31.70%. That compared with a Wall Street . 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. Growth depends on our ability to reach new users, add value to our core product set, and continue to expand our product and service offerings into new markets. You're reading a free article with opinions that may differ from The Motley . The financial results of ZeniMax have been included in our consolidated financial statements since the date of the acquisition. We offer an array of services, including cloud-based solutions that provide customers with software, services, platforms, and content, and we provide solution support and consulting services. More broadly, we are leading the way with solutions tailored to the needs of key industries. Our competitors are developing new software and devices, while also deploying competing cloud-based services for consumers and businesses. 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. 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. To use individual functions (e.g., mark statistics as favourites, set The . Certain options and forwards not designated as hedging instruments are also used to manage the variability in foreign exchange rates on certain balance sheet amounts and to manage other foreign currency exposures. As organizations focus on creating their own technology solutions, they will need standardized tools to modernize existing apps and build new ones. With Azure Mixed Reality Services, digital information can be represented within the context of the three-dimensional world we live in. 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. Customer mix between consumer, small and medium businesses, and large enterprises. Office Commercial products and cloud services revenue increased 13% driven by Office 365 Commercial growth of 22%. Partners in this program can easily package their own products and services to directly provision, manage, and support their customer subscriptions. These non-GAAP financial measures presented should not be considered a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP. Nine of these cases were filed in 2002 and are consolidated for certain pre-trial proceedings; the remaining cases are stayed. Enterprise Services, including Premier Support Services and Microsoft Consulting Services, assist customers in developing, deploying, and managing Microsoft server and desktop solutions and provide training and certification to developers and IT professionals on various Microsoft products. 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. Azure Space is extending Azure capabilities through worldwide satellite-based connectivity. Our search business competes with Google and a wide array of websites, social platforms like Facebook, and portals that provide content and online offerings to end users. Last year, we mobilized resources to respond to the Beirut explosion, hurricanes in Central America, wildfires in the United States, and more. LinkedIn has over 750 million members and has offices around the globe. Search advertising revenue increased $788 million or 10%. In addition to LinkedIns free services, LinkedIn offers monetized solutions: Talent Solutions, Marketing Solutions, Premium Subscriptions, Sales Solutions, and Learning Solutions. 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. 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. ", Microsoft, Microsoft's revenue from 2012 to 2022 financial years, by segment (in billion U.S. dollars) Statista, https://www.statista.com/statistics/273482/segment-revenue-of-microsoft/ (last visited March 01, 2023), Microsoft's revenue from 2012 to 2022 financial years, by segment (in billion U.S. dollars) [Graph], Microsoft, July 26, 2022. Highlights from fiscal year 2021 compared with fiscal year 2020 included: On March 9, 2021, we completed our acquisition of ZeniMax Media Inc. (ZeniMax), the parent company of Bethesda Softworks LLC, for a total purchase price of $8.1 billion, consisting primarily of cash. Our fixed-income portfolio is diversified and consists primarily of investment-grade securities. But the most notable thing is what will happen to the other 90 percent. Our management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Vice Chairman and Executive Vice Together with our partners, we have reached more than 47 million people to date, across 250 countries, but the work doesnt stop there. None of the goodwill is expected to be deductible for income tax purposes. This starts with access to broadband. In fiscal year 2021, we delivered $168 billion in revenue, up 18 percent year-over-year. Additional information on our reportable segments is contained in Note 19 Segment Information and Geographic Data of the Notes to Financial Statements. Managers evaluate and recommend rewards based on, for example, how well we leverage the work of others and contribute to the success of our colleagues. Microsoft's Intelligent Cloud revenue rose 18 percent to $21.5 billion, up from $18.2 billion one year ago. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Our Internet address is www.microsoft.com. Our hardware is generally highly dependent on, and interrelated with, the underlying operating system and cannot function without the operating system. The components of the provision for income taxes were as follows: U.S. and foreign components of income before income taxes were as follows: The items accounting for the difference between income taxes computed at the U.S. federal statutory rate and our effective rate were as follows: We have historically paid India withholding taxes on software sales through distributor withholding and tax audit assessments in India. Changes to our estimated variable consideration were not material for the periods presented. 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. 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. Gross margin percentage increased with the change in estimated useful lives of our server and network equipment. And every day this past year, I have had the privilege to see it in action, as customers of every size, in every industry, in every part of the world use our platforms and tools to help address their own challenges and opportunities as well as those of their communities and society at-large. 