To ensure our AI technologies are used responsibly and to avoid unintended consequences, we take a principled approach built on fairness, reliability and safety, privacy and security, inclusiveness, transparency, and accountability. Contribution in Q2 2022. Changes in operating assets and liabilities: Acquisition of companies, net of cash acquired, and purchases of intangible and other assets, Effect of foreign exchange rates on cash and cash equivalents, Cash and cash equivalents, beginning of period, Accounts receivable, net of allowance for doubtful accounts, Net income available for common shareholders (A), Weighted average outstanding shares of common stock (B), Common stock and common stock equivalents (C), Realized gains from sales of available-for-sale securities, Realized losses from sales of available-for-sale securities, Impairments and allowance for credit losses, Net unrealized gains on investments still held, Gross amounts of derivatives offset in the balance sheet, Amount reclassified from accumulated other comprehensive income, Cash, cash equivalents, and short-term investments, Foreign-derived intangible income deduction, State income taxes, net of federal benefit, Excess tax benefits relating to stock-based compensation, Deferred income tax assets, net of valuation allowance, Book/tax basis differences in investments and debt, Long-term deferred income tax liabilities, Increases for tax positions related to the current year, Increases for tax positions related to prior years, Decreases for tax positions related to prior years, Decreases due to lapsed statutes of limitations. Xbox content and services revenue increased 23%. We distribute our retail packaged products primarily through independent non-exclusive distributors, authorized replicators, resellers, and retail outlets. The largest component of the OEM business is the Windows operating system pre-installed on devices. Microsoft has introduced a Hybrid Workplace Flexibility Guide to better support managers and employees as they adapt to new ways of working that shift paradigms, embrace flexibility, promote inclusion, and drive innovation. The primary drag on earnings was the 19% decrease down to $14.2B the company saw in it's personal computing segment with Windows OEM license revenue falling a massive 39%. We tested the reasonableness of managements judgments regarding the future resolution of the uncertain tax positions, including an evaluation of the technical merits of the uncertain tax positions. Foreign currency risks related to certain Euro-denominated debt are hedged using foreign exchange forward contracts that are designated as cash flow hedging instruments. The threat landscape has never been more complex or challenging, and security has never been more critical for our customers or society as a whole. To use individual functions (e.g., mark statistics as favourites, set The consolidated financial statements include the accounts of Microsoft Corporation and its subsidiaries. LinkedIn revenue is mainly affected by demand from enterprises and professional organizations for subscriptions to Talent Solutions, Learning Solutions, Sales Solutions, and Premium Subscriptions offerings, as well as member engagement and the quality of the sponsored content delivered to those members to drive Marketing Solutions. In January, we released our first annual sustainability report, sharing our progress toward becoming carbon negative, zero waste, and water positive by 2030. If our review indicates a reduction in utility below carrying value, we reduce our inventory to a new cost basis through a charge to cost of revenue. We record an allowance to cover expected losses based on troubled accounts, historical experience, and other currently available evidence. The Company engaged Deloitte & Touche LLP, an independent registered public accounting firm, to audit and render an opinion on the consolidated financial statements and internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Growth of our Gaming business is determined by the overall active user base through Xbox enabled content, availability of games, providing exclusive game content that gamers seek, the computational power and reliability of the devices used to access our content and services, and the ability to create new experiences through first-party content creators. Activity in the allowance for doubtful accounts was as follows: Allowance for doubtful accounts included in our consolidated balance sheets: We record financing receivables when we offer certain of our customers the option to acquire our software products and services offerings through a financing program in a limited number of countries. And as a global technology company, we have a particular responsibility to do our part. Cactus' Rental revenues were $27.3 million, up from $19.2 million in the year-ago quarter. We have not engaged in any related party transactions or arrangements with unconsolidated entities or other persons that are reasonably likely to materially affect liquidity or the availability of capital resources. Every organization is looking to digitize their end-to-end operationsfrom sales and customer service to supply chain managementso they can rapidly adapt to changing market dynamics. Directly accessible data for 170 industries from 50 countries and over 1 million facts: Get quick analyses with our professional research service. Revenue is up 22 percent, and net income has . During fiscal years 2021 and 2020, we repurchased 101 million shares and 126 million shares of our common stock for $23.0 billion and $19.7 billion, respectively, through our share repurchase programs. Segment-wise results. Refer to Note 13 Unearned Revenue for further information, including unearned revenue by segment and changes in unearned revenue during the period. Changes in these factors could materially impact our consolidated financial statements. 