At Microsoft, were providing technology and resources to help our customers navigate a remote environment. You only have access to basic statistics. Microsoft's revenue from 2012 to 2022 financial years, by segment (in billion U.S. dollars) [Graph]. We recorded over $200 million in adjusted EBITDA for the quarter, an improvement of . We evaluate our reporting units on an annual basis and, if necessary, reassign goodwill using a relative fair value allocation approach. 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. 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. That would be the fastest pace for either metric in at least six years. A year later, 2022 Q4 concluded with a gross profit margin of 24%, an improvement of over 800 basis points. In terms of formal on-line learning solutions, in fiscal year 2021 our employees completed over 5 million courses, averaging over 18 hours per employee. 31.70%. The decrease in our effective tax rate for fiscal year 2021 compared to fiscal year 2020 was primarily due to tax benefits from the India Supreme Court decision on withholding taxes, an agreement between the U.S. and India tax authorities related to transfer pricing, final TCJA regulations, and an increase in tax benefits relating to stock-based compensation. 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. Our devices are designed to enable people and organizations to connect to the people and content that matter most using Windows and integrated Microsoft products and services. Server products and cloud services revenue increased $11.2 billion or 27% driven by Azure. Server products and cloud services revenue increased 27% driven by Azure growth of 50%. Full-year fiscal '23 estimates today expect Microsoft to earn $9.55 in EPS on $212.2 billion in revenue for expected growth in the next 6 months of 4% in EPS and 7% in revenue. Equity investments without readily determinable fair values are measured using the equity method or measured at cost with adjustments for observable changes in price or impairments (referred to as the measurement alternative). The above table excludes shares repurchased to settle employee tax withholding related to the vesting of stock awards of $4.4 billion, $3.3 billion, and $2.7 billion for fiscal years 2021, 2020, and 2019, respectively. In addition to LinkedIns free services, LinkedIn offers monetized solutions: Talent Solutions, Marketing Solutions, Premium Subscriptions, Sales Solutions, and Learning Solutions. Before releasing new software platforms, and as we make significant modifications to existing platforms, we provide application vendors with a range of resources and guidelines for development, training, and testing. The effort surpassed its initial goals and has been expanded with a new emphasis on connecting learners with jobs that help put their new training to use and connecting employers with skilled job seekers they might not find in traditional networks. Were helping companies make 250,000 skills-based hires this yearensuring those who learn digital skills can convert them into jobs and opportunity. 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. SA is included. As we have diversity of target audiences and sales motions within the Windows business, we monitor metrics that are reflective of those varying motions. In fiscal year 2020, we removed $2.0 billion of foreign net operating losses and corresponding valuation allowances as a result of the liquidation of a foreign subsidiary. Office Consumer Services revenue is mainly affected by the demand for communication and storage through Skype, Outlook.com, and OneDrive, which is largely driven by subscriptions, advertising, and the sale of minutes. Microsoft expects More Personal Computing revenue to rise to between $13.6 billion and $14.0 billion in Q4 FY 2021. LinkedIn, including Talent Solutions, Marketing Solutions, Premium Subscriptions, Sales Solutions, and Learning Solutions. Generally, we also create product documentation internally. Founder and Chairman, Trilogy Timing of revenue recognition may differ from the timing of invoicing to customers. The regional center in Ireland supports the European, Middle Eastern, and African region; the center in Singapore supports the Japan, India, Greater China, and Asia-Pacific region; and the centers in Fargo, North Dakota, Fort Lauderdale, Florida, Puerto Rico, Redmond, Washington, and Reno, Nevada support Latin America and North America. We have several partnerships with other companies, including Verizon Media Group, through which we provide and monetize search queries. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. 12.80%. No additional shares will be requested at this meeting. Price Quote as of 2/17/2023 4:00:00 PM - ET. MSN advertising includes both native and display ads. Operating expenses increased $839 million or 5% driven by investments in commercial sales, cloud engineering, and LinkedIn. Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. The Surface family includes Surface Book 3, Surface Laptop Go, Surface Go 2, Surface Pro 7, Surface Laptop 4, Surface Pro X, Surface Studio 2, and Surface Duo. Outcomes: The segment generated revenues of $66 million (14.1% of total revenues), up 4% on a year-over-year basis due to higher software license and product sales partly offset by EMEA prepay . These allocated costs include legal, including settlements and fines, information technology, human resources, finance, excise taxes, field selling, shared facilities services, and customer service and support. We also continue to lead in the fast-growing cloud gaming market. 