Transforming the workplace to deliver new modern, modular business applications to improve how people communicate, collaborate, learn, work, play, and interact with one another. Server products and cloud services, including Azure; SQL Server, Windows Server, Visual Studio, System Center, and related Client Access Licenses (CALs); and GitHub. $ 35,058. GlaxoSmithKline, Hugh F. Johnston 1 Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 to 60 days. We evaluate our reporting units on an annual basis and, if necessary, reassign goodwill using a relative fair value allocation approach. The Microsoft Cloud is the most comprehensive and trusted cloud, providing the best integration across the technology stack while offering openness, improving time to value, reducing costs, and increasing agility. 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. In the next phase of innovation, computing is more powerful and ubiquitous from the cloud to the edge. For a discussion of the year ended June 30, 2020 compared to the year ended June 30, 2019, please refer to, Managements Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended June 30, 2020. The agreement allows customers to acquire monthly or annual subscriptions for cloud-based services. None of the goodwill is expected to be deductible for income tax purposes. Refer to Note 19 Segment Information and Geographic Data for further information, including revenue by significant product and service offering. There were 63 patent infringement cases pending against Microsoft as of June 30, 2021, none of which are material individually or in aggregate. Partners license software over a three-year period and are billed monthly based on consumption. Our future opportunity depends on reaching and empowering all communities, and we are committed to taking action to help address racial injustice and inequity. We invite you to submit any questions via the proxy voting site at www.proxyvote.com. Chairman and Chief Executive Officer We evaluated the appropriateness and consistency of managements methods and assumptions used in the identification, recognition, measurement, and disclosure of uncertain tax positions, which included testing the effectiveness of the related internal controls. The revenue didn't grow by itself, and there is more than one reason behind it. With Azure Mixed Reality Services, digital information can be represented within the context of the three-dimensional world we live in. The Surface family includes Surface Book 3, Surface Laptop Go, Surface Go 2, Surface Pro 7, Surface Laptop 4, Surface Pro X, Surface Studio 2, and Surface Duo. 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. Marketing Solutions help companies reach, engage, and convert their audiences at scale. We also fund research and development activities at the operating segment level. Equity investments with readily determinable fair values are measured at fair value. There was no impact to our consolidated financial statements. But in addition to the top line, also pay close . Our CSR Reports Hub provides detailed information on law enforcement access to data, our environmental data, our political activities, our workforce demographics, and our human rights work. Principal currency exposures include the Euro, Japanese yen, British pound, Canadian dollar, and Australian dollar. On-the-job stretch and advancement opportunities. Server products and cloud services revenue increased 27% driven by Azure growth of 50%. 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: [email protected]. 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 With Windows 11the biggest update to our operating system in a decadewere reimagining everything from the platform to the store to help people and organizations be more productive, connected, and secure, and to build a more open ecosystem for developers and creators. We also settled a portion of the IRS audit for tax years 2007 to 2009 in fiscal year 2016, and a portion of the IRS audit for tax years 2010 to 2013 in fiscal year 2018. $90.88. 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. 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. GitHub provides a collaboration platform and code hosting service for developers. 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. As a result, no collateral was required to be posted. Sinai Health System in New York and Kyabirwa Surgical Centre in Uganda have together, Anheuser-Busch InBevthe worlds largest brewerused Azure Digital Twins. Finally, we believe transparency is the foundation of trust, so we continue to offer clear information on how we run our business and work with customers and partners. COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. Currently, you are using a shared account. Although it may be difficult to imagine in this time of immeasurable hardship and deep uncertainty, I see boundless possibility ahead. This section generally discusses the results of our operations for the year ended June 30, 2021 compared to the year ended June 30, 2020. 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. But our ability to make sense of data is growing more difficult as the volume, velocity, and variety expand. We describe risks and uncertainties that could cause actual results and events to differ materially in Risk Factors, Managements Discussion and Analysis of Financial Condition and Results of Operations, and Quantitative and Qualitative Disclosures about Market Risk in our fiscal year 2021 Form 10-K. Azures competitive advantage includes enabling a hybrid cloud, allowing deployment of existing datacenters with our public cloud into a single, cohesive infrastructure, and the ability to run at a scale that meets the needs of businesses of all sizes and complexities. The company's Xbox Game Pass gaming subscription revenue during the year was . We will include as many of your questions as possible during the Q&A session of the meeting and will provide answers to questions on the Microsoft Investor Relations website under the Annual Meeting page. We also deliver relevant online advertising to a global audience. Growth was driven by content and services for its Xbox gaming console. Reality Labs' total loss for 2022 came in . This amounted to an increase of 19.3% from the year-ago quarter . Microsoft forecast Intelligent Cloud revenue of $21.1 billion to $21.35 billion for its fiscal fourth quarter, driven by strong growth in its Azure platform. No asset is more strategic than data. Research and development expenses also include third-party development and programming costs, localization costs incurred to translate software for international markets, and the amortization of purchased software code and services content. In addition, we consider specific adverse conditions related to the financial health of, and business outlook for, the investee. This segment primarily comprises: Server products and cloud services, including Azure and other cloud services; SQL Server, Windows Server, Visual Studio, System Center, and related Client Access Licenses ("CALs"); and Nuance and GitHub. 