We also continue to lead in the fast-growing cloud gaming market. It has helped us become more empathetic toward our colleagues and enabled us to work together as a teamas One Microsoft. We are subject to income tax in many jurisdictions outside the U.S. Our operations in certain jurisdictions remain subject to examination for tax years 1996 to 2020, some of which are currently under audit by local tax authorities. Management does not believe any remaining unrealized losses represent impairments based on our evaluation of available evidence. (July 26, 2022). We acknowledge we have more work ahead of us to address racial injustice and inequity, and are applying many of the programs above to help other underrepresented communities. Under the Executive Incentive Plan, the Compensation Committee approves stock awards to executive officers and certain senior executives. We believe that our audits provide a reasonable basis for our opinion. This determination requires significant judgment. Segment-wise results. Our strategy requires continued investment in datacenters and other hybrid and edge infrastructure to support our services. The markets for software, devices, and cloud-based services are dynamic and highly competitive. 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. Microsoft offers direct sales programs targeted to reach small, medium, and corporate customers, in addition to those offered through the reseller channel. This segment primarily comprises: The Windows operating system is designed to deliver a more personal computing experience for users by enabling consistency of experience, applications, and information across their devices. 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. In addition to our main research and development operations, we also operate Microsoft Research. We believe that our audit provides a reasonable basis for our opinion. Refer to Risk Factors in our fiscal year 2021 Form 10-K for a discussion of these factors and other risks. Enterprise Agreements are designed for medium or large organizations that want to license cloud services and on-premises software organization-wide over a three-year period. This year, we made progress in our work to address racial injustice and inequity. We are required to estimate the fair value of the investment to determine the amount of the impairment loss. 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. The segment made $ 46. . We recorded over $200 million in adjusted EBITDA for the quarter, an improvement of . Tech as a percentage of total GDP will double from 5 to 10 percent by 2030. We made substantial modifications to employee travel policies and implemented office closures so non-essential employees could work remotely. Our web application platform software competes with open source software such as Apache, Linux, MySQL, and PHP. We read and evaluated managements documentation, including relevant accounting policies and information obtained by management from outside tax specialists, that detailed the basis of the uncertain tax positions. Artificial intelligence (AI) capabilities are rapidly advancing, fueled by data and knowledge of the world. Refer to Note 1 Accounting Policies of the Notes to Financial Statements for further discussion. 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. 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. Personalized, integrated, and relevant views of all learning opportunities on our internal learning portal, our external learning portal MS Learn, and LinkedIn Learning that is available to all employees worldwide. We also fund research and development activities at the operating segment level. The valuation allowance disclosed in the table above relates to the foreign net operating loss carryforwards and other net deferred tax assets that may not be realized. Windows, including Windows OEM licensing and other non-volume licensing of the Windows operating system; Windows Commercial, comprising volume licensing of the Windows operating system, Windows cloud services, and other Windows commercial offerings; patent licensing; Windows Internet of Things; and MSN advertising. We expect to recognize approximately 50% of this revenue over the next 12 months and the remainder thereafter. Opportunities to sign up for email alerts to have information pushed in real time. Revenue is up 19 percent, and net income has increased . In fiscal year 2021, the COVID-19 pandemic continued to impact our business operations and financial results. LinkedIn faces competition from online professional networks, recruiting companies, talent management companies, and larger companies that are focusing on talent management and human resource services; job boards; traditional recruiting firms; and companies that provide learning and development products and services. 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. The fair values of these investments are determined based on valuation techniques using the best information available, and may include quoted market prices, market comparables, and discounted cash flow projections. DIRECTORS AND EXECUTIVE OFFICERS OF MICROSOFT CORPORATION, Satya Nadella Partnerships, Satya Nadella Rent-A-Center envisions adjusted earnings in the range of $2.50 to $3.00 per share . Azure is a trusted cloud with comprehensive compliance coverage and AI-based security built in. Tested managements identification and treatment of contract terms. Build the Intelligent Cloud and Intelligent Edge Platform. Our devices are primarily manufactured by third-party contract manufacturers, some of which contain certain components for which there are very few qualified suppliers. 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. 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. Sales and marketing included an unfavorable foreign currency impact of 2%. Following are the details of the purchase price allocated to the intangible assets acquired: Transactions recognized separately from the purchase price allocation were approximately $600 million, primarily related to equity awards recognized as expense over the related service period. Our server products are designed to make IT professionals, developers, and their systems more productive and efficient. We review debt investments quarterly for credit losses and impairment. You only have access to basic statistics. In 2014, the trial court granted in part and denied in part the defendants motion to exclude the plaintiffs general causation experts. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. 