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. GitHub provides a collaboration platform and code hosting service for developers. Microsoft's recent Q3 earnings uncovered several crucial trends that will drive its Dynamics software products and LinkedIn revenue higher. Dynamics 365 for Talent with LinkedIn Recruiter and Learning gives human resource professionals a complete solution to compete for talent. As a result, changes in foreign exchange rates may significantly affect revenue and expenses. Cash from operations increased $16.1 billion to $76.7 billion for fiscal year 2021, mainly due to an increase in cash received from customers, offset in part by an increase in cash paid to suppliers and employees. Xbox Game Pass is a community with access to a curated library of over 100 first- and third-party console and PC titles. Revenue from search advertising is recognized when the advertisement appears in the search results or when the action necessary to earn the revenue has been completed. The primary drag on earnings was the 19% decrease down to $14.2B the company saw in it's personal computing segment with Windows OEM license revenue falling a massive 39%. Through this commitment we can allow everyone the chance to be their authentic selves and do their best work every day. The proceeds of these issuances were or will be used for general corporate purposes, which may include, among other things, funding for working capital, capital expenditures, repurchases of capital stock, acquisitions, and repayment of existing debt. Microsoft revenue for the twelve months ending December 31, 2022 was $204.094B, a 10.38% increase year-over-year. 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. We are committed to designing and marketing first-party devices to help drive innovation, create new device categories, and stimulate demand in the Windows ecosystem. To determine credit losses, we employ a systematic methodology that considers available quantitative and qualitative evidence. It has helped us become more empathetic toward our colleagues and enabled us to work together as a teamas One Microsoft. Commercial competitors for our server applications for PC-based distributed client-server environments include CA Technologies, IBM, and Oracle. Their revenue came in at 25,007 Million USD, which missed the expected amount by around 5% but represented a 13% increase YoY. We have historically paid India withholding taxes on software sales through distributor withholding and tax audit assessments in India. Microsoft's gaming revenue matched analysts' forecasts. These contracts are not designated as hedging instruments and are included in Other contracts in the tables below. Net recognized gains (losses) on debt investments were as follows: Net recognized gains (losses) on equity investments were as follows: The components of investments were as follows: Equity investments presented as Other in the tables above include investments without readily determinable fair values measured using the equity method or measured at cost with adjustments for observable changes in price or impairments, and investments measured at fair value using net asset value as a practical expedient which are not categorized in the fair value hierarchy. 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. We apply a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less. These metrics provide strategic product insights which allow us to assess the performance across our commercial and consumer businesses. Obsessing over what matters to our customers. Accessed March 01, 2023. https://www.statista.com/statistics/273482/segment-revenue-of-microsoft/, Microsoft. And we continue to bring rich AI capabilities directly into the data stack as large-scale models become powerful platforms in their own right. Xbox revenue is mainly affected by subscriptions and sales of first- and third-party content, as well as advertising. Refer to Risk Factors in our fiscal year 2021 Form 10-K for a discussion of these factors and other risks. The devices and form factors customers prefer evolve rapidly, and influence how users access services in the cloud, and in some cases, the users choice of which suite of cloud-based services to use. Determination of stand-alone selling prices for each distinct performance obligation and for products and services that are not sold separately. This pricing methodology applies to our Level 1 investments, such as U.S. government securities, common and preferred stock, and mutual funds. 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. LinkedIn revenue increased $2.2 billion or 27% driven by advertising demand in our Marketing Solutions business. January 26, 2022, 12:36 PM EST. 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. 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. The guidance eliminates certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences related to changes in ownership of equity method investments and foreign subsidiaries. It also provides support, tools, training, and other licensing benefits to help customers deploy and use software efficiently. PSP Partners, Emma N. Walmsley 2,4 Our products include operating systems, cross-device productivity applications, server applications, business solution applications, desktop and server management tools, software development tools, and video games. Our principal audit procedures related to the Companys revenue recognition for these customer agreements included the following: Income Taxes Uncertain Tax Positions Refer to Note 12 to the financial statements. We are expanding our opportunity to reach every one of them. These operating and finance leases will commence between fiscal year 2022 and fiscal year 2026 with lease terms of 1 year to 15 years. 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. 