Cost includes materials, labor, and manufacturing overhead related to the purchase and production of inventories. Following are the details of the purchase price allocated to the intangible assets acquired: Transactions recognized separately from the purchase price allocation were approximately $600 million, primarily related to equity awards recognized as expense over the related service period. We have lease agreements with lease and non-lease components, which are generally accounted for separately. There were 63 patent infringement cases pending against Microsoft as of June 30, 2021, none of which are material individually or in aggregate. To ensure our AI technologies are used responsibly and to avoid unintended consequences, we take a principled approach built on fairness, reliability and safety, privacy and security, inclusiveness, transparency, and accountability. We strive to include others by holding ourselves accountable for diversity, driving global systemic change in our workplace and workforce, and creating an inclusive work environment. And we continue to make our technology affordable and accessible to nonprofit organizations around the world. Advertising costs are expensed as incurred. Sales and marketing expenses increased $519 million or 3% driven by investments in commercial sales, offset in part by a reduction in bad debt expense. Additionally, for certain equipment leases, we apply a portfolio approach to effectively account for the operating lease ROU assets and liabilities. Windows faces competition from various software products and from alternative platforms and devices, mainly from Apple and Google. The better we represent that diversity inside Microsoft, the more effectively we can innovate for those we seek to empower. The bottom . Excluding this impact, gross margin percentage decreased slightly driven by a sales mix shift to cloud offerings, on a low prior year comparable impacted by increased usage. At times, we may hold options, futures, and swap contracts. January 26, 2022, 12:36 PM EST. 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. Changes in these factors could materially impact our consolidated financial statements. SA conveys rights to new software and upgrades released over the contract period and provides support, tools, and training to help customers deploy and use products more efficiently. MSN advertising includes both native and display ads. If our review indicates a reduction in utility below carrying value, we reduce our inventory to a new cost basis through a charge to cost of revenue. Meanwhile, the company is plowing billions of dollars into its Reality Labs (metaverse) segment despite it generating a mere pittance in terms of revenue. 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. These controls include model validation, review of key model inputs, analysis of period-over-period fluctuations, and independent recalculation of prices where appropriate. 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. 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 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. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Xbox revenue is mainly affected by subscriptions and sales of first- and third-party content, as well as advertising. The Company engaged Deloitte & Touche LLP, an independent registered public accounting firm, to audit and render an opinion on the consolidated financial statements and internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Microsoft posted the third quarter of its 2021 financial results today, reporting revenue of $41.7 billion and a net income of $15.5 billion. We manage the average maturity of the fixed-income portfolio to achieve economic returns that correlate to certain global fixed-income indices. Extended disruptions at these suppliers could lead to a similar disruption in our ability to manufacture devices on time to meet consumer demand. 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. To achieve our vision, our research and development efforts focus on three interconnected ambitions: Reinvent Productivity and Business Processes. Judgment is required to determine the stand-alone selling price (SSP) for each distinct performance obligation. Additionally, we have seen growth in our Black- and African American-owned supplier base and in Black- and African American-owned technology partners in the Microsoft Partner Network, and we launched the Black Channel Partner Alliance community to support partners onboarding to the Microsoft Cloud and to unlock partner benefits for co-selling with Microsoft. They consist predominantly of highly liquid investment-grade fixed-income securities, diversified among industries and individual issuers. The federal and state net operating loss carryforwards will expire in various years from fiscal 2022 through 2041, if not utilized. Forward-looking statements may appear throughout this report, including the following sections: Business, and Managements Discussion and Analysis of Financial Condition and Results of Operations. Microsoft is committed to supporting our employees well-being and safety while they are at work and in their personal lives. We strive to create local opportunity, growth, and impact in every country around the world. Management is responsible for the preparation of the consolidated financial statements and related information that are presented in this report. Nearly 250 million people use Teams every month. In these cases, the hardware and software license are accounted for as a single performance obligation and revenue is recognized at the point in time when ownership is transferred to resellers or directly to end customers through retail stores and online marketplaces. With Xbox Game Pass, we are transforming how people discover, connect, and engage with games. The markets for software, devices, and cloud-based services are dynamic and highly competitive. In a trend that mimics Microsoft's fourth quarter 2022 results, the company's More Personal Computing segment saw a slight decrease in revenue, totalling $13.3 billion. 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. SA is included with certain volume licensing agreements and is an optional purchase with others. Gross margin increased $18.9 billion or 20% driven by growth across each of our segments and the change in estimated useful lives of our server and network equipment. 