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. As of June 30, 2021 and 2020, long-term accounts receivable, net of allowance for doubtful accounts, was $3.4 billion and $2.7 billion, respectively, and is included in other long-term assets in our consolidated balance sheets. Segment. The strong success of LinkedIn is a clear indicator of how important this is. More broadly, we are leading the way with solutions tailored to the needs of key industries. Revenue is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. Eligible U.S. employees may contribute a portion of their salary into the savings plans, subject to certain limitations. For hardware warranties, we estimate the costs based on historical and projected product failure rates, historical and projected repair costs, and knowledge of specific product failures (if any). Surface is designed to help organizations, students, and consumers be more productive. Microsoft Corporation, Reid G. Hoffman A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Microsoft changed their segment reporting for the 2016 financial year, providing historical reporting for the new segments only as far back as 2014. Throughout the fiscal year, we also collect nearly 75,000 Daily Pulse employee survey responses. The markets for software, devices, and cloud-based services are dynamic and highly competitive. Office Commercial (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. Gross margin percentage decreased driven by sales mix shift to Gaming hardware. The Company remains under IRS audit, or subject to IRS audit, for tax years subsequent to 2003. We believe our gaming platform is effectively positioned against, and uniquely differentiated from, competitive products and services based on significant innovation in hardware architecture, user interface, developer tools, online gaming and entertainment services, and continued strong exclusive content from our own first-party game franchises as well as other digital content offerings. Revenue growth was led by its search segment . We issue new shares of Microsoft common stock to satisfy vesting of awards granted under our stock plans. Gains and losses representing hedge components excluded from the assessment of effectiveness are recognized in other income (expense), net. . Our approach to privacy begins with the belief that people have a right to own their personal data and that companies have a responsibility to collect and use personal data responsibly. We recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year. The competitive position of Linux has also benefited from the large number of compatible applications now produced by many commercial and non-commercial software developers. We strive to maximize the potential of our human capital resources by creating a respectful, rewarding, and inclusive work environment that enables our global employees to create products and services that further our mission to empower every person and every organization on the planet to achieve more. We have operating and finance leases for datacenters, corporate offices, research and development facilities, Microsoft Experience Centers, and certain equipment. Organizations purchase perpetual licenses or subscribe to licenses. Enterprise Services revenue increased $534 million or 8% driven by growth in Premier Support Services. 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. Microsoft annual revenue for 2021 was $168.088B, a 17.53% increase from 2020. ET Research and development expenses include payroll, employee benefits, stock-based compensation expense, and other headcount-related expenses associated with product development. 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. The small to medium business (SMB) segment is divided into three subsegments: Corporate scale subsegment is the largest existing SMB customers with the most opportunity for Microsoft. Furthermore, we shared a commitment to transparency by subjecting the data in our annual sustainability report to third-party review and to accountability by including progress on sustainability goals as a factor in determining executive pay. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each reporting unit. It drives our passion to obsess about our customers, and to learn about and from them. Because of its inherent limitations, internal control over financial reporting is not intended to provide absolute assurance that a misstatement of our consolidated financial statements would be prevented or detected. Information on our business strategies, financial results, and metrics for investors. We use derivative instruments to manage risks related to foreign currencies, interest rates, equity prices, and credit; to enhance investment returns; and to facilitate portfolio diversification. 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. We report our financial performance based on the following segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. Segment by Type - Asset Tracking and Inventory Management Solutions Market Apple distributes versions of its pre-installed application software, such as email and calendar products, through its PCs, tablets, and phones. Xbox is designed to benefit users by providing access to a network of certified applications and services and to benefit our developer and partner ecosystems by providing access to a large customer base. 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. To navigate it, organizations will need to embrace flexibility across their entire operating model, including the ways people work, the places they inhabit, and how they manage business process. Microsoft Revenue by Segment. With more than 60 datacenter regionsincluding 15 new regions added this year on five continentswe are delivering faster access to data and cloud services while addressing critical data residency requirements. LinkedIn, including Talent Solutions, Marketing Solutions, Premium Subscriptions, Sales Solutions, and Learning Solutions. Many organizations that license our products and services transact directly with us through Enterprise Agreements and Enterprise Services contracts, with sales support from system integrators, independent software vendors, web agencies, and partners that advise organizations on licensing our products and services (Enterprise Agreement Software Advisors or ESA). It also provides support, tools, training, and other licensing benefits to help customers deploy and use software efficiently. We perform a qualitative assessment on a periodic basis and recognize an impairment if there are sufficient indicators that the fair value of the investment is less than carrying value. However, some of our products contain certain components for which there are very few qualified suppliers. 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. Managers holding conversations about employees career and development plans, coaching on career opportunities, and programs like mentoring and sponsorship. Office Commercial revenue is mainly affected by a combination of continued installed base growth and average revenue per user expansion, as well as the continued shift from Office licensed on-premises to Office 365. We use derivatives instruments to manage these risks, however, they may still impact our consolidated financial statements. With Azure Stack, organizations can extend Azure into their own datacenters to create a consistent stack across the public cloud and the intelligent edge. Microsoft MSFT is set to report second-quarter fiscal 2022 results on Jan 25. We intend to request shareholder approval for a successor ESPP with a January 1, 2022 effective date and ten-year expiration of December 31, 2031 at our 2021 Annual Shareholders Meeting. 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