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 Key . All repurchases were made using cash resources. In 2019 the growth curve flattened and brought almost $7 billion, and in 2020 the revenue was $8 billion. Segment by Type - Asset Tracking and Inventory Management Solutions Market You need a Statista Account for unlimited access. Breaking down Microsoft's earnings by operational segment. Were seeing our family of products play key roles in the ways the world is continuing to work, learn, and connect. These capabilities have relied on the public cloud, which is built on the investments we have made over time. We have historically paid India withholding taxes on software sales through distributor withholding and tax audit assessments in India. Microsoft reported $51.7 billion in revenue for the second fiscal quarter, a 20 percent increase year over year. The financial performance of NDS is now reported in the Phone Hardware segment. We believe learning can be more than formal instruction, and our learning philosophy focuses on providing the right learning, at the right time, in the right way. 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. In making this judgment, we employ a systematic methodology that considers available quantitative and qualitative evidence in evaluating potential impairment of our investments. In that division, server products and cloud services revenue increased 20 percent from a year ago, boosted by a 31 percent rise . Our sales force performs a variety of functions, including working directly with commercial enterprises and public-sector organizations worldwide to identify and meet their technology and digital transformation requirements; managing OEM relationships; and supporting system integrators, independent software vendors, and other partners who engage directly with our customers to perform sales, consulting, and fulfillment functions for our products and services. We have audited the internal control over financial reporting of Microsoft Corporation and subsidiaries (the Company) as of June 30, 2021, based on criteria established in Internal Control Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). For the majority of our products, we have the ability to use other manufacturers if a current vendor becomes unavailable or unable to meet our requirements. Once technological feasibility is reached, such costs are capitalized and amortized to cost of revenue over the estimated lives of the products. 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. Quarter. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. No asset is more strategic than data. We record a receivable when revenue is recognized prior to invoicing, or unearned revenue when revenue is recognized subsequent to invoicing. 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. These costs are expected to be recognized over a weighted average period of three years. 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. 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. Microsoft changed their segment reporting for the 2016 financial year, providing historical reporting for the new segments only as far back as 2014. The global pandemic has accelerated our capabilities and culture with respect to flexible work. Second quarter revenue is driven by corporate year-end spending trends in our major markets and holiday season spending by consumers, and fourth quarter revenue is driven by the volume of multi-year on-premises contracts executed during the period. This change in accounting estimate was effective beginning fiscal year 2021. In, Microsoft. Virtual Shareholder Meeting: www.virtualshareholdermeeting.com/MSFT21. As part of our effort to promote a One Microsoft and inclusive culture, we expanded stock eligibility to all Microsoft employees as part of our annual rewards process. 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. Customers can use Azure through our global network of datacenters for computing, networking, storage, mobile and web application services, AI, IoT, cognitive services, and machine learning. I have had the honor to see how the hard work and commitment of Microsofts employees, the ingenuity of our partners, the trust of our customers, and the support of our shareholders translate into strong results. Our responsibility is to express an opinion on the Companys financial statements based on our audits. Revenue in Microsoft's "Intelligent Cloud" segment rose 30% to $17.4 billion, with growth in Azure revenues handily surpassing the 43.1% jump projected by analysts, according to consensus data . Under the Executive Incentive Plan, the Compensation Committee approves stock awards to executive officers and certain senior executives. Microsoft is a technology company whose mission is to empower every person and every organization on the planet to achieve more. The following table sets forth the potential loss in future earnings or fair values, including associated derivatives, resulting from hypothetical changes in relevant market rates or prices: Our consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). From our CEO and Senior Leadership Team and throughout our organization, people at Microsoft are working to conduct our business in principled ways that make a significant positive impact on important global issues. Executive Vice President and Chief Financial Officer, Alice L. Jolla If we have plans to sell the security or it is more likely than not that we will be required to sell the security before recovery, then a decline in fair value below cost is recorded as an impairment charge in other income (expense), net and a new cost basis in the investment is established. 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. Analysts had expected a 41.4% growth in Azure, according to consensus data from . There was no impact to our consolidated financial statements. 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