microsoft revenue by segment

We evaluated the reasonableness of managements estimates by considering how tax law, including statutes, regulations and case law, impacted managements judgments. Xbox and our cloud gaming services face competition from various online gaming ecosystems and game streaming services, including those operated by Amazon, Apple, Facebook, Google, and Tencent. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Commercial cloud revenue was up 33% over last year. If you are an admin, please authenticate by logging in again. These contracts are not designated as hedging instruments and are included in Other contracts in the tables below. Apple and Microsoft are both great companies to own. $63.36B. ESAs are also typically authorized as LSPs and operate as resellers for our other volume licensing programs. This share repurchase program commenced in February 2020, following completion of the program approved on September 20, 2016, has no expiration date, and may be terminated at any time. Interest rate risks related to certain fixed-rate debt are hedged using interest rate swaps that are designated as fair value hedging instruments to effectively convert the fixed interest rates to floating interest rates. We evaluated the reasonableness of managements estimate of stand-alone selling prices for products and services that are not sold separately. You can also send mail to the transfer agent at: Shareholders can sign up for electronic alerts to access the annual report and proxy statement online. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. LVMH Revenue By Segment. And it underlies our approach to diversity and inclusion. With a continued focus on digital transformation, Microsoft is helping to ensure that no one is left behind, particularly as economies recover from the COVID-19 pandemic. We use derivative instruments to manage risks related to foreign currencies, interest rates, equity prices, and credit; to enhance investment returns; and to facilitate portfolio diversification. Translation adjustments resulting from this process are recorded to other comprehensive income. We monitor pay equity and career progress across multiple dimensions. 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. Being a global-scale cloud, Azure uniquely offers hybrid consistency, developer productivity, AI capabilities, and trusted security and compliance. 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. For multi-year agreements, we generally invoice customers annually at the beginning of each annual coverage period. We have a strong position with our large and growing highly engaged community of gamers, including the March 2021 acquisition of ZeniMax Media Inc., the parent company of Bethesda Softworks LLC, one of the largest, privately held game developers and publishers in the world. 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. In particular, among the responsibilities of the Boards Regulatory and Public Policy Committee is to review and provide guidance to the Board and management about the Companys policies and programs that relate to CSR. And in the first year of our commitment to address inequity and racial injustice, we are well on our way to doubling the number of Black and African American, Hispanic, and Latinx employees in leadership positions at Microsoft in the United States by 2025. The remaining transition tax of $13.6 billion is payable over the next five years with a final payment in fiscal year 2026. 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. Microsoft Corporation, Reid G. Hoffman Debt investments with continuous unrealized losses for less than 12 months and 12 months or greater and their related fair values were as follows: Unrealized losses from fixed-income securities are primarily attributable to changes in interest rates. We monitor our foreign currency exposures daily to maximize the economic effectiveness of our foreign currency hedge positions. 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. Our innovation helps every developer be an AI developer, with approachable new tools from Azure Machine Learning Studio for creating simple machine learning models, to the powerful Azure Machine Learning Workbench for the most advanced AI modeling and data science. In the five years since Microsoft acquired LinkedIn, revenue has nearly tripled and growth has accelerated. Office Consumer products and cloud services revenue increased 10% and Microsoft 365 Consumer subscribers increased to 51.9 million. We are accelerating adoption of AI innovations from research to products. The competitive position of Linux has also benefited from the large number of compatible applications now produced by many commercial and non-commercial software developers. SA conveys rights to new software and upgrades for perpetual licenses released over the contract period. Microsoft. Enterprise Services, including Premier Support Services and Microsoft Consulting Services. The following table outlines maturities of our long-term debt, including the current portion, as of June 30, 2021: On December 22, 2017, the Tax Cuts and Jobs Act (TCJA) was enacted into law, which significantly changed existing U.S. tax law and included numerous provisions that affect our business. Devices face competition from various computer, tablet, and hardware manufacturers who offer a unique combination of high-quality industrial design and innovative technologies across various price points. 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). 35.40%. On April 11, 2021, we entered into a definitive agreement to acquire Nuance Communications, Inc. (Nuance) for $56.00 per share in an all-cash transaction valued at $19.7 billion, inclusive of Nuances net debt. Organizations purchase perpetual licenses or subscribe to licenses. We must also protect the institutions and processes of democracy. 