Although each type of reselling partner may reach organizations of all sizes, LSPs are primarily engaged with large organizations, distributors resell primarily to VARs, and VARs typically reach small and medium organizations. We record a receivable related to revenue recognized for multi-year on-premises licenses as we have an unconditional right to invoice and receive payment in the future related to those licenses. Metrics related to our Productivity and Business Processes and Intelligent Cloud segments assess the health of our core businesses within these segments. Debt in the table above is comprised of senior unsecured obligations and ranks equally with our other outstanding obligations. $ 52,959. We will include as many of your questions as possible during the Q&A session of the meeting and will provide answers to questions on the Microsoft Investor Relations website under the Annual Meeting page. Our commercial business primarily consists of Server products and cloud services, Office Commercial, Windows Commercial, the commercial portion of LinkedIn, Enterprise Services, and Dynamics. Our products include operating systems, cross-device productivity applications, server applications, business solution applications, desktop and server management tools, software development tools, and video games. Nine of these cases were filed in 2002 and are consolidated for certain pre-trial proceedings; the remaining cases are stayed. 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. While our own actions are important, our most critical contribution will come from sharing our learnings and helping other organizations achieve their own goals for a better future too. In its 2022 financial year, Microsoft generated 63.4 billion U.S. dollars from its productivity and business processes segment and a further 75.3 billion . Revenue from search advertising is recognized when the advertisement appears in the search results or when the action necessary to earn the revenue has been completed. Our cloud and AI services and datacenters help businesses cut energy consumption, reduce physical footprints, and design sustainable products. The rise of hybrid work will be one of the most profound changes to the way people work in more than a century. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. The purchase price allocation as of the date of acquisition was based on a preliminary valuation and is subject to revision as more detailed analyses are completed and additional information about the fair value of assets acquired and liabilities assumed becomes available. That compared with a Wall Street . 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. The Companys management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Report of Management on Internal Control over Financial Reporting. Becoming more diverse and inclusive in everything we do. Our employees donated an additional $214 million (including the company match) to the organizations and causes they care about. Stock awards generally vest over a service period of four years or five years. Microsoft aims to recruit, develop, and retain diverse, world-changing talent. And to preserve and protect journalism, were helping strengthen local news ecosystems, restore trust in news, and provide cybersecurity and legal security for journalists. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. But the most notable thing is what will happen to the other 90 percent. 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. 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. More personal Computing. At Microsoft we have an inherently inclusive mission: to empower every person and every organization on the planet to achieve more. 6. We believe that our audit provides a reasonable basis for our opinion. Refer to Note 16 Stockholders Equity of the Notes to Financial Statements for further discussion. That would be the fastest pace for either metric in at least six years. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities in our consolidated balance sheets. Archives of these events are also available. The guidance also simplifies aspects of accounting for franchise taxes and enacted changes in tax laws or rates, and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. We are investing significant resources in: Our future growth depends on our ability to transcend current product category definitions, business models, and sales motions. Among Microsoft Corporation, the S&P 500 Index and the NASDAQ Computer Index. Business Solutions including all features. In evaluating estimated losses on these obligations, we consider factors such as the degree of probability of an unfavorable outcome and our ability to make a reasonable estimate of the amount of loss. Although we were not a party to the appeals, our software sales in India were determined to be not subject to withholding taxes. Zacks Equity Research. From Visual Studio to GitHub, we deliver the best tools for moving quickly from idea to code and from code to the cloud. Application of the goodwill impairment test requires judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. LinkedIn, including Talent Solutions, Marketing Solutions, Premium Subscriptions, Sales Solutions, and Learning Solutions. We are accelerating progress toward a more sustainable future by reducing our environmental footprint, advancing research, helping our customers build sustainable solutions, and advocating for policies that benefit the environment. Dynamics 365 for Talent with LinkedIn Recruiter and Learning gives human resource professionals a complete solution to compete for talent. Our success is highly dependent on our ability to attract and retain qualified employees. For the majority of our products, we have the ability to use other manufacturers if a current vendor becomes unavailable or unable to meet our requirements. At times, we make select intellectual property