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. These manufacturers, many of which are also current or potential partners and customers, include Apple and our Windows OEMs. You need a Statista Account for unlimited access. It transforms how people connect holographically with others in a natural way. We have a network of field sales representatives and field support personnel that solicit orders from distributors and resellers, and provide product training and sales support. Virtual Shareholder Meeting: www.virtualshareholdermeeting.com/MSFT21. We tested the effectiveness of controls related to the identification of distinct performance obligations, the determination of the timing of revenue recognition, and the estimation of variable consideration. Partnerships, Satya Nadella Our web application platform software competes with open source software such as Apache, Linux, MySQL, and PHP. Although management currently believes that resolving claims against us, individually or in aggregate, will not have a material adverse impact in our consolidated financial statements, these matters are subject to inherent uncertainties and managements view of these matters may change in the future. Nine of these cases were filed in 2002 and are consolidated for certain pre-trial proceedings; the remaining cases are stayed. The fair values of these investments approximate their carrying values. Thats why in April we announced a new five-year commitment to spur the development of accessible technology, expand opportunities for people with disabilities in the workforce, and build a more inclusive workplace. 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. statistic alerts) please log in with your personal account. A number of companies, such as Red Hat, supply versions of Linux. The agreement allows customers to acquire monthly or annual subscriptions for cloud-based services. As of June 30, 2021, the primary unresolved issues for the IRS audits relate to transfer pricing, which could have a material impact in our consolidated financial statements when the matters are resolved. The pattern of delivery (i.e., timing of when revenue is recognized) for each distinct performance obligation. $ 52,959. Apple and Microsoft are both great companies to own. During the periods presented, we reported our financial performance based on the following segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. On-the-job stretch and advancement opportunities. We also are subject to a variety of other claims and suits that arise from time to time in the ordinary course of our business. The Independent Software Vendor Royalty program enables partners to integrate Microsoft products into other applications and then license the unified business solution to their end users. We plan to continue to make significant investments in a broad range of research and development efforts. 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. We must also protect the institutions and processes of democracy. All repurchases were made using cash resources. Okta, Proofpoint, and Symantec provide security solutions across email security, information protection, identity, and governance. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined our contracts generally do not include a significant financing component. Principal currencies hedged included the Euro, Japanese yen, British pound, Canadian dollar, and Australian dollar. Such costs related to software development are included in research and development expense until the point that technological feasibility is reached, which for our software products, is generally shortly before the products are released to production. On March 9, 2021, we completed our acquisition of ZeniMax Media Inc. (ZeniMax), the parent company of Bethesda Softworks LLC (Bethesda), for a total purchase price of $8.1 billion, consisting primarily of cash. 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. In our 2020 Diversity and Inclusion Report, we reported that all racial and ethnic minority employees in the U.S. combined earn $1.006 for every $1.000 earned by their white counterparts, that women in the U.S. earn $1.001 for every $1.000 earned by their counterparts in the U.S. who are men, and women in the U.S. plus our ten other largest employee geographies (Australia, Canada, China, France, Germany, India, Ireland, Israel, Japan, and United Kingdom) combined earn $1.000 for every $1.000 by men in these countries. We generally fund research at the corporate level to ensure that we are looking beyond immediate product considerations to opportunities further in the future. Inventories are stated at average cost, subject to the lower of cost or net realizable value. We regularly review inventory quantities on hand, future purchase commitments with our suppliers, and the estimated utility of our inventory. At Microsoft we have an inherently inclusive mission: to empower every person and every organization on the planet to achieve more. Our practice is to ship our products promptly upon receipt of purchase orders from customers; consequently, backlog is not significant. 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. Were unfavorable final outcomes to occur, there exists the possibility of a material adverse impact in our consolidated financial statements for the period in which the effects become reasonably estimable. The acquisition has been approved by Nuances shareholders, and we expect it to close by the end of calendar year 2021, subject to the satisfaction of certain regulatory approvals and other customary closing conditions. Executive Vice President and Chief Financial Officer, Alice L. Jolla Our employees donated an additional $214 million (including the company match) to the organizations and causes they care about. These reviews include analysis of demand forecasts, product life cycle status, product development plans, current sales levels, pricing strategy, and component cost trends. The Productivity and Business Processes segment, containing Microsoft 365 (formerly known as Office 365), LinkedIn and Dynamics, delivered $17 billion in revenue, up 7% and more than the . Microsoft Corporation, Sandra E. Peterson 2,3 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. Cost of revenue increased $6.2 billion or 13% driven by growth in commercial cloud and Gaming, offset in part by a reduction in depreciation expense due to the change in estimated useful lives of our server and network equipment. Padmasree Warrior 2 Our most significant expenses are related to compensating employees; designing, manufacturing, marketing, and selling our products and services; datacenter costs in support of our cloud-based services; and income taxes. The best of the best: the portal for top lists & rankings: Strategy and business building for the data-driven economy: Industry-specific and extensively researched technical data (partially from exclusive partnerships). 