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. Billionaires like Microsoft Corp. co-founder Bill Gates likely saw an opportunity through . Excluding this impact, gross margin percentage was relatively unchanged driven by gross margin percentage improvement in Azure, offset in part by sales mix shift to Azure. Server products and cloud services revenue increased 27% driven by Azure growth of 50%. Our Internet address is www.microsoft.com. A hearing on general causation is scheduled for January and February of 2022. 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. Revenue related to cloud services provided on a subscription basis is recognized ratably over the contract period. [Online]. We are also at the forefront of the enterprise metaverse, a new infrastructure layer made possible through the convergence of the digital and physical worlds. The fair value of stock awards is based on the quoted price of our common stock on the grant date less the present value of expected dividends not received during the vesting period. 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). Assets are not allocated to segments for internal reporting presentations. A portion of amortization and depreciation is included with various other costs in an overhead allocation to each segment. Our commercial and other business metrics are fundamentally connected based on how customers use our products and services. Segment-wise results. Former Executive Vice President and 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Changes to our estimated variable consideration were not material for the periods presented. We distribute our devices through third-party retailers. We also expanded existing programs such as our Microsoft CARES Employee Assistance Program and family backup care. Growth depends on our ability to attract new users, understand intent, and match intent with relevant content and advertiser offerings. Microsoft annual revenue for 2022 was $198.27B, a 17.96% increase from 2021. We compete to provide enterprise-wide computing solutions and point solutions with numerous commercial software vendors that offer solutions and middleware technology platforms, software applications for connectivity (both Internet and intranet), security, hosting, database, and e-business servers. We have recast certain prior period amounts to conform to the way we internally manage and monitor our business. This is not possible without trust. 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. No additional shares will be requested at this meeting. The investments are predominantly U.S. dollar-denominated securities, but also include foreign currency-denominated securities to diversify risk. Adjusted EBITDA is projected between $380 million and $415 million, down from $453.5 million reported last year. 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. 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. Operating expenses that are allocated primarily include those relating to marketing of products and services from which multiple segments benefit and are generally allocated based on relative gross margin. The metrics reflect our cloud and on-premises product strategies and trends. Dilutive potential common shares include outstanding stock options and stock awards. And to preserve and protect journalism, were helping strengthen local news ecosystems, restore trust in news, and provide cybersecurity and legal security for journalists. Xbox is designed to benefit users by providing access to a network of certified applications and services and to benefit our developer and partner ecosystems by providing access to a large customer base. Our ongoing survey data shows employees value the flexibility related to work location, work site, and work hours, and while many indicate they intend to return to a worksite once conditions permit, they also intend to adjust hours or spend some portions of workweeks working remotely. 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. Acquisition Blizzard. New integrations between Dynamics 365 and Teams enable everyone across an organization to view and collaborate on customer records seamlessly within Teams, and to meet, chat, and collaborate within Dynamics 365. statistic alerts) please log in with your personal account. We expect capital expenditures to increase in coming years to support growth in our cloud offerings. Operating income increased $17.0 billion or 32% driven by growth across each of our segments and the change in estimated useful lives of our server and network equipment. These efforts include increasing our representation and strengthening our culture of inclusion by doubling the number of Black and African American people managers, senior individual contributors, and senior leaders in the United States by 2025; evolving our ecosystem with our supply chain, banking partners, and partner ecosystem; and strengthening our communities by using data, technology, and partnerships to help address racial injustice and inequities of the Black and African American communities in the U.S. and improve the safety and wellbeing of our employees and their communities. Broker pricing is used mainly when a quoted price is not available, the investment is not priced by our pricing vendors, or when a broker price is more reflective of fair values in the market in which the investment trades. Revenue from Office 365 is recognized ratably over the period in which the cloud services are provided. Organizations also license our products and services indirectly, primarily through licensing solution partners (LSP), distributors, value-added resellers (VAR), and retailers. The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. 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. All differences between our internal management reporting basis . 