broadly available at no or low cost to achieve a strategic objective, such as promoting industry standards, advancing interoperability, supporting societal and/or environmental efforts, or attracting and enabling our external development community. Revenue from Office 365 is recognized ratably over the period in which the cloud services are provided. Advertising costs are expensed as incurred. We see more emerging use cases and needs for compute and security at the edge and are accelerating our innovation across the spectrum of intelligent edge devices, from IoT sensors to gateway devices and edge hardware to build, manage, and secure edge workloads. In addition, certain costs incurred at a corporate level that are identifiable and that benefit our segments are allocated to them. During the past year, we introduced industry clouds for financial services, healthcare, manufacturing, nonprofits, and retail that make it easier for organizations to take advantage of the full power of our tech stack and to utilize new, industry-specific customizations that improve time to value, increase agility, and lower costs. Additional information on our operating segments and geographic and product information is contained in Note 19 Segment Information and Geographic Data of the Notes to Financial Statements. 35.40%. 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. Obsessing over what matters to our customers. 6 . The decrease in our effective tax rate for fiscal year 2021 compared to fiscal year 2020 was primarily due to tax benefits from the India Supreme Court decision on withholding taxes, an agreement between the U.S. and India tax authorities related to transfer pricing, final TCJA regulations, and an increase in tax benefits relating to stock-based compensation. Many organizations that license our products and services transact directly with us through Enterprise Agreements and Enterprise Services contracts, with sales support from system integrators, independent software vendors, web agencies, and partners that advise organizations on licensing our products and services (Enterprise Agreement Software Advisors or ESA). The credit risk and average maturity of our fixed-income portfolio are managed to achieve economic returns that correlate to certain fixed-income indices. Our mission to empower every person and every organization on the planet to achieve more has never been more urgent or more needed. Rent-A-Center envisions adjusted earnings in the range of $2.50 to $3.00 per share . While were proud of our progress, we know we have much more work to do to help our communities, increase representation, and strengthen our culture of inclusion to influence broader, systemic change. In addition, we consider specific adverse conditions related to the financial health of, and business outlook for, the investee. From GitHub to Visual Studio, we provide a developer tool chain for everyone, no matter the technical experience, across all platforms, whether Azure, Windows, or any other cloud or client platform. 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.. 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. Chief Financial Officer, Gap, Inc. John W. Stanton 1,4 We believe our continuing research and product development are not materially dependent on any single license or other agreement with a third party relating to the development of our products. $ 42,959. In fiscal years 2019, our foreign regional operating centers in Ireland, Singapore, and Puerto Rico, which are taxed at rates lower than the U.S. rate, generated 82% of our foreign income before tax, respectively. Management does not believe any remaining unrealized losses represent impairments based on our evaluation of available evidence. We must also protect the institutions and processes of democracy. We have determined that certain sales incentive programs meet the requirements to be capitalized. Billionaires like Microsoft Corp. co-founder Bill Gates likely saw an opportunity through . Enterprise Services, including Premier Support Services and Microsoft Consulting Services. The Company remains under IRS audit, or subject to IRS audit, for tax years subsequent to 2003. In cases where we allocate revenue to software updates, primarily because the updates are provided at no additional charge, revenue is recognized as the updates are provided, which is generally ratably over the estimated life of the related device or license. Skype for Business and Skype also compete with a variety of instant messaging, voice, and video communication providers, ranging from start-ups to established enterprises. Our consolidated financial statements and accompanying notes are prepared in accordance with GAAP. Revenue with cloud products like Azure, Office 365 Commercial and the commercial portion of LinkedIn amounted to $27.1 billion, an increase of $5 billion or 22 percent year over year. Our vision is to create economic opportunity for every member of the global workforce through the ongoing development of the worlds first Economic Graph, a digital representation of the global economy. It is possible that the information we post on social media could be deemed to be material to investors. 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. Changes in these factors could materially impact our consolidated financial statements. Internal development allows us to maintain competitive advantages that come from product differentiation and closer technical control over our products and services. The Companys long-term income taxes liability includes uncertain tax positions related to transfer pricing issues that remain unresolved with the Internal Revenue Service (IRS). The leading indicator of digital transformation success can be measured by an organizations ability to build predictive and analytical power. All share repurchases were made using cash resources. The plaintiffs allege that their handsets either operated outside the FCC Guidelines or were manufactured before the FCC Guidelines went into effect. 