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. We support multiple highly active Employee Resource Groups for women, families, racial and ethnic minorities, military, people with disabilities, or who identify as LGBTQI+, where employees can go for support, networking, and community-building. Gross margin percentage decreased driven by sales mix shift to Gaming hardware. As of June 30, 2021 and 2020, accumulated goodwill impairment was $11.3 billion. Windows. Security, compliance, identity, and management underlie our entire tech stack. Were helping companies make 250,000 skills-based hires this yearensuring those who learn digital skills can convert them into jobs and opportunity. At our Investor Relations website, www.microsoft.com/investor, we make available free of charge a variety of information for investors. We are committed to playing our part to help accelerate the worlds transition to a more economically and environmentally sustainable future for us all. Being a global-scale cloud, Azure uniquely offers hybrid consistency, developer productivity, AI capabilities, and trusted security and compliance. For those uncertain tax positions that had not been effectively settled, we evaluated whether management had appropriately considered new information that could significantly change the recognition, measurement or disclosure of the uncertain tax positions. The allowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance. ZeniMax is reported as part of our More Personal Computing segment. 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. 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. In fiscal year 2020, our U.S. income before income taxes was $24.1 billion and our foreign income before income taxes was $28.9 billion. Show publisher information Operating leases are included in operating lease right-of-use (ROU) assets, other current liabilities, and operating lease liabilities in our consolidated balance sheets. These reviews include analysis of demand forecasts, product life cycle status, product development plans, current sales levels, pricing strategy, and component cost trends. The Company remains under IRS audit, or subject to IRS audit, for tax years subsequent to 2003. With Azure Mixed Reality Services, digital information can be represented within the context of the three-dimensional world we live in. Segment by Type - Asset Tracking and Inventory Management Solutions Market The trial of the British Columbia action commenced in May 2016. 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. , Oct 10, 2022. 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. Net Recognized Gains (Losses) on Investments. 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. Critical accounting policies for us include revenue recognition, impairment of investment securities, goodwill, research and development costs, contingencies, income taxes, and inventories. The Microsoft Cloud Solution Provider program offers customers an easy way to license the cloud services they need in combination with the value-added services offered by their systems integrator, managed services provider, or cloud reseller partner. 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 compete by providing powerful, flexible, secure, integrated industry-specific, and easy-to-use productivity and collaboration tools and services that create comprehensive solutions and work well with technologies our customers already have both on-premises or in the cloud. It empowers people with AI-first interfaces ranging from voice-activated commands through Cortana, inking, immersive 3D content storytelling, and mixed reality experiences. Property and equipment is stated at cost less accumulated depreciation, and depreciated using the straight-line method over the shorter of the estimated useful life of the asset or the lease term. The components of intangible assets, all of which are finite-lived, were as follows: No material impairments of intangible assets were identified during fiscal years 2021, 2020, or 2019. Foreign currency risks related to certain Euro-denominated debt are hedged using foreign exchange forward contracts that are designated as cash flow hedging instruments. To serve the needs of customers around the world and to improve the quality and usability of products in international markets, we localize many of our products to reflect local languages and conventions. Such costs related to software development are included in research and development expense until the point that technological feasibility is reached, which for our software products, is generally shortly before the products are released to production. The company's shares . SA conveys rights to new software and upgrades released over the contract period and provides support, tools, and training to help customers deploy and use products more efficiently. Zacks Equity Research. The consolidated financial statements include the accounts of Microsoft Corporation and its subsidiaries. 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. Padmasree Warrior 2 Customers may purchase perpetual licenses or subscribe to licenses, which provide customers with the same functionality and differ mainly in the duration over which the customer benefits from the software. The settlement risk related to these investments is insignificant given that the short-term investments held are primarily highly liquid investment-grade fixed-income securities. Xbox Cloud Gaming utilizes Microsofts Azure cloud technology to allow direct and on-demand streaming of games to PCs, consoles, and mobile devices, enabling gamers to take their favorites games with them and play on the device most convenient to them. 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. 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). Our fixed-income portfolio is diversified and consists primarily of investment-grade securities. Our commercial and other business metrics are fundamentally connected based on how customers use our products and services. We assumed responsibility for these claims in our agreement to acquire Nokias Devices and Services business and have been substituted for the Nokia defendants. As of June 30, 2021, an aggregate of 251 million shares were authorized for future grant under our stock plans. There are two broad categories of OEMs. Executive Vice President, Chief Financial Officer, Judson Althoff We settled a portion of the Internal Revenue Service (IRS) audit for tax years 2004 to 2006 in fiscal year 2011. Excluding this impact, gross margin percentage decreased slightly driven by a sales mix shift to cloud offerings, on a low prior year comparable impacted by increased usage. The ten-month claims period commenced on November 23, 2020 and will close on September 23, 2021. Our devices are primarily manufactured by third-party contract manufacturers. Our intended result is a global performance and development approach that fosters our culture, and competitive compensation that ensures equitable pay by role while supporting pay for performance. 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