The acquisition will build on our industry-specific cloud offerings. The rise of hybrid work will be one of the most profound changes to the way people work in more than a century. Our platforms and tools help drive small business productivity, large business competitiveness, and public-sector efficiency. These manufacturers, many of which are also current or potential partners and customers, include Apple and our Windows OEMs. The . Microsoft Power Platform empowers employees to build custom applications, automate workflow, and analyze data no matter their technical expertise. Our corporate learning portal has over 100,000 average monthly active users. Chart. We expect capital expenditures to increase in coming years to support growth in our cloud offerings. Refer to Note 1 Accounting Policies of the Notes to Financial Statements for further discussion. PSP Partners, Emma N. Walmsley 2,4 Product and Service Development, and Intellectual Property. Build the Intelligent Cloud and Intelligent Edge Platform. We test goodwill for impairment annually on May 1 at the reporting unit level, primarily using a discounted cash flow methodology with a peer-based, risk-adjusted weighted average cost of capital. Revenue Recognition Refer to Note 1 to the financial statements. Given our focus on understanding core company beliefs and compliance topics, all employees complete required learning programs like Standards of Business Conduct, Privacy, Unconscious Bias, and preventing harassment courses. We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise. These controls include model validation, review of key model inputs, analysis of period-over-period fluctuations, and independent recalculation of prices where appropriate. We aspire to create a culture where employees are encouraged to be curious, to experiment, and to share things they learn. Fair value is calculated based on publicly available market information or other estimates determined by management. We evaluated the appropriateness and consistency of managements methods and assumptions used in the identification, recognition, measurement, and disclosure of uncertain tax positions, which included testing the effectiveness of the related internal controls. Constraints in the supply chain of device components. 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. ZeniMax is reported as part of our More Personal Computing segment. We offer organizations the ability to ensure their data is being used only for their benefit. Commercial cloud revenue was up 33% over last year. . We protect our intellectual property investments in a variety of ways. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. 16,375. Server products and cloud services revenue increased 27% driven by Azure growth of 50%. 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. The standard will be effective for us beginning July 1, 2021. 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. We plan to continue to make significant investments in a broad range of research and development efforts. In January 2021, we announced that in fiscal year 2020 we reduced Microsofts carbon emissions by 586,683 metric tons. 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. Founder and Chairman, Changes to our estimated variable consideration were not material for the periods presented. We have lease agreements with lease and non-lease components, which are generally accounted for separately. 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. We also help our suppliers and customers around the world use Microsoft technology to reduce their own carbon footprint. We also continue to lead in the fast-growing cloud gaming market. We strive to make computing more personal by putting people at the core of the experience, enabling them to interact with technology in more intuitive, engaging, and dynamic ways. 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. (All figures in USD millions, except percentages) The company generates revenue by licensing and supporting an array of software products; offering a diverse portfolio of cloud-based solutions and other services to people and business organizations; designing, manufacturing, and selling devices; and . If recognized, the resulting tax benefit would affect our effective tax rates for fiscal years 2021, 2020, and 2019 by $12.5 billion, $12.1 billion, and $12.0 billion, respectively. Through this commitment we can allow everyone the chance to be their authentic selves and do their best work every day. 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. Our growth mindset culture begins with valuing learning over knowing seeking out new ideas, driving innovation, embracing challenges, learning from failure, and improving over time. 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. The investments we are making in infrastructure and devices will continue to increase our operating costs and may decrease our operating margins. $ 35,058. 10,610. us-gaap:OperatingIncomeLoss. LinkedIn revenue increased 27%. For certain equipment leases, such as vehicles, we account for the lease and non-lease components as a single lease component. Dynamics business solutions, including Dynamics 365, comprising a set of intelligent, cloud-based applications across ERP, CRM, Customer Insights, Power Apps, and Power Automate; and on-premises ERP and CRM applications. Windows. We also have an ESPP for all eligible employees. We strive to create local opportunity, growth, and impact in every country around the world. 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. 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. Although it may be difficult to imagine in this time of immeasurable hardship and deep uncertainty, I see boundless possibility ahead. The 2021 Annual Shareholders Meeting will be held as a virtual-only meeting. We have recast certain prior period amounts to conform to the way we internally manage and monitor our business. The Company designs and maintains accounting and internal control systems to provide reasonable assurance at reasonable cost that assets are safeguarded against loss from unauthorized use or disposition, and that the financial records are reliable for preparing consolidated financial statements and maintaining accountability for assets. 35.40%. 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. 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 . The federal and state net operating loss carryforwards will expire in various years from fiscal 2022 through 2041, if not utilized. 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. Our responsibility is to express an opinion on the Companys internal control over financial reporting based on our audit. 