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. Based on this evaluation, management concluded that the Companys internal control over financial reporting was effective as of June 30, 2021. 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). Our Search business, including Bing and Microsoft Advertising, is designed to deliver relevant online advertising to a global audience. These contracts are not designated as hedging instruments and are included in Other contracts in the tables below. Office Consumer products and cloud services revenue increased $474 million or 10% driven by Microsoft 365 Consumer subscription revenue, on a strong prior year comparable that benefited from transactional strength in Japan. Operating income increased $3.5 billion or 22%. And we continue to create successful new franchises. Revenue from certain contracts is allocated among the segments based on the relative value of the underlying products and services, which can include allocation based on actual prices charged, prices when sold separately, or estimated costs plus a profit margin. They also support new startups, improve educational and health outcomes, and empower human ingenuity. Changes in operating assets and liabilities: Acquisition of companies, net of cash acquired, and purchases of intangible and other assets, Effect of foreign exchange rates on cash and cash equivalents, Cash and cash equivalents, beginning of period, Accounts receivable, net of allowance for doubtful accounts, Net income available for common shareholders (A), Weighted average outstanding shares of common stock (B), Common stock and common stock equivalents (C), Realized gains from sales of available-for-sale securities, Realized losses from sales of available-for-sale securities, Impairments and allowance for credit losses, Net unrealized gains on investments still held, Gross amounts of derivatives offset in the balance sheet, Amount reclassified from accumulated other comprehensive income, Cash, cash equivalents, and short-term investments, Foreign-derived intangible income deduction, State income taxes, net of federal benefit, Excess tax benefits relating to stock-based compensation, Deferred income tax assets, net of valuation allowance, Book/tax basis differences in investments and debt, Long-term deferred income tax liabilities, Increases for tax positions related to the current year, Increases for tax positions related to prior years, Decreases for tax positions related to prior years, Decreases due to lapsed statutes of limitations. Making a difference in the lives of each other, our customers, and the world around us. Windows, including Windows OEM licensing 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 Internet of Things; and MSN advertising. Dynamics competes with cloud-based and on-premises business solution providers such as Oracle, Salesforce.com, and SAP. Deferred tax assets are reported net of a valuation allowance when it is more likely than not that a tax benefit will not be realized. The components of the provision for income taxes were as follows: U.S. and foreign components of income before income taxes were as follows: The items accounting for the difference between income taxes computed at the U.S. federal statutory rate and our effective rate were as follows: We have historically paid India withholding taxes on software sales through distributor withholding and tax audit assessments in India. We also expanded existing programs such as our Microsoft CARES Employee Assistance Program and family backup care. Meanwhile, the company is plowing billions of dollars into its Reality Labs (metaverse) segment despite it generating a mere pittance in terms of revenue. A companys internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements. Download as image Embed. 6 . In addition to the operations centers, we also operate datacenters throughout the Americas, Europe, Australia, and Asia, as well as in the Middle East and Africa. The Company remains under IRS audit, or subject to IRS audit, for tax years subsequent to 2003. Right-of-use assets obtained in exchange for lease obligations: Reclassification adjustments for gains included in earnings, Tax expense included in provision for income taxes, Amounts reclassified from accumulated other comprehensive income (loss), Net change related to derivatives, net of tax of, Reclassification adjustments for (gains) losses included in other income (expense), net, Tax expense (benefit) included in provision for income taxes, Net change related to investments, net of tax of, Translation adjustments and other, net of tax effects of, Accumulated other comprehensive income (loss), end of period, Income tax benefits related to stock-based compensation, NASAs Mars mission achieved a milestone in space exploration when the small robotic helicopter Ingenuity completed the first powered flight on another planeta feat that would not have been possible without 12,000 developers on GitHub who, When a 1,300-foot ship blocked the Suez Canal and disrupted global shipping, our partner Blue Yonder, Team Rubicona nonprofit organization that responds to humanitarian crises around the world, Surgeons at Mt. , by segment ( in billion U.S. dollars ) [ Graph ], reassign goodwill using a relative fair allocation... 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Hosting service for developers year later, 2022 Q4 concluded with a gross profit of. Not designated as hedging instruments and are included in other contracts in the future both!
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