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. Individual consumers obtain these products primarily through retail outlets. Founder and Chairman, In June 2021, Microsoft announced the next generation of Windows Windows 11. Changes in value are recorded in other income (expense), net. Our contracts with customers often include promises to transfer multiple products and services to a customer. 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. Net realizable value is the estimated selling price less estimated costs of completion, disposal, and transportation. On September 20, 2016, our Board of Directors approved a share repurchase program authorizing up to $40.0 billion in share repurchases. Conclusions on recognizing and measuring uncertain tax positions involve significant estimates and management judgment and include complex considerations of the Internal Revenue Code, related regulations, tax case laws, and prior-year audit settlements. Chart. Save for three of these 16 quarters, that YOY growth has ranged between roughly 20% and 35% a quarter . 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. Our growth depends on securely delivering continuous innovation and advancing our leading productivity and collaboration tools and services, including Office, Dynamics, and LinkedIn. The specific hardware warranty terms and conditions vary depending upon the product sold and the country in which we do business, but generally include parts and labor over a period generally ranging from 90 days to three years. The small to medium business (SMB) segment is divided into three subsegments: Corporate scale subsegment is the largest existing SMB customers with the most opportunity for Microsoft. LVMH is a luxury group owned by the Arnault family, which generated over 79 billion in revenue ($83 billion) in revenue in 2022, with a luxury empire that spans many segments. Interest expense decreased due to a decrease in outstanding long-term debt due to debt maturities. We license software to organizations under volume licensing agreements to allow the customer to acquire multiple licenses of products and services instead of having to acquire separate licenses through retail channels. As of June 30, 2021 and 2020, other receivables due from suppliers were $965 million and $442 million, respectively, and are included in accounts receivable, net in our consolidated balance sheets. We also have an ESPP for all eligible employees. This segment primarily comprises: Azure is a comprehensive set of cloud services that offer developers, IT professionals, and enterprises freedom to build, deploy, and manage applications on any platform or device. 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. Identification and treatment of contract terms that may impact the timing and amount of revenue recognized (e.g., variable consideration, optional purchases, and free services). On September 18, 2019, our Board of Directors approved a share repurchase program authorizing up to $40.0 billion in share repurchases. In a separate 2009 decision, the Court of Appeals for the District of Columbia held that adverse health effect claims arising from the use of cellular handsets that operate within the U.S. Federal Communications Commission radio frequency emission guidelines (FCC Guidelines) are pre-empted by federal law. Depreciation expense declined in fiscal year 2021 due to the change in estimated useful lives of our server and network equipment. 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. The fifth perspective. Long-lived assets, excluding financial instruments and tax assets, classified by the location of the controlling statutory company and with countries over 10% of the total shown separately, were as follows: REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, To the Stockholders and the Board of Directors of Microsoft Corporation. Examples include invoicing at the beginning of a subscription term with revenue recognized ratably over the contract period, and multi-year on-premises licenses that are invoiced annually with revenue recognized upfront. As a Premium user you get access to the detailed source references and background information about this statistic. Intelligent Cloud revenue increased driven by Azure. 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. $ 17,897. Segment-wise results. Microsoft's revenue from 2012 to 2022 financial years, by segment (in billion U.S. dollars) [Graph]. Both numbers easily beat analyst estimates. Xbox content and services revenue increased $2.3 billion or 23% driven by growth in third-party titles, Xbox Game Pass subscriptions, and first-party titles. We enter into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. In fiscal year 2021, we closed our Microsoft Store physical locations and opened our Microsoft Experience Centers. We exclusively licensed GPT-3, allowing us to leverage its technical innovations to deliver advanced AI solutions for our customers, as well as create new solutions that harness the power of advanced natural language generation. The segment amounts included in MD&A are presented on a basis consistent with our internal management reporting. Segment revenue and operating income were as follows during the periods presented: No sales to an individual customer or country other than the United States accounted for more than 10% of revenue for fiscal years 2021, 2020, or 2019. Our gaming platform is designed to provide a variety of entertainment through a unique combination of content, community, and cloud. We also license standalone and software development lifecycle tools for software architects, developers, testers, and project managers. The mix of computing devices based on form factor and screen size. Its also why were making direct investments through our $1 billion Climate Innovation Fund to help organizations accelerate the development of solutions for carbon reduction and removal technology. Timing of revenue recognition may differ from the timing of invoicing to customers. Rent-A-Center envisions adjusted earnings in the range of $2.50 to $3.00 per share . We evaluated the reasonableness of managements estimates by considering how tax law, including statutes, regulations and case law, impacted managements judgments. Our fair value processes include controls that are designed to ensure appropriate fair values are recorded. Today, it is exciting to see how our platforms and tools are enabling people and organizations to achieve remarkable things that would have been unimaginable even a few years ago. GlaxoSmithKline, Hugh F. Johnston 1 Please do not hesitate to contact me. Shares of our common stock may be purchased by employees at three-month intervals at 90% of the fair market value on the last trading day of each three-month period. Azure SQL Database makes it possible for customers to take SQL Server from their on-premises datacenter to a fully managed instance in the cloud to utilize built-in AI. President and Vice Chair, Christopher C. Capossela For a discussion of the year ended June 30, 2020 compared to the year ended June 30, 2019, please refer to, Managements Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended June 30, 2020. Learn more about how Statista can support your business. We hire a mix of university and industry talent worldwide. 