Unearned revenue also includes payments for consulting services to be performed in the future, LinkedIn subscriptions, Office 365 subscriptions, Xbox subscriptions, Windows 10 post-delivery support, Dynamics business solutions, and other offerings for which we have been paid in advance and earn the revenue when we transfer control of the product or service. Gross margin percentage increased with the change in estimated useful lives of our server and network equipment. Gaming revenue increased $3.8 billion or 33% driven by growth in Xbox content and services and Xbox hardware. The following table summarizes the payments due by fiscal year for our outstanding contractual obligations as of June 30, 2021: 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. Our corporate learning portal has over 100,000 average monthly active users. Inventories are stated at average cost, subject to the lower of cost or net realizable value. Access to this and all other statistics on 80,000 topics from, Show sources information Revenue, gross margin, and operating income included a favorable foreign currency impact of 2%, 3%, and 4%, respectively. Revenue and expenses are translated at average rates of exchange prevailing during the year. At Microsoft, we push the boundaries of what is possible through a broad range of research and development activities that seek to identify and address the changing demands of customers and users, industry trends, and competitive forces. Vice Chairman and Executive Vice Our goal is to lead the industry in several distinct areas of technology over the long-term, which we expect will translate to sustained growth. Microsoft is committed to supporting our employees well-being and safety while they are at work and in their personal lives. This is why we put so much emphasis over the past few years on building a culture that centers on our commitment to a growth mindset. We plan to continue to make significant investments in a broad range of research and development efforts. Gross margin percentage increased with the change in estimated useful lives of our server and network equipment. Revenue from consulting services is recognized as services are provided. We expect existing cash, cash equivalents, short-term investments, cash flows from operations, and access to capital markets to continue to be sufficient to fund our operating activities and cash commitments for investing and financing activities, such as dividends, share repurchases, debt maturities, material capital expenditures, and the transition tax related to the TCJA, for at least the next 12 months and thereafter for the foreseeable future. The specific hardware warranty terms and conditions vary depending upon the product sold and the country in which we do business, but generally include parts and labor over a period generally ranging from 90 days to three years. Source:Microsoft. We believe potential can be nurtured and is not pre-determined, and we should always be learning and curious trying new things without fear of failure. Growth in Devices is dependent on total PC shipments, the ability to attract new customers, our product roadmap, and expanding into new categories. Operating income increased $7.8 billion or 43%. With Dynamics 365, were building a new generation of business applications to meet this challenge. Windows Commercial revenue often reflects the number of information workers in a licensed enterprise and is relatively independent of the number of PCs sold in a given year. In these instances, we may use information such as the size of the customer and geographic region in determining the SSP. I am encouraged because of the power of you, our shareholders, our employees, our partners, our customers, and everyone who has continued to work hard to make the world a better place in the face of constraints. In-the-classroom learning, learning pods, our early-in-career Aspire program, and manager excellence communities. Microsoft's other revenue segment, "Productivity and Business Processes," reported revenue of $16.5 billion, up from $15.04 billion a year ago and higher than the average analyst estimate of . If market, industry, and/or investee conditions deteriorate, we may incur future impairments. The investments we make in sustainability carry through to our products, services, and devices. Compensation expense for the employee stock purchase plan (ESPP) is measured as the discount the employee is entitled to upon purchase and is recognized in the period of purchase. We also have an ESPP for all eligible employees. In general, investments with original maturities of greater than three months and remaining maturities of less than one year are classified as short-term investments. Market Cap. A majority of our investments are priced by pricing vendors and are generally Level 1 or Level 2 investments as these vendors either provide a quoted market price in an active market or use observable inputs for their pricing without applying significant adjustments. Finally, Learning Solutions, including Glint, help businesses close critical skills gaps in times where companies are having to do more with existing talent. Opportunities to sign up for email alerts to have information pushed in real time. 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. More broadly, we are leading the way with solutions tailored to the needs of key industries. Xbox revenue is mainly affected by subscriptions and sales of first- and third-party content, as well as advertising. 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. 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. We have committed $9.5 billion for the construction of new buildings, building improvements, and leasehold improvements as of June 30, 2021. Dynamics products and cloud services revenue increased 25% driven by Dynamics 365 growth of 43%. Net recognized gains on investments increased due to higher gains on equity securities. On-premises licenses are considered distinct performance obligations when sold with SA. The global pandemic has accelerated our capabilities and culture with respect to flexible work. This is not possible without trust. 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. We offer organizations the ability to ensure their data is being used only for their benefit. 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. We believe our allowances for income tax contingencies are adequate. 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. The following table outlines the expected future recognition of unearned revenue as of June 30, 2021: If our customers choose to license cloud-based versions of our products and services rather than licensing transaction-based products and services, the associated revenue will shift from being recognized at the time of the transaction to being recognized over the subscription period or upon consumption, as applicable. Office Commercial products revenue declined 23% driven by continued customer shift to cloud offerings and transactional weakness. $ 33,773. Our effective tax rate was lower than the U.S. federal statutory rate, primarily due to earnings taxed at lower rates in foreign jurisdictions resulting from producing and distributing our products and services through our foreign regional operations centers in Ireland and Puerto Rico, tax benefits relating to stock-based compensation, and tax benefits from the India Supreme Court decision on withholding taxes. We have a network of field sales representatives and field support personnel that solicit orders from distributors and resellers, and provide product training and sales support. While we intend to defend these matters vigorously, adverse outcomes that we estimate could reach approximately $500 million in aggregate beyond recorded amounts are reasonably possible. Likewise, Microsoft's revenue has grown by 74% to US$168.1 billion, and its net profit has grown by 140% to US$61.2 billion over the same period. 