Office Consumer products and cloud services revenue increased 10% and Microsoft 365 Consumer subscribers increased to 51.9 million. The components of basic and diluted EPS were as follows: Anti-dilutive stock-based awards excluded from the calculations of diluted EPS were immaterial during the periods presented. Our strategy requires continued investment in datacenters and other hybrid and edge infrastructure to support our services. Gross margin percentage increased with the change in estimated useful lives of our server and network equipment. Recent Accounting Guidance Not Yet Adopted. 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. Our responsibility is to express an opinion on the Companys financial statements based on our audits. Get in touch with us now. 10,610. us-gaap:OperatingIncomeLoss. MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying Notes to Financial Statements. The fair value of stock awards vested was $13.4 billion, $10.1 billion, and $8.7 billion, for fiscal years 2021, 2020, and 2019, respectively. Our CSR Reports Hub provides detailed information on law enforcement access to data, our environmental data, our political activities, our workforce demographics, and our human rights work. A paid subscription is required for full access. Web-based offerings competing with individual applications have also positioned themselves as alternatives to our products and services. 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. 4 min read. Dynamics competes with cloud-based and on-premises business solution providers such as Oracle, Salesforce.com, and SAP. Revenue related to cloud services provided on a subscription basis is recognized ratably over the contract period. While these programs may differ in various parts of the world, generally they include those discussed below. We distribute our products and services through OEMs that pre-install our software on new devices and servers they sell. Being a global-scale cloud, Azure uniquely offers hybrid consistency, developer productivity, AI capabilities, and trusted security and compliance. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance with accounting principles generally accepted in the United States of America. We conducted our audits in accordance with the standards of the PCAOB. 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. 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. We estimate that we have no significant residual value related to our intangible assets. Its revenue is likely to amount to $51.2 billion. We also settled a portion of the IRS audit for tax years 2007 to 2009 in fiscal year 2016, and a portion of the IRS audit for tax years 2010 to 2013 in fiscal year 2018. Microsoft MSFT is set to report second-quarter fiscal 2022 results on Jan 25. Please do not hesitate to contact me. On September 18, 2019, our Board of Directors approved a share repurchase program authorizing up to $40.0 billion in share repurchases. Gains and losses from changes in fair values of derivatives that are not designated as hedging instruments are primarily recognized in other income (expense), net. Amid rapid change weve witnessed technology empower telehealth, remote manufacturing, and new ways of working from home and serving customers. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each reporting unit. In the next three years, well create more data than we did in the past 10. Certain income and expenses are not reported in tax returns and financial statements in the same year. $ 22,247. To the extent we fail to meet these requirements, we will be required to post collateral, similar to the standard convention related to over-the-counter derivatives. We perform a qualitative assessment on a periodic basis. Our derivative programs include strategies that both qualify and do not qualify for hedge accounting treatment. Our goal is to help every organization strengthen its security capabilities through a Zero Trust architecture built on our comprehensive solutions that span identity, security, compliance, and device management across all clouds and platforms. This study bestows revenue data by type, and during the historical period (2017-2023) and forecast period (2023-2028). ZeniMax is reported as part of our More Personal Computing segment. Microsoft Corporation's quarterly revenue almost tripled within the last 12 years, increasing from 14.45 billion U.S. dollars in the third . We continue to invest in new gaming studios and content to expand our IP roadmap and leverage new content creators. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements and the related notes (collectively referred to as the financial statements) as of and for the year ended June 30, 2021, of the Company and our report dated July 29, 2021, expressed an unqualified opinion on those financial statements. Total. This includes all non-exempt and exempt employees and equivalents across the globe including business support professionals and datacenter and retail employees. Sales Solutions help companies strengthen customer relationships, empower teams with digital selling tools, and acquire new opportunities. GlaxoSmithKline, Hugh F. Johnston 1 Founder and Chairman, Trilogy Gaming revenue increased $3.8 billion or 33% driven by growth in Xbox content and services and Xbox hardware. . 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 Synapse brings together data integration, data warehousing, and big data analytics so organizations can query data on their own terms at any scale. We believe our server products provide customers with advantages in performance, total costs of ownership, and productivity by delivering superior applications, development tools, compatibility with a broad base of hardware and software applications, security, and manageability. Xbox hardware revenue increased 92% driven by higher price of consoles sold due to the Xbox Series X|S launches. Changes in inventory levels in the OEM channel. As a result of the TCJA, we are required to pay a one-time transition tax on deferred foreign income not previously subject to U.S. income tax. With Dynamics 365, were building a new generation of business applications to meet this challenge. 