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. 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. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2021, based on the criteria established in Internal Control Integrated Framework (2013) issued by COSO. The trial of the British Columbia action commenced in May 2016. This means the places we go and the things we interact with will increasingly become digitized, creating new opportunities and new breakthroughs. Revenue Recognition Refer to Note 1 to the financial statements. Azure Arc simplifies governance and management by delivering a consistent multi-cloud and on-premises management platform. This growth mindset served us well during the past year of crisis, disruption, and transformation. Amid rapid change weve witnessed technology empower telehealth, remote manufacturing, and new ways of working from home and serving customers. This will give organizations greater flexibility and a more secure way to empower employees to be productive and connected, regardless of their location. Gross margin increased $2.8 billion or 10% driven by growth in Windows, Gaming, and Search advertising. Its revenue is likely to amount to $51.2 billion. Certain corporate-level activity is not allocated to our segments. 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. This global approach helps us remain competitive in local markets and enables us to continue to attract top talent from across the world. 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. Equity investments without readily determinable fair values are written down to fair value if a qualitative assessment indicates that the investment is impaired and the fair value of the investment is less than carrying value. ZeniMax is reported as part of our More Personal Computing segment. $100 invested on 6/30/16 in stock or index, including reinvestment of dividends. Refer to Risk Factors in our fiscal year 2021 Form 10-K for a discussion of these factors and other risks. The acquisition is expected to empower developers to achieve more at every stage of the development lifecycle, accelerate enterprise use of GitHub, and bring Microsofts developer tools and services to new audiences. On-premises licenses are considered distinct performance obligations when sold with SA. 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. Operating Partner, Metrics related to our More Personal Computing segment assess the performance of key lines of business within this segment. $75.25B. Unearned revenue comprises mainly unearned revenue related to volume licensing programs, which may include SA and cloud services. Revenue and expenses are translated at average rates of exchange prevailing during the year. No asset is more strategic than data. These manufacturers, many of which are also current or potential partners and customers, include Apple and our Windows OEMs. Talent Solutions provide insights for workforce planning and tools to hire, nurture, and develop talent. Changes in inventory levels in the OEM channel. We have served as the Companys auditor since 1983. 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. Microsoft Experience Centers are designed to facilitate deeper engagement with our partners and customers across industries. Among Microsoft Corporation, the S&P 500 Index and the NASDAQ Computer Index. Great content drives Game Pass growth, and our acquisition this year of ZeniMax Media adds some of the worlds most iconic franchises to the service. In addition to poll and pulse surveys, we gain insights through onboarding and exit surveys, internal Yammer channels, employee Q&A sessions, and AskHR Service support. 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. 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. This pricing methodology applies to our Level 2 investments, such as commercial paper, certificates of deposit, U.S. agency securities, foreign government bonds, mortgage- and asset-backed securities, corporate notes and bonds, and municipal securities. Operating expenses decreased $752 million or 6% driven by prior year charges associated with the closing of our Microsoft Store physical locations and reductions in retail store expenses and marketing, offset in part by investments in Gaming. The pattern of delivery (i.e., timing of when revenue is recognized) for each distinct performance obligation. Many of our shareholders are increasingly focused on the importance of the effective engagement and action on ESG topics. We are a leader among technology companies in pursuing patents and currently have a portfolio of over 65,000 U.S. and international patents issued and over 21,000 pending worldwide. In the past, option and forward contracts were used to hedge a portion of forecasted international revenue and were designated as cash flow hedging instruments. Research and development expenses include payroll, employee benefits, stock-based compensation expense, and other headcount-related expenses associated with product development. During the periods presented, we reported our financial performance based on the following segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. 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. If quoted prices in active markets for identical assets or liabilities are not available to determine fair value, then we use quoted prices for similar assets and liabilities or inputs other than the quoted prices that are observable either directly or indirectly. 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. 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. With Azure Mixed Reality Services, digital information can be represented within the context of the three-dimensional world we live in. These reviews include analysis of demand forecasts, product life cycle status, product development plans, current sales levels, pricing strategy, and component cost trends. LinkedIn connects the worlds professionals to make them more productive and successful and transforms the way companies hire, market, sell, and learn.
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