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. These contracts are not designated as hedging instruments and are included in Other contracts in the tables below. Any shareholder can join the Annual Meeting, while shareholders of record as of September 30, 2021, will be able to vote and submit questions during the meeting. General and administrative expenses were relatively unchanged, driven by prior year charges associated with the closing of our Microsoft Store physical locations, offset in part by an increase in certain employee-related expenses and business taxes. This study bestows revenue data by type, and during the historical period (2017-2023) and forecast period (2023-2028). Revenue from sales of Windows Pro licenses sold through the OEM channel, which primarily addresses demand in the commercial market, Revenue from sales of Windows non-Pro licenses sold through the OEM channel, which primarily addresses demand in the consumer market, Windows Commercial products and cloud Significant judgment is exercised by the Company in determining revenue recognition for these customer agreements, and includes the following: Given these factors and due to the volume of transactions, the related audit effort in evaluating managements judgments in determining revenue recognition for these customer agreements was extensive and required a high degree of auditor judgment. Our growth depends on securely delivering continuous innovation and advancing our leading productivity and collaboration tools and services, including Office, Dynamics, and LinkedIn. 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. We repurchased the following shares of common stock under the share repurchase programs: Shares repurchased during fiscal year 2021 and the fourth quarter of fiscal year 2020 were under the share repurchase program approved on September 18, 2019. We compete for talented individuals globally by offering an exceptional working environment, broad customer reach, scale in resources, the ability to grow ones career across many different products and businesses, and competitive compensation and benefits. You need a Statista Account for unlimited access. Sales and marketing expenses include payroll, employee benefits, stock-based compensation expense, and other headcount-related expenses associated with sales and marketing personnel, and the costs of advertising, promotions, trade shows, seminars, and other programs. Our derivative programs include strategies that both qualify and do not qualify for hedge accounting treatment. 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. We continued to pay hourly service providers such as cleaning and reception staff who may have otherwise been furloughed. Cactus' Rental revenues were $27.3 million, up from $19.2 million in the year-ago quarter. STATEMENT OF MANAGEMENTS RESPONSIBILITY FOR FINANCIAL STATEMENTS. Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. AI is technologys most important priority, and healthcare is its most urgent application. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. At Microsoft, we believe that the economic growth we help drive must reach every person, community, and country. revenue growth, Revenue from Dynamics products and cloud services, including Dynamics 365, comprising a set of intelligent, cloud-based applications across ERP, CRM, Customer Insights, Power Apps, and Power Automate; and on-premises ERP and CRM applications, Revenue from LinkedIn, including Talent Solutions, Marketing Solutions, Premium Subscriptions, Sales Solutions, and Learning Solutions, Server products and cloud services revenue growth, Revenue from Server products and cloud services, including Azure; SQL Server, Windows Server, Visual Studio, System Center, and related Client Access Licenses (CALs); and GitHub. We offer integrated, end-to-end capabilities to protect people and organizations. General and administrative expenses include payroll, employee benefits, stock-based compensation expense, severance expense, and other headcount-related expenses associated with finance, legal, facilities, certain human resources and other administrative personnel, certain taxes, and legal and other administrative fees. 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. 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. 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. General Partner, Greylock Partners, Penny S. Pritzker 4 Enterprise Services, including Premier Support Services and Microsoft Consulting Services. 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. Our employees donated an additional $214 million (including the company match) to the organizations and causes they care about. LVMH Revenue By Segment. Microsoft Research is one of the worlds largest corporate research organizations and works in close collaboration with top universities around the world to advance the state-of-the-art in computer science and a broad range of other disciplines, providing us a unique perspective on future trends and contributing to our innovation. In response, we will invest $20 billion over the next five years to advance our security solutions. This includes all non-exempt and exempt employees and equivalents across the globe including business support professionals and datacenter and retail employees. Cloud services, which allow customers to use hosted software over the contract period without taking possession of the software, are provided on either a subscription or consumption basis. Actual results and outcomes may differ from managements estimates and assumptions due to risks and uncertainties, including uncertainty in the current economic environment due to COVID-19. In 2013, the defendants in the consolidated cases moved to exclude the plaintiffs expert evidence of general causation on the basis of flawed scientific methodologies. We support the fundamental rights of all people. Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. 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. $ 42,959. The tax effect of such temporary differences is reported as deferred income taxes. 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. It has helped us become more empathetic toward our colleagues and enabled us to work together as a teamas One Microsoft. We built on this pledge by adding commitments to be water positive by 2030, zero waste by 2030, and to protect ecosystems by developing a Planetary Computer. Azure Arc simplifies governance and management by delivering a consistent multi-cloud and on-premises management platform. Our products for software developers compete against offerings from Adobe, IBM, Oracle, and other companies, and also against open-source projects, including Eclipse (sponsored by CA Technologies, IBM, Oracle, and SAP), PHP, and Ruby on Rails. 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