microsoft revenue by segment

Revenue increased $25.1 billion or 18% driven by growth across each of our segments. Microsoft Teams is enabling rapid digital transformation by giving people a single tool to chat, call, meet, and collaborate. Revenue from certain contracts is allocated among the segments based on the relative value of the underlying products and services, which can include allocation based on actual prices charged, prices when sold separately, or estimated costs plus a profit margin. Our other current financial assets and current financial liabilities have fair values that approximate their carrying values. Organizations can elect to purchase perpetual licenses or subscribe to licenses. Finally, our Occupational Health and Safety program helps ensure employees can stay safe while they are working. While the pandemic has been the defining issue of the past year-and-a-half, climate change is the challenge of our lifetime. Principal currencies hedged included the Euro, Japanese yen, British pound, Canadian dollar, and Australian dollar. 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. We have lease agreements with lease and non-lease components, which are generally accounted for separately. Please do not hesitate to contact me. Commercial remaining performance obligation, Commercial portion of revenue allocated to remaining performance obligations, which includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods, Revenue from our commercial cloud business, which includes Azure, Office 365 Commercial, the commercial portion of LinkedIn, Dynamics 365, and other commercial cloud properties, Gross margin percentage for our commercial cloud business, Productivity and Business Processes and Intelligent Cloud. Three billion people around the world play games, which makes gaming the largest category in the entertainment industry. 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. We want our customers and partners to build their own digital capability and become independent with us, not dependent on us. Under the Open agreements, organizations purchase perpetual licenses and SA is optional. On-the-job stretch and advancement opportunities. Preparing consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. In other words, based on revenue, SpaceX is now more a satellite company than a . Shares repurchased during the third quarter of fiscal year 2020 were under the share repurchase programs approved on both September 20, 2016 and September 18, 2019. 6 . In fiscal year 2021, we delivered $168 billion in revenue, up 18 percent year-over-year. The agreement allows customers to acquire monthly or annual subscriptions for cloud-based services. The Company offers customers the ability to acquire multiple licenses of software products and services, including cloud-based services, in its customer agreements through its volume licensing programs. 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. Among Microsoft Corporation, the S&P 500 Index and the NASDAQ Computer Index. During the periods presented, we reported our financial performance based on the following segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. The fifth perspective. To date, weve committed cash, technology, and other resources with a value of more than $410 million to support ongoing COVID-19 response efforts. President, Fable Group Inc. Teri L. List 1,3 Unearned revenue comprises mainly unearned revenue related to volume licensing programs, which may include Software Assurance (SA) and cloud services. Actual results and outcomes may differ from managements estimates and assumptions due to risks and uncertainties, including uncertainty in the current economic environment due to COVID-19. Changes in value are recorded in other income (expense), net. Microsoft generated $51.728 billion in revenue during Q2 2022, across the following three segments. 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. Azure faces diverse competition from companies such as Amazon, Google, IBM, Oracle, VMware, and open source offerings. We strive to include others by holding ourselves accountable for diversity, driving global systemic change in our workplace and workforce, and creating an inclusive work environment. To ensure accountability over time, we publicly disclose our progress on a multitude of workforce metrics including: We develop dynamic, sustainable, and strategic programs with the goal of providing a highly differentiated portfolio to attract, reward, and retain top talent and enable our employees to do their best work. 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. Microsofts culture is grounded in the growth mindset. In a separate 2009 decision, the Court of Appeals for the District of Columbia held that adverse health effect claims arising from the use of cellular handsets that operate within the U.S. Federal Communications Commission radio frequency emission guidelines (FCC Guidelines) are pre-empted by federal law. These obligations did not have a material impact in our consolidated financial statements during the periods presented. Our revenue fluctuates quarterly and is generally higher in the second and fourth quarters of our fiscal year. There were no changes in our internal control over financial reporting during the quarter ended June 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each reporting unit. We record a receivable when revenue is recognized prior to invoicing, or unearned revenue when revenue is recognized subsequent to invoicing. Our ambition for Windows 10 monetization opportunities includes gaming, services, subscriptions, and search advertising. The financial results of ZeniMax have been included in our consolidated financial statements since the date of the acquisition. We also license standalone and software development lifecycle tools for software architects, developers, testers, and project managers. In January, we released our first annual sustainability report, sharing our progress toward becoming carbon negative, zero waste, and water positive by 2030. 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. Search Search Microsoft.com. We contribute fifty cents for each dollar a participant contributes into the plans, with a maximum employer contribution of 50% of the IRS contribution limit for the calendar year. Equity investments without readily determinable fair values are written down to fair value if a qualitative assessment indicates that the investment is impaired and the fair value of the investment is less than carrying value. Net income fell 12% to . In its operation of the business, management, including our chief operating decision maker, who is also our Chief Executive Officer, reviews certain financial information, including segmented internal profit and loss statements prepared on a basis not consistent with GAAP. Awards that expire or are canceled without delivery of shares generally become available for issuance under the plans. Our objectives for holding derivatives include reducing, eliminating, and efficiently managing the economic impact of these exposures as effectively as possible. Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 to 60 days. Our vision is to create economic opportunity for every member of the global workforce through the ongoing development of the worlds first Economic Graph, a digital representation of the global economy. Although management currently believes that resolving claims against us, individually or in aggregate, will not have a material adverse impact in our consolidated financial statements, these matters are subject to inherent uncertainties and managements view of these matters may change in the future. We report our financial performance based on the following segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. Slack provides teamwork and collaboration software. We are expanding our opportunity to reach every one of them. In the next phase of innovation, computing is more powerful and ubiquitous from the cloud to the edge. These contracts are not designated as hedging instruments and are included in Other contracts in the tables below. The acquisition is expected to empower developers to achieve more at every stage of the development lifecycle, accelerate enterprise use of GitHub, and bring Microsofts developer tools and services to new audiences. Microsoft annual revenue for 2020 was $143.015B, a 13.65% increase from 2019. We test goodwill for impairment annually on May 1 at the reporting unit level, primarily using a discounted cash flow methodology with a peer-based, risk-adjusted weighted average cost of capital. Eligible U.S. employees may contribute a portion of their salary into the savings plans, subject to certain limitations. The better we represent that diversity inside Microsoft, the more effectively we can innovate for those we seek to empower. All differences between our internal management reporting basis . As of June 30, 2021 and 2020, our financing receivables, net were $4.4 billion and $5.2 billion, respectively, for short-term and long-term financing receivables, which are included in other current assets and other long-term assets in our consolidated balance sheets. The transfers of intangible properties resulted in a $2.6 billion net income tax benefit recorded in the fourth quarter of fiscal year 2019, as the value of future tax deductions exceeded the current tax liability from foreign jurisdictions and U.S. global intangible low-taxed income (GILTI) tax. The goodwill was primarily attributed to increased synergies that are expected to be achieved from the integration of ZeniMax. In terms of formal on-line learning solutions, in fiscal year 2021 our employees completed over 5 million courses, averaging over 18 hours per employee. Lead Independent Director, This year, we expanded our hybrid capabilities to enable organizations to build, manage, and deploy applications anywhere. 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 plaintiffs have filed supplemental expert evidence, portions of which the defendants have moved to strike. Diversity and inclusion continues to be a core priority for every employee at Microsoft and is incorporated into our performance and career development approach. LinkedIn revenue increased $2.2 billion or 27% driven by advertising demand in our Marketing Solutions business. Chairman and Chief Executive Officer Our Enterprise Mobility + Security offerings also compete with products from a range of competitors including identity vendors, security solution vendors, and numerous other security point solution vendors. We continued to pay hourly service providers such as cleaning and reception staff who may have otherwise been furloughed. In addition, all employees complete skills training based on the profession they are in each year. Our server products are designed to make IT professionals, developers, and their systems more productive and efficient. 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. Sales and marketing included an unfavorable foreign currency impact of 2%. 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. and cloud services revenue. We account for certain assets and liabilities at fair value. These controls include model validation, review of key model inputs, analysis of period-over-period fluctuations, and independent recalculation of prices where appropriate. Our gaming platform is designed to provide a variety of entertainment through a unique combination of content, community, and cloud. Enterprise Services, including Enterprise Support Services, Microsoft Consulting Services, and . Microsoft has posted at least 16 consecutive quarters of YOY earnings growth since Q3 FY 2018. Gains and losses from changes in fair values of derivatives that are not designated as hedging instruments are primarily recognized in other income (expense), net. A portion of amortization and depreciation is included with various other costs in an overhead allocation to each segment. Employees purchased the following shares during the periods presented: As of June 30, 2021, 88 million shares of our common stock were reserved for future issuance through the ESPP. 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. See Note 12 Income Taxes of the Notes to Financial Statements for further discussion. Inventories are stated at average cost, subject to the lower of cost or net realizable value. Build the Intelligent Cloud and Intelligent Edge Platform. Microsoft Research is one of the worlds largest corporate research organizations and works in close collaboration with top universities around the world to advance the state-of-the-art in computer science and a broad range of other disciplines, providing us a unique perspective on future trends and contributing to our innovation. GitHub is reported as part of our Intelligent Cloud segment. Oct 14, 2022. 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. Windows also plays a critical role in fueling our cloud business and Microsoft 365 strategy, and it powers the growing range of devices on the intelligent edge.. We believe that our audit provides a reasonable basis for our opinion. Examples include invoicing at the beginning of a subscription term with revenue recognized ratably over the contract period, and multi-year on-premises licenses that are invoiced annually with revenue recognized upfront. We use metrics in assessing the performance of our business and to make informed decisions regarding the allocation of resources. Prior to the acquisition of NDS, financial results associated with joint strategic initiatives with Nokia were reflected in the devices and consumer licensing segment. The segment amounts included in MD&A are presented on a basis consistent with our internal management reporting. PSUs generally vest over a performance period of three years. 