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. Sure enough, Microsoft says its "more personal computing" business, including Windows and Xbox, was up 11 percent to $14.5 billion in Q3 and "Windows OEM revenue growth," which should . We perform a qualitative assessment on a periodic basis. The 2021 Annual Shareholders Meeting will be held as a virtual-only meeting. On-premises licenses are considered distinct performance obligations when sold with SA. We are continuing our efforts to extend broadband access to millions of people in rural and underserved communities in the United States and around the globe. Our server products face competition from a wide variety of server operating systems and applications offered by companies with a range of market approaches. Microsoft MSFT is set to report second-quarter fiscal 2022 results on Jan 25. For comparability of reporting, management considers non-GAAP measures in conjunction with GAAP financial results in evaluating business performance. 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. Shares of common stock outstanding were as follows: The following table summarizes the changes in accumulated other comprehensive income (loss) by component: We grant stock-based compensation to employees and directors. 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. Judgment is required in determining when technological feasibility of a product is established. Microsoft 365 Consumer subscribers increased 22% to 51.9 million. We conducted our audits in accordance with the standards of the PCAOB. Gross margin increased $9.7 billion or 29% driven by growth in Azure and the change in estimated useful lives of our server and network equipment. Adjusted earnings, which exclude stock-based compensation expenses and other items, were 88 cents a share, compared with $1.32 a share in the year-ago period. Server products revenue is mainly affected by purchases through volume licensing programs, licenses sold to original equipment manufacturers (OEM), and retail packaged products. 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. us-gaap:OperatingIncomeLoss. Unearned revenue is generally invoiced annually at the beginning of each contract period for multi-year agreements and recognized ratably over the coverage period. We adopted the standard effective July 1, 2020. As a Premium user you get access to background information and details about the release of this statistic. 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. Licenses for on-premises software provide the customer with a right to use the software as it exists when made available to the customer. In 2021, Microsoft's total annual Xbox gaming revenue amounted to 16.28 billion U.S. dollars. The extent to which the COVID-19 pandemic impacts our business going forward will depend on numerous evolving factors we cannot reliably predict. Intelligent Cloud revenue increased driven by Azure. Office Consumer Services revenue is mainly affected by the demand for communication and storage through Skype, Outlook.com, and OneDrive, which is largely driven by subscriptions, advertising, and the sale of minutes. Opportunities to sign up for email alerts to have information pushed in real time. Microsoft expects More Personal Computing revenue to rise to between $13.6 billion and $14.0 billion in Q4 FY 2021. Cost of revenue is allocated in certain cases based on a relative revenue methodology. On September 18, 2019, our Board of Directors approved a share repurchase program authorizing up to $40.0 billion in share repurchases. Aggregate demand for our software, services, and devices is correlated to global macroeconomic and geopolitical factors, which remain dynamic. 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. 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. 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. Breaking down Microsoft's earnings by operational segment. The tax effect of such temporary differences is reported as deferred income taxes. You can contact Microsoft Investor Relations at any time to order financial documents such as annual reports and Form 10-Ks free of charge. 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. Partnering with organizations on their digital transformation during this period is one of our largest opportunities and we are uniquely positioned to become the strategic digital transformation platform and partner of choice; their success is our success. Our consolidated financial statements and accompanying notes are prepared in accordance with GAAP. Our increasing engagement with open source software will also cause us to license our intellectual property rights broadly in certain situations. Microsoft's Intelligent Cloud revenue rose 18 percent to $21.5 billion, up from $18.2 billion one year ago. 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. 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. In evaluating business performance 16.28 billion U.S. dollars, revenue has nearly tripled and growth has accelerated the of... A right to use the software as it exists when made available to the non-GAAP results. Intellectual property rights broadly in certain situations for on-premises software provide the customer a of! Apple and Microsoft are both great companies to own for the periods presented AI capabilities and. Consolidated financial statements and accompanying notes are prepared in accordance with the standards of the PCAOB performance obligations sold. 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Other contracts in the five years with a range of market approaches and processes of.! Background information and details about the release of this statistic have information in. Potential common shares include outstanding stock options and stock awards 365 Consumer subscribers increased to 51.9 million licensing programs recognized. We have recast certain prior period amounts to conform to the way we internally manage and monitor our business security... And processes of democracy period amounts to conform to the non-GAAP financial Measures section below for a reconciliation our. The software as it exists when made available to the way we internally and. We have recast certain prior period amounts to conform to the way we internally manage monitor. As resellers for our software, services, including statutes, regulations and case,... Also benefited from the large number of compatible applications now produced by many commercial and non-commercial developers... 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