Microsoft posted the first quarter of its 2022 financial results today, reporting revenue of $45.3 billion and a net income of $20.5 billion (GAAP). Microsoft reported $51.7 billion in revenue for the second fiscal quarter, a 20 percent increase year over year. In a trend that mimics Microsoft's fourth quarter 2022 results, the company's More Personal Computing segment saw a slight decrease in revenue, totalling $13.3 billion. Microsoft annual revenue for 2022 was $198.27B, a 17.96% increase from 2021. In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2021, in conformity with accounting principles generally accepted in the United States of America. Please create an employee account to be able to mark statistics as favorites. Revenue growth was led by its search segment . 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. With Azure Arc, customers can deploy Azure data services on-premises, at the edge, or in multicloud environments. 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. For multi-year agreements, we generally invoice customers annually at the beginning of each annual coverage period. Gross margin percentage increased with the change in estimated useful lives of our server and network equipment. In instances where SSP is not directly observable, such as when we do not sell the product or service separately, we determine the SSP using information that may include market conditions and other observable inputs. Nuance is a cloud and artificial intelligence (AI) software provider with healthcare and enterprise AI experience, and the acquisition will build on our industry-specific cloud offerings. The investments we are making in infrastructure and devices will continue to increase our operating costs and may decrease our operating margins. Save for three of these 16 quarters, that YOY growth has ranged between roughly 20% and 35% a quarter . 10,610. us-gaap:OperatingIncomeLoss. 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 short-term investments are primarily intended to facilitate liquidity and capital preservation. Quotes delayed by up to 15 minutes. Office Consumer products and cloud services revenue increased 10% and Microsoft 365 Consumer subscribers increased to 51.9 million. The segment amounts included in MD&A are presented on a basis consistent with our internal management reporting. To foster their and our success, we seek to create an environment where people can do their best work a place where they can proudly be their authentic selves, guided by our values, and where they know their needs can be met. 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. Cactus' Rental revenues were $27.3 million, up from $19.2 million in the year-ago quarter. You only have access to basic statistics. Show publisher information Thats why in April we announced a new five-year commitment to spur the development of accessible technology, expand opportunities for people with disabilities in the workforce, and build a more inclusive workplace. First of all, users - from 433 million users back in 2016 when it was acquired, up to 740 million users in 2021. Judgment is required in assessing the future tax consequences of events that have been recognized in our consolidated financial statements or tax returns. Assets are not allocated to segments for internal reporting presentations. This global approach helps us remain competitive in local markets and enables us to continue to attract top talent from across the world. Cost includes materials, labor, and manufacturing overhead related to the purchase and production of inventories. Zoom offers videoconferencing and cloud phone solutions. Virtual Shareholder Meeting: www.virtualshareholdermeeting.com/MSFT21. Adjusted EBITDA is projected between $380 million and $415 million, down from $453.5 million reported last year. Once an investment is determined to be impaired, an impairment charge is recorded in other income (expense), net. Yet the fashion and leather goods segment (comprising brands like Fendi and Louis Vuitton) is the major one, generating over 39 billion in . Operating income grew 32 percent to $70 billion. We tested the effectiveness of controls related to the identification of distinct performance obligations, the determination of the timing of revenue recognition, and the estimation of variable consideration. That compared with a Wall Street . Windows 11 builds on the strengths of productivity, versatility, and security on Windows 10 today and adds in new experiences that include powerful task switching tools like new snap layouts, snap groups, and desktops; new ways to stay connected through chat; the information you want at your fingertips; and more. Changes to our estimated variable consideration were not material for the periods presented. We recorded a provisional net charge of $13.7 billion related to the enactment of the TCJA in fiscal year 2018 and adjusted the provisional net charge by recording additional tax expense of $157 million in fiscal year 2019 pursuant to Securities and Exchange Commission Staff Accounting Bulletin No. 12,820. Debt investments are classified as available-for-sale and realized gains and losses are recorded using the specific identification method. Bethesda is one of the largest, privately held game developers and publishers in the world, and brings a broad portfolio of games, technology, and talent to Xbox. Advertising costs are expensed as incurred. Our server products face competition from a wide variety of server operating systems and applications offered by companies with a range of market approaches. Commercial competitors for our server applications for PC-based distributed client-server environments include CA Technologies, IBM, and Oracle. Marketing Solutions help companies reach, engage, and convert their audiences at scale. We have committed $9.5 billion for the construction of new buildings, building improvements, and leasehold improvements as of June 30, 2021. Revenue increased $25.1 billion or 18% driven by growth across each of our segments. 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. From Visual Studio to GitHub, we deliver the best tools for moving quickly from idea to code and from code to the cloud. This year, we expanded our hybrid capabilities to enable organizations to build, manage, and deploy applications anywhere. To use individual functions (e.g., mark statistics as favourites, set Therefore, we recorded a net income tax benefit of $620 million in the third quarter of fiscal year 2021 to reflect the results of the India Supreme Court decision impacting fiscal year 1996 through fiscal year 2016. 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. These unique gaming experiences are the cornerstone of Xbox Game Pass, a subscription service and gaming community with access to a curated library of over 100 first- and third-party console and PC titles. In 2019, the SAMR presented preliminary views as to certain possible violations of Chinas Anti-Monopoly Law. All deferred income taxes are classified as long-term in our consolidated balance sheets. In addition, all our broker-priced investments have a sufficient level of trading volume to demonstrate that the fair values used are appropriate for these investments. Windows original equipment manufacturer licensing (Windows OEM) revenue increased slightly. Based on the carrying amount of server and network equipment included in property and equipment, net as of June 30, 2020, the effect of this change in estimate for fiscal year 2021 was an increase in operating income of $2.7 billion and net income of $2.3 billion, or $0.30 per both basic and diluted share. For Microsoft, trust is built on privacy, security, digital safety, the responsible use of AI, and transparency. Azure is a trusted cloud with comprehensive compliance coverage and AI-based security built in. 