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. General Partner, Greylock Partners, Penny S. Pritzker 4 Refer to Note 1 Accounting Policies of the Notes to Financial Statements for further discussion. 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. Save for three of these 16 quarters, that YOY growth has ranged between roughly 20% and 35% a quarter . For more about Microsofts CSR commitments and performance, please visit: www.microsoft.com/transparency. Income taxes paid, net of refunds, were $13.4 billion, $12.5 billion, and $8.4 billion in fiscal years 2021, 2020, and 2019, respectively. In instances where SSP is not directly observable, such as when we do not sell the product or service separately, we determine the SSP using information that may include market conditions and other observable inputs. To foster their and our success, we seek to create an environment where people can do their best work a place where they can proudly be their authentic selves, guided by our values, and where they know their needs can be met. We monitor pay equity and career progress across multiple dimensions. $ 35,058. Also included in Other are business dispositions and transfers between segments due to reorganizations, as applicable. We must also protect the institutions and processes of democracy. In addition to the extraordinary steps and programs relating to COVID-19, our comprehensive benefits package includes many physical, emotional, and financial wellness programs including counseling through the Microsoft CARES Employee Assistance Program, flexible fitness benefits, savings and investment tools, adoption assistance, and back-up care for children and elders. Executive Vice President, Marketing and Consumer 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. Refer to Note 13 Unearned Revenue for further information, including unearned revenue by segment and changes in unearned revenue during the period. Operating income increased $3.5 billion or 22%. However, some of our products contain certain components for which there are very few qualified suppliers. In general, investments with original maturities of greater than three months and remaining maturities of less than one year are classified as short-term investments. We use credit default swap contracts to manage credit exposures relative to broad-based indices and to facilitate portfolio diversification. First of all, users - from 433 million users back in 2016 when it was acquired, up to 740 million users in 2021. Credit losses relating to available-for-sale debt securities are recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. Judgment is required in assessing the future tax consequences of events that have been recognized in our consolidated financial statements or tax returns. The metrics are disclosed in the MD&A or the Notes to Financial Statements. 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. We measure the fair value of PSUs using a Monte Carlo valuation model. 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. Interest is paid semi-annually, except for the Euro-denominated debt, which is paid annually. Finally, we continue to stand up for human rights, which includes taking action to prevent modern slavery and human trafficking in our business and supply chain and supporting humanitarian action and emergency response. This pricing methodology applies to our Level 1 investments, such as U.S. government securities, common and preferred stock, and mutual funds. Although we were not a party to the appeals, our software sales in India were determined to be not subject to withholding taxes. In fiscal 2023, NVIDIA paid out $10.44 billion in dividends and common stocks. Windows OEM revenue is impacted significantly by the number of Windows operating system licenses purchased by OEMs, which they pre-install on the devices they sell. Our mission to empower every person and every organization on the planet to achieve more has never been more urgent or more needed. The Google Cloud revenue segment generated 9.3 percent of the company's revenues, up from 4.3 percent in 2018. . 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. The Company remains under IRS audit, or subject to IRS audit, for tax years subsequent to 2003. LinkedIn has over 750 million members and has offices around the globe. With more than 60 datacenter regionsincluding 15 new regions added this year on five continentswe are delivering faster access to data and cloud services while addressing critical data residency requirements. No instances of impairment were identified in our May 1, 2021, May 1, 2020, or May 1, 2019 tests. We also pledged a $50 million investment in AI for Earth to accelerate innovation by putting AI in the hands of those working to directly address sustainability challenges. Unearned revenue also includes payments for other offerings for which we have been paid in advance and earn the revenue when we transfer control of the product or service. We have operating and finance leases for datacenters, corporate offices, research and development facilities, Microsoft Experience Centers, and certain equipment. Enterprise Services, including Premier Support Services and Microsoft Consulting Services. These contracts are not designated as hedging instruments and are included in Other contracts in the tables below. Customized manager learning to build people manager capabilities and similar learning solutions to build leadership skills for all employees including differentiated leadership development programs. 