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. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Securities held in our equity investments portfolio are subject to market price risk. All share repurchases were made using cash resources. Office Commercial products and cloud services revenue growth, Revenue from Office Commercial products and cloud services (Office 365 subscriptions, the Office 365 portion of Microsoft 365 Commercial subscriptions, and Office licensed on-premises), comprising Office, Exchange, SharePoint, Microsoft Teams, Office 365 Security and Compliance, and Skype for Business, Office Consumer products and cloud services revenue growth, Revenue from Office Consumer products and cloud services, including Microsoft 365 Consumer subscriptions and Office licensed on-premises, The number of Office 365 Commercial seats at end of period where seats are paid users covered by an Office 365 Commercial subscription, The number of Microsoft 365 Consumer (formerly Office 365 Consumer) subscribers at end of period, Dynamics products and cloud services Our Enterprise Mobility + Security offerings also compete with products from a range of competitors including identity vendors, security solution vendors, and numerous other security point solution vendors. Cash from operations increased $16.1 billion to $76.7 billion for fiscal year 2021, mainly due to an increase in cash received from customers, offset in part by an increase in cash paid to suppliers and employees. 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. 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. PSUs generally vest over a performance period of three years. $ 22,247. Income taxes paid, net of refunds, were $13.4 billion, $12.5 billion, and $8.4 billion in fiscal years 2021, 2020, and 2019, respectively. In fiscal year 2021, the COVID-19 pandemic continued to impact our business operations and financial results. The agreement allows customers to acquire monthly or annual subscriptions for cloud-based services. Office Consumer products and cloud services revenue increased 10% and Microsoft 365 Consumer subscribers increased to 51.9 million. Total. October 12, 2021. The investments we are making in infrastructure and devices will continue to increase our operating costs and may decrease our operating margins. To meet the expectations of our stakeholders and to and maintain their trust, we are committed to conducting our business in ways that are principled, transparent, and accountable and we have made a broad range of environmental and social commitments. However, some of our products contain certain components for which there are very few qualified suppliers. In general, and where applicable, we use quoted prices in active markets for identical assets or liabilities to determine the fair value of our financial instruments. (July 26, 2022). Our Dynamics business solutions are also licensed to enterprises through a global network of channel partners providing vertical solutions and specialized services. Accessed March 01, 2023. https://www.statista.com/statistics/273482/segment-revenue-of-microsoft/, Microsoft. We distribute our products and services through OEMs that pre-install our software on new devices and servers they sell. We generally fund research at the corporate level to ensure that we are looking beyond immediate product considerations to opportunities further in the future. This includes the server platform, database, business intelligence, storage, management and operations, virtualization, service-oriented architecture platform, security, and identity software. Our cloud business benefits from three economies of scale: datacenters that deploy computational resources at significantly lower cost per unit than smaller ones; datacenters that coordinate and aggregate diverse customer, geographic, and application demand patterns, improving the utilization of computing, storage, and network resources; and multi-tenancy locations that lower application maintenance labor costs. Changes in value are recorded in other income (expense), net. Azure revenue grew 50% due to growth in our consumption-based services. Breaking down Microsoft's earnings by operational segment. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. 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. The transfers of intangible properties resulted in a $2.6 billion net income tax benefit recorded in the fourth quarter of fiscal year 2019, as the value of future tax deductions exceeded the current tax liability from foreign jurisdictions and U.S. global intangible low-taxed income (GILTI) tax. Being a global-scale cloud, Azure uniquely offers hybrid consistency, developer productivity, AI capabilities, and trusted security and compliance. 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. We have lease agreements with lease and non-lease components, which are generally accounted for separately. Finance leases are included in property and equipment, other current liabilities, and other long-term liabilities in our consolidated balance sheets. How the Critical Audit Matter Was Addressed in the Audit. 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 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. Securities held in our equity investments portfolio are subject to price risk. Revenue from distinct on-premises licenses is recognized upfront at the point in time when the software is made available to the customer. Former Executive Vice President and Introduced in November 2020, the new Xbox Series S and X are our fastest-selling consoles ever. The Automotive Voice Command System market size, estimations, and forecasts are provided in terms of and revenue (USD millions), considering 2023 as the base year, with history and forecast data . We are accelerating adoption of AI innovations from research to products. 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. Are consolidated for certain pre-trial proceedings ; the remaining cases are stayed in time when the software is made to! 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