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. It extends to our investments in security, and our belief that the public and private sectorsincluding tech companiesmust be transparent so we can work together on a coordinated global response. Meanwhile, the company is plowing billions of dollars into its Reality Labs (metaverse) segment despite it generating a mere pittance in terms of revenue. Antitrust and unfair competition class action lawsuits were filed against us in British Columbia, Ontario, and Quebec, Canada. Organizations of all sizes have digitized business-critical functions, redefining what they can expect from their business applications. We work actively in the U.S. and internationally to ensure the enforcement of copyright, trademark, trade secret, and other protections that apply to our software and hardware products, services, business plans, and branding. Economic Conditions, Challenges, and Risks. The . 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. Build the Intelligent Cloud and Intelligent Edge Platform. We evaluated the reasonableness of managements estimates by considering how tax law, including statutes, regulations and case law, impacted managements judgments. Supplied by Refinitiv. We are expanding our opportunity to reach every one of them. We monitor our foreign currency exposures daily to maximize the economic effectiveness of our foreign currency positions, including hedges. Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. In, Microsoft. As organizations focus on creating their own technology solutions, they will need standardized tools to modernize existing apps and build new ones. The goodwill was primarily attributed to increased synergies that are expected to be achieved from the integration of ZeniMax. Fiscal year ending June 30. Microsoft revenue for the twelve months ending December 31, 2022 was $204.094B, a 10.38% increase year-over-year. Xbox hardware revenue increased 92% driven by higher price of consoles sold due to the Xbox Series X|S launches. 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. We record an allowance to cover expected losses based on troubled accounts, historical experience, and other currently available evidence. Revenue from consulting services is recognized as services are provided. Any change in the goodwill amounts resulting from foreign currency translations and purchase accounting adjustments are presented as Other in the table above. Nearly all computer manufacturers offer server hardware for the Linux operating system and many contribute to Linux operating system development. We develop most of our products and services internally through the following engineering groups. 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. Our ambition for Windows 10 monetization opportunities includes gaming, services, subscriptions, and search advertising. No additional shares will be requested at this meeting. dollars)." Principal currency exposures include the Euro, Japanese yen, British pound, Canadian dollar, and Australian dollar. We contribute fifty cents for each dollar a participant contributes into the plans, with a maximum employer contribution of 50% of the IRS contribution limit for the calendar year. Slack provides teamwork and collaboration software. Over the past year, we introduced hundreds of new features, from new presenter modes to new inclusive meeting experiences, that make it easy for everyone to be full participants in meetings, whether theyre joining from home, the office, a conference room, or a factory floor. Opportunities include: Our employees embrace the growth mindset and take advantage of the formal learning opportunities as well as thousands of informal and on-the-job learning opportunities. Current year net income and diluted EPS were positively impacted by the tax benefit related to the India Supreme Court decision on withholding taxes, which resulted in an increase to net income and diluted EPS of $620 million and $0.08, respectively. Executive Vice President, Business Generally, we also create product documentation internally. Their net earnings came in at $2,407 Million, a decrease of 5.6% YoY. Changes in inventory levels in the OEM channel. We are committed to designing and marketing first-party devices to help drive innovation, create new device categories, and stimulate demand in the Windows ecosystem. GitHub is reported as part of our Intelligent Cloud segment. Our consumer businesses also benefited from the remote environment, with continued demand for PCs and productivity tools, as well as strong engagement across our Gaming platform. 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. Prior to the acquisition of NDS, financial results associated with joint strategic initiatives with Nokia were reflected in the devices and consumer licensing segment. Over 42 million people across every continent have accessed free training through our skills initiative. Changes in fair value, excluding credit losses and impairments, are recorded in other comprehensive income. Azure Synapse brings together data integration, data warehousing, and big data analytics so organizations can query data on their own terms at any scale. 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 . We determine if an arrangement is a lease at inception. 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. Profit from the additional features of your individual account. Following are details of the purchase price allocated to the intangible assets acquired: On October 25, 2018, we acquired GitHub, Inc. (GitHub), a software development platform, in a $7.5 billion stock transaction (inclusive of total cash payments of $1.3 billion in respect of vested GitHub equity awards and an indemnity escrow). 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