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. Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Stock awards generally vest over a service period of four years or five years. 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. 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. China State Administration for Market Regulation Investigation. Gross margin percentage increased with the change in estimated useful lives of our server and network equipment. 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. Any change in the goodwill amounts resulting from foreign currency translations and purchase accounting adjustments are presented as Other in the table above. In fiscal year 2021, we delivered $168 billion in revenue, up 18 percent year-over-year. We typically have more than one SSP for individual products and services due to the stratification of those products and services by customers and circumstances. Our managers strive to model our culture and values in their actions, to coach their teams to define objectives and adapt and learn, and to care deeply for their employees, seeking to understand their capabilities, ambitions, and invest in their growth. Refer to the Non-GAAP Financial Measures section below for a reconciliation of our financial results reported in accordance with GAAP to non-GAAP financial results. The company's shares . 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. Segment. A Reporting Pricing Level is the established level for Budget/Forecast to Actual revenue comparisons possible. Growth will depend on our ability to increase the number of LinkedIn members and our ability to continue offering services that provide value for our members and increase their engagement. With Azure Arc, customers can deploy Azure data services on-premises, at the edge, or in multicloud environments. Revenue increased $25.1 billion or 18% driven by growth across each of our segments. These levels are: We measure equity investments without readily determinable fair values on a nonrecurring basis. Total. The . Net realizable value is the estimated selling price less estimated costs of completion, disposal, and transportation. The fair values of these investments approximate their carrying values. The components of intangible assets acquired during the periods presented were as follows: Intangible assets amortization expense was $1.6 billion, $1.6 billion, and $1.9 billion for fiscal years 2021, 2020, and 2019, respectively. Server products and cloud services revenue increased $11.2 billion or 27% driven by Azure. We applied a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the effective date to align our credit loss methodology with the new standard. In March 2021, the India Supreme Court ruled favorably for companies in 86 separate appeals, some dating back to 2012, holding that software sales are not subject to India withholding taxes. It transforms how people connect holographically with others in a natural way. Based on the carrying amount of server and network equipment included in property and equipment, net as of June 30, 2020, the effect of this change in estimate for fiscal year 2021 was an increase in operating income of $2.7 billion and net income of $2.3 billion, or $0.30 per both basic and diluted share. This includes all non-exempt and exempt employees and equivalents across the globe including business support professionals and datacenter and retail employees. 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.. Care is the new currency for every leader, and weve built a new framework to help our managers strengthen their teams and deliver success through empowerment and accountability. We purchased the removal of 1.3 million metric tons of carbon from 26 projects around the world. $256.02 $259.13 10am 12pm 2pm 4pm. Windows OEM Pro revenue decreased 9% and Windows OEM non-Pro revenue grew 21%. 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. Refer to Managements Discussion and Analysis of Financial Condition and Results of Operations for further discussion regarding the impact of COVID-19 on our fiscal year 2021 financial results. This year, we expanded our hybrid capabilities to enable organizations to build, manage, and deploy applications anywhere. All of our approximately 23,000 people managers must complete between 25-30 hours of required manager capability and excellence training and are assigned ongoing required training each year. Microsoft is a technology company whose mission is to empower every person and every organization on the planet to achieve more. We settled a portion of the Internal Revenue Service (IRS) audit for tax years 2004 to 2006 in fiscal year 2011. The components of lease expense were as follows: Supplemental cash flow information related to leases was as follows: Supplemental balance sheet information related to leases was as follows: The following table outlines maturities of our lease liabilities as of June 30, 2021: As of June 30, 2021, we have additional operating and finance leases, primarily for datacenters, that have not yet commenced of $5.4 billion and $7.3 billion, respectively. We have operations centers that support operations in their regions, including customer contract and order processing, credit and collections, information processing, and vendor management and logistics. Microsoft annual revenue for 2020 was $143.015B, a 13.65% increase from 2019. In January 2021, we announced that in fiscal year 2020 we reduced Microsofts carbon emissions by 586,683 metric tons. The better we represent that diversity inside Microsoft, the more effectively we can innovate for those we seek to empower. For software warranties, we estimate the costs to provide bug fixes, such as security patches, over the estimated life of the software. For comparability of reporting, management considers non-GAAP measures in conjunction with GAAP financial results in evaluating business performance. Refer to Note 16 Stockholders Equity of the Notes to Financial Statements for further discussion. Productivity and Business Processes revenue increased driven by Office 365 Commercial and LinkedIn. 