"Microsoft's revenue from 2012 to 2022 financial years, by segment (in billion U.S. Research and development expenses include payroll, employee benefits, stock-based compensation expense, and other headcount-related expenses associated with product development. Securities held in our fixed-income portfolio are subject to different interest rate risks based on their maturities. Generally, this occurs shortly before the products are released to production. It is impracticable for us to separately identify the amount of amortization and depreciation by segment that is included in the measure of segment profit or loss. The fair values of these investments are determined based on valuation techniques using the best information available, and may include quoted market prices, market comparables, and discounted cash flow projections. We have served as the Companys auditor since 1983. Their net earnings came in at $2,407 Million, a decrease of 5.6% YoY. Today's Change. Corporate governance information including our articles of incorporation, bylaws, governance guidelines, committee charters, codes of conduct and ethics, global corporate social responsibility initiatives, and other governance-related policies. 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. Our broker-priced investments are generally classified as Level 2 investments because the broker prices these investments based on similar assets without applying significant adjustments. dollars)." Prior to the acquisition of NDS, financial results associated with joint strategic initiatives with Nokia were reflected in the devices and consumer licensing segment. Server products and cloud services revenue increased 27% driven by Azure growth of 50%. And, finally, our comprehensive portfolio of AI tools, frameworks, and infrastructure enables developers to build solutions that comprehend speech, make predictions, provide insights, and support decision-making. We determine the allowance based on known troubled accounts, historical experience, and other currently available evidence. This change in accounting estimate was effective beginning fiscal year 2021. Azure Synapse brings together data integration, data warehousing, and big data analytics so organizations can query data on their own terms at any scale. For hardware warranties, we estimate the costs based on historical and projected product failure rates, historical and projected repair costs, and knowledge of specific product failures (if any). Open agreements are designed for small and medium organizations that want to license cloud services and on-premises software over a one- to three-year period. New integrations between Dynamics 365 and Teams enable everyone across an organization to view and collaborate on customer records seamlessly within Teams, and to meet, chat, and collaborate within Dynamics 365. 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 . Our fixed-income portfolio is diversified and consists primarily of investment-grade securities. 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. While it may be necessary in the future to seek or renew licenses relating to various aspects of our products, services, and business methods, we believe, based upon past experience and industry practice, such licenses generally can be obtained on commercially reasonable terms. We provide indemnifications of varying scope and size to certain customers against claims of intellectual property infringement made by third parties arising from the use of our products and certain other matters. At our Investor Relations website, www.microsoft.com/investor, we make available free of charge a variety of information for investors. 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. We also help our suppliers and customers around the world use Microsoft technology to reduce their own carbon footprint. The purchase price included $768 million of cash and cash equivalents acquired. 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. In the first fiscal quarter of 2023, revenue in the Microsoft Intelligent Cloud segment, which includes the Azure public cloud, Windows Server, SQL Server, Nuance, and Enterprise Services, was $20 . The second broad category of OEMs are system builders consisting of lower-volume PC manufacturers, which source Microsoft software for pre-installation and local redistribution primarily through the Microsoft distributor channel rather than through a direct agreement or relationship with Microsoft. Microsoft Mesh enables presence and shared experiences from anywhere through mixed reality applications. Translation adjustments resulting from this process are recorded to other comprehensive income. Our short-term investments are primarily intended to facilitate liquidity and capital preservation. We also invested $20 million in key non-profit partnerships through Microsoft Philanthropies to help people from underserved communities that are often excluded by the digital economy. The following table outlines the estimated future amortization expense related to intangible assets held as of June 30, 2021: As of June 30, 2021 and 2020, the estimated fair value of long-term debt, including the current portion, was $70.0 billion and $77.1 billion, respectively. Managers holding conversations about employees career and development plans, coaching on career opportunities, and programs like mentoring and sponsorship. Revenue from Office 365 is recognized ratably over the period in which the cloud services are provided. LinkedIn connects the worlds professionals to make them more productive and successful and transforms the way companies hire, market, sell, and learn. 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. A majority of our investments are priced by pricing vendors and are generally Level 1 or Level 2 investments as these vendors either provide a quoted market price in an active market or use observable inputs for their pricing without applying significant adjustments. 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. Our fair value processes include controls that are designed to ensure appropriate fair values are recorded. Customers can use Azure through our global network of datacenters for computing, networking, storage, mobile and web application services, AI, IoT, cognitive services, and machine learning. Under Open Value agreements, organizations can elect to purchase perpetual licenses or subscribe to licenses and SA is included. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. 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. Our competitors are developing new software and devices, while also deploying competing cloud-based services for consumers and businesses. 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. In addition to our main research and development operations, we also operate Microsoft Research. In Q2 FY 2022, productivity and business processes generated $15.9 billion in revenue, comprising 31% of Microsoft's total revenue. No instances of impairment were identified in our May 1, 2021, May 1, 2020, or May 1, 2019 tests. Revenue, gross margin, and operating income included a favorable foreign currency impact of 2%, 3%, and 4%, respectively. These controls include model validation, review of key model inputs, analysis of period-over-period fluctuations, and independent recalculation of prices where appropriate. These reviews include analysis of demand forecasts, product life cycle status, product development plans, current sales levels, pricing strategy, and component cost trends. The Microsoft Cloud is the most comprehensive and trusted cloud, providing the best integration across the technology stack while offering openness, improving time to value, reducing costs, and increasing agility. From LinkedIn profiles within Office, to LinkedIn Learning courses within Microsoft Viva, and LinkedIn Sales Navigator leads within Dynamics 365, we continue to bring the power of LinkedIn and Microsoft together to transform how people learn, sell, and connect. The decrease from the federal statutory rate in fiscal year 2020 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, and tax benefits relating to stock-based compensation. Apple and Microsoft are both great companies to own. Microsofts Board of Directors provides insight, feedback, and oversight across a broad range of environmental and social matters. We support multiple highly active Employee Resource Groups for women, families, racial and ethnic minorities, military, people with disabilities, or who identify as LGBTQI+, where employees can go for support, networking, and community-building. These levels are: We measure equity investments without readily determinable fair values on a nonrecurring basis. Chief Financial Officer, Gap, Inc. John W. Stanton 1,4 Interest expense decreased due to a decrease in outstanding long-term debt due to debt maturities. We also license standalone and software development lifecycle tools for software architects, developers, testers, and project managers. LinkedIn and our security business both passed $10 billion in annual revenue for the first time. In February 2012, the IRS withdrew its 2011 Revenue Agents Report related to unresolved issues for tax years 2004 to 2006 and reopened the audit phase of the examination. These unique gaming experiences are the cornerstone of Xbox Game Pass, a subscription service and gaming community with access to a curated library of over 100 first- and third-party console and PC titles. Microsoft aims to recruit, develop, and retain diverse, world-changing talent. Microsoft reported its fiscal year 2021 Q3 results today, revealing that it's pulled in a hefty $41.7 billion in revenue over the last quarter . In March 2021 and June 2020, we exchanged a portion of our existing debt at a premium for cash and new debt with longer maturities to take advantage of favorable financing rates in the debt markets, reflecting our credit rating and the low interest rate environment. Principal currency exposures include the Euro, Japanese yen, British pound, Canadian dollar, and Australian dollar. The figure also lagged the Zacks Consensus Estimate of $255 million. Changes in value are recorded in other income (expense), net. ET. Commercial cloud gross margin percentage increased 4 points to 71% driven by gross margin percentage improvement in Azure and the change in estimated useful lives of our server and network equipment, offset in part by sales mix shift to Azure. The major classes of assets and liabilities to which we have preliminarily allocated the purchase price were as follows: Goodwill was assigned to our More Personal Computing segment. For example, through LinkedIns new Skills Path pilot, were providing tools to help businesses source job candidates in a more equitable waybased on their proven proficiencies. For Microsoft, trust is built on privacy, security, digital safety, the responsible use of AI, and transparency. Determination of whether products and services are considered distinct performance obligations that should be accounted for separately versus together, such as software licenses and related services that are sold with cloud-based services. We expect existing cash, cash equivalents, short-term investments, cash flows from operations, and access to capital markets to continue to be sufficient to fund our operating activities and cash commitments for investing and financing activities, such as dividends, share repurchases, debt maturities, material capital expenditures, and the transition tax related to the TCJA, for at least the next 12 months and thereafter for the foreseeable future. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. 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. Through this commitment we can allow everyone the chance to be their authentic selves and do their best work every day. We are accelerating our development of mixed reality solutions with new Azure services and devices. It has helped us become more empathetic toward our colleagues and enabled us to work together as a teamas One Microsoft. We protect our intellectual property investments in a variety of ways. Commercial remaining performance obligation, Commercial portion of revenue allocated to remaining performance obligations, which includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods, Revenue from our commercial cloud business, which includes Azure, Office 365 Commercial, the commercial portion of LinkedIn, Dynamics 365, and other commercial cloud properties, Gross margin percentage for our commercial cloud business, Productivity and Business Processes and Intelligent Cloud. 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