31.70%. We have an ESPP for all eligible employees. Windows faces competition from various software products and from alternative platforms and devices, mainly from Apple and Google. Marketing Solutions help companies reach, engage, and convert their audiences at scale. We want our customers and partners to build their own digital capability and become independent with us, not dependent on us. These contracts are not designated as hedging instruments and are included in Other contracts in the tables below. And if we continue to pursue our mission, I am certain that we will collectively achieve so much more together. Dynamics provides cloud-based and on-premises business solutions for financial management, enterprise resource planning (ERP), customer relationship management (CRM), supply chain management, and other application development platforms for small and medium businesses, large organizations, and divisions of global enterprises. 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. We manage credit exposures relative to broad-based indices and to facilitate portfolio diversification. None of the goodwill is expected to be deductible for income tax purposes. The purchase price included $768 million of cash and cash equivalents acquired. The ability to convert data into AI drives our competitive advantage. 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. This is why we introduced Microsoft Viva, which brings the information, resources, and support employees need to stay connected to each other and their companys mission directly into the flow of work. 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. 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. Server products and cloud services, including Azure; SQL Server, Windows Server, Visual Studio, System Center, and related Client Access Licenses (CALs); and GitHub. 6 . Net income fell 12% to . Microsoft's Intelligent Cloud segment, which includes the Azure public cloud for application hosting, SQL Server, Windows Server and enterprise services generated $20.91 billion in revenue. These programs reinforce our culture and values such as collaboration and growth mindset. Nearly all computer manufacturers offer server hardware for the Linux operating system and many contribute to Linux operating system development. Search advertising revenue excluding traffic acquisition costs increased 13% driven by higher revenue per search and search volume. Acquisition Blizzard. 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. For these components, we have limited near-term flexibility to use other manufacturers if a current vendor becomes unavailable or is unable to meet our requirements. In fiscal year 2021, we delivered $168 billion in revenue, up 18 percent year-over-year. Enterprise Services, including Premier Support Services and Microsoft Consulting Services. 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. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. Our devices are primarily manufactured by third-party contract manufacturers. Breaking down Microsoft's earnings by operational segment. We are living in the new era of the intelligent cloud and intelligent edge, which is being sharpened by rapid advances in distributed computing, ambient intelligence, and multidevice experiences. 118. These metrics provide strategic product insights which allow us to assess the performance across our commercial and consumer businesses. Operating expenses increased $1.9 billion or 12% driven by investments in Azure. The lawsuits also allege an industry-wide conspiracy to manipulate the science and testing around emission guidelines. We have broadened our approach to how we think about gaming end-to-end, from the way games are created and distributed to how they are played, including cloud gaming so players can stream across PC, console, and mobile. Revenue increased $25.1 billion or 18% driven by growth across each of our segments. 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. In the United States, we expanded our work this year to include eight cities with particularly large broadband gaps, especially among Black and African American communities. Therefore, we recorded a net income tax benefit of $620 million in the third quarter of fiscal year 2021 to reflect the results of the India Supreme Court decision impacting fiscal year 1996 through fiscal year 2016. In fiscal year 2021, we closed our Microsoft Store physical locations and opened our Microsoft Experience Centers. Cactus' Rental revenues were $27.3 million, up from $19.2 million in the year-ago quarter. Timing of revenue recognition may differ from the timing of invoicing to customers. Over 42 million people across every continent have accessed free training through our skills initiative. We are accelerating our development of mixed reality solutions with new Azure services and devices. At Microsoft, were providing technology and resources to help our customers navigate a remote environment. Land is not depreciated. For derivative instruments designated as fair value hedges, gains and losses are recognized in other income (expense), net with offsetting gains and losses on the hedged items. Stock awards generally vest over a service period of four years or five years. While the Company has settled a portion of the IRS audits, resolution of the remaining matters could have a material impact on the Companys financial statements. Microsoft offers direct sales programs targeted to reach small, medium, and corporate customers, in addition to those offered through the reseller channel. Our Dynamics business solutions are also licensed to enterprises through a global network of channel partners providing vertical solutions and specialized services. Metrics related to our Productivity and Business Processes and Intelligent Cloud segments assess the health of our core businesses within these segments. Li Auto's pure EV lineup, which will come later, will also be priced in a range of 200,000 yuan to 500,000 yuan, Li added. As we pursue the opportunities ahead, we also recognize our increased responsibility in a world that will require much more from technology to address its most pressing challenges. World, generally they include those discussed below our responsibility is to express an opinion on Companys... 51.2 billion included in other contracts in the year-ago quarter on new and! Many contribute to Linux operating system development will collectively achieve so much more.! 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