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. The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year, and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in an entitys financial statements or tax returns. Our devices are primarily manufactured by third-party contract manufacturers, some of which contain certain components for which there are very few qualified suppliers. To expand usage and deepen engagement, we continue to invest in content, community, and cloud services as we pursue the expansive opportunity in the gaming industry. Right-of-use assets obtained in exchange for lease obligations: Reclassification adjustments for gains included in earnings, Tax expense included in provision for income taxes, Amounts reclassified from accumulated other comprehensive income (loss), Net change related to derivatives, net of tax of, Reclassification adjustments for (gains) losses included in other income (expense), net, Tax expense (benefit) included in provision for income taxes, Net change related to investments, net of tax of, Translation adjustments and other, net of tax effects of, Accumulated other comprehensive income (loss), end of period, Income tax benefits related to stock-based compensation, NASAs Mars mission achieved a milestone in space exploration when the small robotic helicopter Ingenuity completed the first powered flight on another planeta feat that would not have been possible without 12,000 developers on GitHub who, When a 1,300-foot ship blocked the Suez Canal and disrupted global shipping, our partner Blue Yonder, Team Rubicona nonprofit organization that responds to humanitarian crises around the world, Surgeons at Mt. 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. Windows, including Windows OEM licensing (Windows OEM) 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 IoT; and MSN advertising. Licenses for on-premises software provide the customer with a right to use the software as it exists when made available to the customer. We assigned the goodwill to our Intelligent Cloud segment. All share repurchases were made using cash resources. Over the last year, we have collaborated with partners and worked within neighborhoods and communities to launch and scale a number of projects and programs including: expanding our existing justice reform work with a five-year, $50 million sustained effort, expanding access to affordable broadband and devices for Black and African American communities and key institutions that support them in major urban centers, expanding access to skills and education to support Black and African American students and adults to succeed in the digital economy, and increasing technology support for nonprofits that provide critical services to Black and African American communities. We estimate that we have no significant residual value related to our intangible assets. Metrics related to our Productivity and Business Processes and Intelligent Cloud segments assess the health of our core businesses within these segments. No one company, industry, or country can solve these challenges alone. Much of our segment level research and development is coordinated with other segments and leveraged across the Company. A Detail Pricing Level is assigned to actual revenue based on rules defined and approved by the business. Judgment is required to determine the SSP for each distinct performance obligation. Of the total employed people, 67,000 were in operations, including manufacturing, distribution, product support, and consulting services; 60,000 were in product research and development; 40,000 were in sales and marketing; and 14,000 were in general and administration. Equity investments with readily determinable fair values are measured at fair value. Register in seconds and access exclusive features. We evaluate our reporting units on an annual basis and, if necessary, reassign goodwill using a relative fair value allocation approach. Introduced in November 2020, the new Xbox Series S and X are our fastest-selling consoles ever. to incorporate the statistic into your presentation at any time. IBM and Oracle lead a group of companies focused on the Java Platform Enterprise Edition that competes with our enterprise-wide computing solutions. Unearned revenue is generally invoiced annually at the beginning of each contract period for multi-year agreements and recognized ratably over the coverage period. Sempra Energy's (SRE Quick Quote SRE - Free Report) fourth-quarter 2022 adjusted earnings per share (EPS) came in at $2.35, which beat the Zacks Consensus Estimate of $2.06 by 14.1%. Through this commitment we can allow everyone the chance to be their authentic selves and do their best work every day. 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. In the next phase of innovation, computing is more powerful and ubiquitous from the cloud to the edge. We encourage investors, the media, and others interested in Microsoft to review the information we post on the social media channels listed on our Investor Relations website. 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. These systems are augmented by written policies, an organizational structure providing division of responsibilities, careful selection and training of qualified personnel, and a program of internal audits. 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. Intelligent cloud. Revenue allocated to SA is generally recognized ratably over the contract period as customers simultaneously consume and receive benefits, given that SA comprises distinct performance obligations that are satisfied over time. In fiscal year 2021, our U.S. income before income taxes was $35.0 billion and our foreign income before income taxes was $36.1 billion. Revenue, classified by the major geographic areas in which our customers were located, was as follows: Revenue from external customers, classified by significant product and service offerings, was as follows: Our commercial cloud revenue, which includes Azure, Office 365 Commercial, the commercial portion of LinkedIn, Dynamics 365, and other commercial cloud properties, was $69.1 billion, $51.7 billion and $38.1 billion in fiscal years 2021, 2020, and 2019, respectively. Changes in these factors could materially impact our consolidated financial statements. The adoption of the standard did not have a material impact on our consolidated financial statements. At Microsoft, we believe that the economic growth we help drive must reach every person, community, and country. 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. 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. Our competitors are developing new software and devices, while also deploying competing cloud-based services for consumers and businesses. Fourth-quarter revenue rose 33% to $209.7 million, driving adjusted earnings per share up 45% to $0.90. These costs include our internal sales force compensation program and certain partner sales incentive programs as we have determined annual compensation is commensurate with annual sales activities. LVMH is a luxury group owned by the Arnault family, which generated over 79 billion in revenue ($83 billion) in revenue in 2022, with a luxury empire that spans many segments. GitHub is reported as part of our Intelligent Cloud segment. Certain corporate-level activity is not allocated to our segments. Our short-term investments are primarily intended to facilitate liquidity and capital preservation. You only have access to basic statistics. Contribution in Q2 2022. Basic earnings per share (EPS) is computed based on the weighted average number of shares of common stock outstanding during the period. An estimated loss from a loss contingency such as a legal proceeding or claim is accrued by a charge to income if it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. Windows Commercial products and cloud services revenue increased 14% driven by demand for Microsoft 365. 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microsoft revenue by segment