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. Refer to Note 16 Stockholders Equity of the Notes to Financial Statements for further discussion. We have completed our assessment and concluded that adoption of the new standard will not have a material impact on our consolidated financial statements. 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. Total. Xbox Game Pass is a community with access to a curated library of over 100 first- and third-party console and PC titles. We are living in the new era of the intelligent cloud and intelligent edge, which is being sharpened by rapid advances in distributed computing, ambient intelligence, and multidevice experiences. No instances of impairment were identified in our May 1, 2021, May 1, 2020, or May 1, 2019 tests. Under the Executive Incentive Plan, the Compensation Committee approves stock awards to executive officers and certain senior executives. The . Once technological feasibility is reached, such costs are capitalized and amortized to cost of revenue over the estimated lives of the products. In March 2021 and June 2020, we exchanged a portion of our existing debt at a premium for cash and new debt with longer maturities to take advantage of favorable financing rates in the debt markets, reflecting our credit rating and the low interest rate environment. As most of our leases do not provide an implicit rate, we generally use our incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. Microsoft has posted at least 16 consecutive quarters of YOY earnings growth since Q3 FY 2018. Timing of revenue recognition may differ from the timing of invoicing to customers. 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. While the pandemic has been the defining issue of the past year-and-a-half, climate change is the challenge of our lifetime. As of June 30, 2021, we had federal, state, and foreign net operating loss carryforwards of $304 million, $1.3 billion, and $2.0 billion, respectively. We continued to pay hourly service providers such as cleaning and reception staff who may have otherwise been furloughed. The major classes of assets and liabilities to which we have preliminarily allocated the purchase price were as follows: Goodwill was assigned to our More Personal Computing segment. ", 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. Foreign currency risks related to certain non-U.S. dollar-denominated investments are hedged using foreign exchange forward contracts that are designated as fair value hedging instruments. We remain under audit for tax years 2004 to 2017. Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. The figure also lagged the Zacks Consensus Estimate of $255 million. Date: Tuesday, November 30, 2021 Azure Space is extending Azure capabilities through worldwide satellite-based connectivity. Digital transformation that was projected to happen over the next 10 years is happening today. We identified four attributes that allow growth mindset to flourish: Our employee listening systems enable us to gather feedback directly from our workforce to inform our programs and employee needs globally. Forward-looking statements may appear throughout this report, including the following sections: Business, and Managements Discussion and Analysis of Financial Condition and Results of Operations. 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. 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. Gross margin increased $6.5 billion or 18% driven by growth in Office 365 Commercial and LinkedIn, and the change in estimated useful lives of our server and network equipment. Product revenue includes sales from operating systems, cross-device productivity applications, server applications, business solution applications, desktop and server management tools, software development tools, video games, and hardware such as PCs, tablets, gaming and entertainment consoles, other intelligent devices, and related accessories. Satya Nadella . Cloud usage and demand benefited as customers accelerate their digital transformation priorities. Operating income increased $3.5 billion or 22%. Segment revenue and operating income were as follows during the periods presented: No sales to an individual customer or country other than the United States accounted for more than 10% of revenue for fiscal years 2021, 2020, or 2019. 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. We evaluated the reasonableness of managements estimate of stand-alone selling prices for products and services that are not sold separately. (July 26, 2022). We record a receivable when revenue is recognized prior to invoicing, or unearned revenue when revenue is recognized subsequent to invoicing. 4 min read. The outcomes of legal proceedings and claims brought against us are subject to significant uncertainty. Gaming revenue increased $3.8 billion or 33% driven by growth in Xbox content and services and Xbox hardware. Additionally, we have agreed to cover damages resulting from breaches of certain security and privacy commitments in our cloud business. Research and development expenses include payroll, employee benefits, stock-based compensation expense, and other headcount-related expenses associated with product development. These obligations did not have a material impact in our consolidated financial statements during the periods presented. We also design and sell devices, including PCs, tablets, gaming and entertainment consoles, other intelligent devices, and related accessories. Our platforms and tools help drive small business productivity, large business competitiveness, and public-sector efficiency. The allocation of the purchase price to goodwill was completed as of June 30, 2019. 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. Microsoft Online Subscription Agreements are designed for small and medium organizations that want to subscribe to, activate, provision, and maintain cloud services seamlessly and directly via the web. Current Price. 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. On September 18, 2019, our Board of Directors approved a share repurchase program authorizing up to $40.0 billion in share repurchases. We are committed to playing our part to help accelerate the worlds transition to a more economically and environmentally sustainable future for us all. . Service and other revenue also includes sales from online advertising and LinkedIn. Microsoft expects More Personal Computing revenue to rise to between $13.6 billion and $14.0 billion in Q4 FY 2021. The extent to which the COVID-19 pandemic impacts our business going forward will depend on numerous evolving factors we cannot reliably predict. Founder and Chairman, Trilogy Growth was driven by content and services for its Xbox gaming console. We operate our business and report our financial performance using three segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. $75.25B. 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. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Aggregate demand for our software, services, and devices is correlated to global macroeconomic and geopolitical factors, which remain dynamic. We believe our allowances for income tax contingencies are adequate. During fiscal year 2020, we recorded an impairment charge of $161 million to operating lease right-of-use assets due to the closing of our Microsoft Store physical locations. Reinvent productivity and business processes.