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. That would be the fastest pace for either metric in at least six years. We believe our continuing research and product development are not materially dependent on any single license or other agreement with a third party relating to the development of our products. In a time of great disruption and uncertainty, customers are looking to us to accelerate their own digital transformations as software and cloud computing play a huge role across every industry and around the world. On-premises licenses are considered distinct performance obligations when sold with SA. The bottom . Breaking down Microsoft's earnings by operational segment. 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.. Windows revenue increased $933 million or 4% driven by growth in Windows Commercial. Earnings Release FY23 Q1. 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. Generally, this occurs shortly before the products are released to production. In January, we released our first annual sustainability report, sharing our progress toward becoming carbon negative, zero waste, and water positive by 2030. 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. Our web application platform software competes with open source software such as Apache, Linux, MySQL, and PHP. Commercial cloud revenue was up 33% over last year. Windows 11 builds on the strengths of productivity, versatility, and security on Windows 10 today and adds in new experiences that include powerful task switching tools like new snap layouts, snap groups, and desktops; new ways to stay connected through chat; the information you want at your fingertips; and more. Use Ask Statista Research Service, On April 25, 2014, Microsoft completed the transaction to acquire substantially all of Nokia Corporations Devices and Services Business (NDS). 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. We use a range of amounts to estimate SSP when we sell each of the products and services separately and need to determine whether there is a discount to be allocated based on the relative SSP of the various products and services. Dollars). Refer to Risk Factors in our fiscal year 2021 Form 10-K for a discussion of these factors and other risks. Partners license software over a three-year period and are billed monthly based on consumption. They also support new startups, improve educational and health outcomes, and empower human ingenuity. General and administrative expenses include payroll, employee benefits, stock-based compensation expense, severance expense, and other headcount-related expenses associated with finance, legal, facilities, certain human resources and other administrative personnel, certain taxes, and legal and other administrative fees. We are accelerating adoption of AI innovations from research to products. LVMH Revenue By Segment. We monitor pay equity and career progress across multiple dimensions. Debt investments are classified as available-for-sale and realized gains and losses are recorded using the specific identification method. dollars)." We hire a mix of university and industry talent worldwide. A portion of amortization and depreciation is included with various other costs in an overhead allocation to each segment. We must also protect the institutions and processes of democracy. We assumed responsibility for these claims in our agreement to acquire Nokias Devices and Services business and have been substituted for the Nokia defendants. As soon as this statistic is updated, you will immediately be notified via e-mail. 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. Our fixed-income portfolio is diversified and consists primarily of investment-grade securities. 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. In this new hybrid work environment, having a digital employee experience platform will be key to business success. All three have been certified on behalf of Canadian indirect purchasers who acquired licenses for Microsoft operating system software and/or productivity application software between 1998 and 2010. Our success is highly dependent on our ability to attract and retain qualified employees. 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. Operating income increased $7.8 billion or 43%. Please do not hesitate to contact me. Windows faces competition from various software products and from alternative platforms and devices, mainly from Apple and Google. Securities held in our equity investments portfolio are subject to price risk. 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. 10,610. us-gaap:OperatingIncomeLoss. 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 aggregate changes in the gross unrecognized tax benefits related to uncertain tax positions were as follows: Unearned revenue by segment was as follows: Changes in unearned revenue were as follows: Revenue allocated to remaining performance obligations, which includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods, was $146 billion as of June 30, 2021, of which $141 billion is related to the commercial portion of revenue. 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. The increase in our effective tax rate for fiscal year 2020 compared to fiscal year 2019 was primarily due to a $2.6 billion net income tax benefit in the fourth quarter of fiscal year 2019 related to intangible property transfers. Xbox hardware revenue increased 92% driven by higher price of consoles sold due to the Xbox Series X|S launches. These events or circumstances could include a significant change in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit. We review debt investments quarterly for credit losses and impairment. In 2021, Microsoft's total annual Xbox gaming revenue amounted to 16.28 billion U.S. dollars. For derivative instruments that are not designated as hedges, gains and losses from changes in fair values are primarily recognized in other income (expense), net. Price Quote as of 2/17/2023 4:00:00 PM - ET. Azure enables customers to devote more resources to development and use of applications that benefit their organizations, rather than managing on-premises hardware and software. Sure enough, Microsoft says its "more personal computing" business, including Windows and Xbox, was up 11 percent to $14.5 billion in Q3 and "Windows OEM revenue growth," which should . 