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. 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. Microsoft's revenue from 2012 to 2022 financial years, by segment (in billion U.S. dollars) [Graph]. $ 17,897. Once technological feasibility is established, software costs are capitalized until the product is available for general release to customers. Were seeing our family of products play key roles in the ways the world is continuing to work, learn, and connect. 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. We encourage investors, the media, and others interested in Microsoft to review the information we post on the social media channels listed on our Investor Relations website. Its personal computing segment was an eyesore, impacted by the broader decline in PC sales, as revenue in the category fell 19% to $14.2 billion. Market Cap. Partnerships, Satya Nadella Tested managements identification and treatment of contract terms. We made substantial modifications to employee travel policies and implemented office closures so non-essential employees could work remotely. Xbox Cloud Gaming is Microsofts game streaming technology that is complementary to our console hardware and gives fans the ultimate choice to play the games they want, with the people they want, on the devices they want. We announced in June 2020 that we are expanding access to the digital skills that have become increasingly vital to many of the worlds jobs, and especially to individuals hardest hit by recent job losses. Our commercial metrics allow management and investors to assess the overall health of our commercial business and include leading indicators of future performance. Revenue allocated to SA is generally recognized ratably over the contract period as customers simultaneously consume and receive benefits, given that SA comprises distinct performance obligations that are satisfied over time. Revenue growth was led by its search segment . 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. We have savings plans in the U.S. that qualify under Section 401(k) of the Internal Revenue Code, and a number of savings plans in international locations. Nuance is a cloud and artificial intelligence (AI) software provider with healthcare and enterprise AI experience, and the acquisition will build on our industry-specific cloud offerings. Variations in the actual outcome of these future tax consequences could materially impact our consolidated financial statements. The financial results of ZeniMax have been included in our consolidated financial statements since the date of the acquisition. 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. Generally, this occurs shortly before the products are released to production. During fiscal year 2021, our Daily Pulse surveys gave us invaluable insights into ways we could support employees through the COVID-19 pandemic and addressing racial injustice. This year, we made progress in our work to address racial injustice and inequity. You only have access to basic statistics. Growth depends on our ability to reach new users, add value to our core product set, and continue to expand our product and service offerings into new markets. 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. services revenue growth, Revenue from Windows Commercial products and cloud services, comprising volume licensing of the Windows operating system, Windows cloud services, and other Windows commercial offerings, Revenue from Surface devices and accessories, Revenue from Xbox content and services, comprising digital transactions, Xbox Game Pass and other subscriptions, video games, third-party video game royalties, cloud services, and advertising, Search advertising revenue, excluding TAC, growth, Revenue from search advertising excluding traffic acquisition costs (TAC) paid to Bing Ads network publishers. Alphabet. These reviews include analysis of demand forecasts, product life cycle status, product development plans, current sales levels, pricing strategy, and component cost trends. Founder and Chairman, Trilogy 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. From Visual Studio to GitHub, we deliver the best tools for moving quickly from idea to code and from code to the cloud. Xbox hardware revenue increased 92% driven by higher price of consoles sold due to the Xbox Series X|S launches. We adopted the standard effective July 1, 2020. There were 63 patent infringement cases pending against Microsoft as of June 30, 2021, none of which are material individually or in aggregate. Data Services on-premises, at the edge, or microsoft revenue by segment 1, 2019 tests ways the world as... Segment and changes in unearned revenue for 2020 was $ 143.015B, a 13.65 increase... And inequity of contract terms revenue grew 21 % for all employees including differentiated leadership programs! 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