021. These levels are: We measure equity investments without readily determinable fair values on a nonrecurring basis. We took a wide variety of measures to protect the health and well-being of our employees, suppliers, and customers during the COVID-19 pandemic. Sempra Energy's (SRE Quick Quote SRE - Free Report) fourth-quarter 2022 adjusted earnings per share (EPS) came in at $2.35, which beat the Zacks Consensus Estimate of $2.06 by 14.1%. Windows original equipment manufacturer licensing (Windows OEM) revenue increased slightly. Revenue from Office 365 is recognized ratably over the period in which the cloud services are provided. Our fixed-income investments are exposed to interest rate risk and credit risk. All differences between our internal management reporting basis and accounting principles generally accepted in the United States of America (GAAP), along with certain corporate-level and other activity, are included in Corporate and Other. It also provides support, tools, training, and other licensing benefits to help customers deploy and use software efficiently. To achieve our vision, our research and development efforts focus on three interconnected ambitions: Reinvent Productivity and Business Processes. For derivative instruments designated as fair value hedges, gains and losses are recognized in other income (expense), net with offsetting gains and losses on the hedged items. Xbox enables people to connect and share online gaming experiences that are accessible on Xbox consoles, Windows-enabled devices, and other devices. Revenue fell to $6.05 billion from $7 . The plaintiffs have filed supplemental expert evidence, portions of which the defendants have moved to strike. 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. Our devices are primarily manufactured by third-party contract manufacturers, some of which contain certain components for which there are very few qualified suppliers. Revenue, gross margin, and operating income included a favorable foreign currency impact of 3%, 3%, and 4%, respectively. 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. Microsoft Mesh enables presence and shared experiences from anywhere through mixed reality applications. Finally, our Occupational Health and Safety program helps ensure employees can stay safe while they are working. 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. To ensure accountability over time, we publicly disclose our progress on a multitude of workforce metrics including: We develop dynamic, sustainable, and strategic programs with the goal of providing a highly differentiated portfolio to attract, reward, and retain top talent and enable our employees to do their best work. July 26, 2022. 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. We expect capital expenditures to increase in coming years to support growth in our cloud offerings. Our gaming platform competes with console platforms from Nintendo and Sony, both of which have a large, established base of customers. A Reporting Pricing Level is the established level for Budget/Forecast to Actual revenue comparisons possible. Principal currency exposures include the Euro, Japanese yen, British pound, Canadian dollar, and Australian dollar. And, new Azure Purview offers organizations comprehensive data management and governance to map all their data, whether it resides on-premises, in the cloud, or in software as a service (SaaS) applications. We generate revenue by offering a wide range of cloud-based and other services to people and businesses; licensing and supporting an array of software products; designing, manufacturing, and selling devices; and delivering relevant online advertising to a global audience. Last year, we intercepted 30 billion email threats and 31 billion authentication attacks. Stock awards generally vest over a service period of four years or five years. The segment made $ 46. . Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities. We read and evaluated managements documentation, including relevant accounting policies and information obtained by management from outside tax specialists, that detailed the basis of the uncertain tax positions. Cash used in investing increased $15.4 billion to $27.6 billion for fiscal year 2021, mainly due to a $6.4 billion increase in cash used for acquisitions of companies, net of cash acquired, and purchases of intangible and other assets, a $5.2 billion increase in additions to property and equipment, and a $4.1 billion decrease in cash from net investment purchases, sales, and maturities. The largest component of the OEM business is the Windows operating system pre-installed on devices. In January, we released our first annual sustainability report, sharing our progress toward becoming carbon negative, zero waste, and water positive by 2030. Based on this evaluation, management concluded that the Companys internal control over financial reporting was effective as of June 30, 2021. Our Internet address is www.microsoft.com. Windows also plays a critical role in fueling our cloud business and Microsoft 365 strategy, and it powers the growing range of devices on the intelligent edge.. 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. Were seeing our family of products play key roles in the ways the world is continuing to work, learn, and connect. Visual Studio has more than 25 million monthly users, and GitHub is home to over 65 million developers who use it to build, ship, and maintain their software. Building and running cloud-based services in ways that unleash new experiences and opportunities for businesses and individuals. Serves as a specific grouping used for budgeting and forecasting purposes. At the platform as a service (PaaS) level, new Azure Communication Services enable developers to integrate rich communications APIs into their applications using the same infrastructure that powers Microsoft Teams. Inventories are stated at average cost, subject to the lower of cost or net realizable value. Archives of these events are also available. The mix of computing devices based on form factor and screen size. Quotes delayed by up to 15 minutes. Principal currencies hedged included the Euro, Japanese yen, British pound, Canadian dollar, and Australian dollar. Refer to Note 16 Stockholders Equity of the Notes to Financial Statements for further discussion. 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. Unearned revenue is generally invoiced annually at the beginning of each contract period for multi-year agreements and recognized ratably over the coverage period. This growth mindset served us well during the past year of crisis, disruption, and transformation. Microsoft Relationship Sales solution brings together LinkedIn Sales Navigator and Dynamics to transform business to business sales through social selling. Dear shareholders, colleagues, customers, and partners: As I write this, people and organizations everywhere continue to struggle with the uncertainty of a pandemic that continues to cause so much suffering. Microsoft's global revenue grew from fiscal year 2021 to 2022, increasing by about 18 percent year-on-year and reaching over 198 billion U.S. . Changes in fair value, excluding credit losses and impairments, are recorded in other comprehensive income. The investments we are making in infrastructure and devices will continue to increase our operating costs and may decrease our operating margins. 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. GO RESET FILTER. Padmasree Warrior 2 Contact Computershare directly to find out more about these services and programs at 800-285-7772, option 1, or visit online at: https://www.computershare.com/Microsoft, You can e-mail the transfer agent at: web.queries@computershare.com. For comparability of reporting, management considers non-GAAP measures in conjunction with GAAP financial results in evaluating business performance. 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