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. When a cloud-based service includes both on-premises software licenses and cloud services, judgment is required to determine whether the software license is considered distinct and accounted for separately, or not distinct and accounted for together with the cloud service and recognized over time. We measure the fair value of PSUs using a Monte Carlo valuation model. 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. A persons experience with technology spans a multitude of devices and has become increasingly more natural and multi-sensory with voice, ink, and gaze interactions. Based on its revenue breakdown, Microsoft's Productivity and Business Processes segment is its second-largest segment accounting for 32.1% of revenue in 2021. Licenses for on-premises software provide the customer with a right to use the software as it exists when made available to the customer. 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. As of June 30, 2021 and 2020, equity investments without readily determinable fair values measured at cost with adjustments for observable changes in price or impairments were $3.3 billion and $1.4 billion, respectively. Business Solutions including all features. Microsoft's Intelligent Cloud revenue rose 18 percent to $21.5 billion, up from $18.2 billion one year ago. We disclose metrics to enable investors to evaluate progress against our ambitions, provide transparency into performance trends, and reflect the continued evolution of our products and services. We strive to create local opportunity, growth, and impact in every country around the world. 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. We continue to invest in new gaming studios and content to expand our IP roadmap and leverage new content creators. Chief Executive Officer and Gaming revenue increased $3.8 billion or 33% driven by growth in Xbox content and services and Xbox hardware. Server products and cloud services, including Azure; SQL Server, Windows Server, Visual Studio, System Center, and related Client Access Licenses (CALs); and GitHub. Excluding this impact, gross margin percentage decreased slightly driven by gross margin percentage reduction in More Personal Computing. 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. That compared with a Wall Street . We monitor our foreign currency exposures daily to maximize the economic effectiveness of our foreign currency hedge positions. 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. During the past year, our partner OpenAI achieved dramatic advances training models like GPT-3the largest and most advanced language model in the worldon our Azure AI supercomputer. Our future opportunity depends on reaching and empowering all communities, and we are committed to taking action to help address racial injustice and inequity. 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 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. It also provides support, tools, training, and other licensing benefits to help customers deploy and use software efficiently. 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. We determine the allowance based on known troubled accounts, historical experience, and other currently available evidence. Continuing . Returns and credits are estimated at contract inception and updated at the end of each reporting period if additional information becomes available. We invest in a range of emerging technology trends and breakthroughs that we believe offer significant opportunities to deliver value to our customers and growth for the Company. 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. Interest and dividends income decreased due to lower yields on fixed-income securities. As of June 30, 2021, our long-term unsecured debt rating was AAA, and cash investments were in excess of $1.0 billion. Changes in these factors could materially impact our consolidated financial statements. The lawsuits also allege an industry-wide conspiracy to manipulate the science and testing around emission guidelines. 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. It drives our passion to obsess about our customers, and to learn about and from them. Our segments provide management with a comprehensive financial view of our key businesses. We have operating and finance leases for datacenters, corporate offices, research and development facilities, Microsoft Experience Centers, and certain equipment. Each allocation is measured differently based on the specific facts and circumstances of the costs being allocated. Revenue is up 22 percent, and net income has . The opportunity to merge the physical and digital worlds, when combined with the power of Azure cloud services, unlocks the potential for entirely new workloads and experiences which we believe will shape the next era of computing. 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. Constraints in the supply chain of device components. 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. Refer to Note 12 Income Taxes of the Notes to Financial Statements for further discussion. Microsoft forecast Intelligent Cloud revenue of $21.1 billion to $21.35 billion for its fiscal fourth quarter, driven by strong growth in its Azure platform. 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. This includes the server platform, database, business intelligence, storage, management and operations, virtualization, service-oriented architecture platform, security, and identity software. Sales and marketing included an unfavorable foreign currency impact of 2%. To use individual functions (e.g., mark statistics as favourites, set 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. 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.
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