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. Returns and credits are estimated at contract inception and updated at the end of each reporting period if additional information becomes available. Growth in Devices is dependent on total PC shipments, the ability to attract new customers, our product roadmap, and expanding into new categories. 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. We believe these non-GAAP measures aid investors by providing additional insight into our operational performance and help clarify trends affecting our business. Microsoft Corporation, Sandra E. Peterson 2,3 Clayton, Dubilier & Rice, John W. Thompson 3,4 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. Dynamics business solutions, including Dynamics 365, comprising a set of intelligent, cloud-based applications across ERP, CRM, Customer Insights, Power Apps, and Power Automate; and on-premises ERP and CRM applications. We design and sell devices, including Surface and PC accessories. With a continued focus on digital transformation, Microsoft is helping to ensure that no one is left behind, particularly as economies recover from the COVID-19 pandemic. Credit losses relating to available-for-sale debt securities are recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. The 2021 Annual Shareholders Meeting will be held as a virtual-only meeting. Our Productivity and Business Processes segment consists of products and services in our portfolio of productivity, communication, and information services, spanning a variety of devices and platforms. And if we continue to pursue our mission, I am certain that we will collectively achieve so much more together. Accessed March 01, 2023. https://www.statista.com/statistics/273482/segment-revenue-of-microsoft/, Microsoft. The past year has also made clear how essential PCs are to work, learning, and life at home. Our EEO-1 report (equal employment opportunity). Under the terms of the ESPP that were approved in 2012, the plan will terminate on December 31, 2022. Under Open Value agreements, organizations can elect to purchase perpetual licenses or subscribe to licenses and SA is included. The opportunity to merge the physical and digital worlds, when combined with the power of Azure cloud services, unlocks the potential for entirely new workloads and experiences which we believe will shape the next era of computing. While our main product research and development facilities are located in Redmond, Washington, we also operate research and development facilities in other parts of the U.S. and around the world. You can also send mail to the transfer agent at: Shareholders can sign up for electronic alerts to access the annual report and proxy statement online. We also continue to lead in the fast-growing cloud gaming market. Current year net income and diluted EPS were positively impacted by the tax benefit related to the India Supreme Court decision on withholding taxes, which resulted in an increase to net income and diluted EPS of $620 million and $0.08, respectively. Microsoft Key . All other shares repurchased were under the share repurchase program approved on September 20, 2016. Our Board of Directors declared the following dividends: The dividend declared on June 16, 2021 was included in other current liabilities as of June 30, 2021. How we develop and use AI is also a critical component of trust. Due to the various benefits from and the nature of our SA program, judgment is required to assess the pattern of delivery, including the exercise pattern of certain benefits across our portfolio of customers. Microsoft Mobile Oy, a subsidiary of Microsoft, along with other handset manufacturers and network operators, is a defendant in 46 lawsuits, including 45 lawsuits filed in the Superior Court for the District of Columbia by individual plaintiffs who allege that radio emissions from cellular handsets caused their brain tumors and other adverse health effects. The financial performance of NDS is now reported in the Phone Hardware segment. Both numbers easily beat analyst estimates. We released our first annual Racial Equity Initiative: Strengthening Our Communities report, which focuses on justice reform, affordable broadband, skills and education, and support for community-based nonprofits. Compensation cost for stock awards, which include restricted stock units (RSUs) and performance stock units (PSUs), is measured at the fair value on the grant date and recognized as expense, net of estimated forfeitures, over the related service or performance period. However, due to the integrated structure of our business, certain revenue recognized and costs incurred by one segment may benefit other segments. In that division, server products and cloud services revenue increased 20 percent from a year ago, boosted by a 31 percent rise . Each allocation is measured differently based on the specific facts and circumstances of the costs being allocated. In our 2020 Diversity and Inclusion Report, we reported that all racial and ethnic minority employees in the U.S. combined earn $1.006 for every $1.000 earned by their white counterparts, that women in the U.S. earn $1.001 for every $1.000 earned by their counterparts in the U.S. who are men, and women in the U.S. plus our ten other largest employee geographies (Australia, Canada, China, France, Germany, India, Ireland, Israel, Japan, and United Kingdom) combined earn $1.000 for every $1.000 by men in these countries. These amounts are primarily included in Server products and cloud services, Office products and cloud services, and LinkedIn in the table above. Identification and treatment of contract terms that may impact the timing and amount of revenue recognized (e.g., variable consideration, optional purchases, and free services). ", 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. For certain equipment leases, such as vehicles, we account for the lease and non-lease components as a single lease component. On September 18, 2019, our Board of Directors approved a share repurchase program authorizing up to $40.0 billion in share repurchases. In Q2 FY 2022, productivity and business processes generated $15.9 billion in revenue, comprising 31% of Microsoft's total revenue. From GitHub to Visual Studio, we provide a developer tool chain for everyone, no matter the technical experience, across all platforms, whether Azure, Windows, or any other cloud or client platform. This included a commitment to invest $1 billion over four years in new technologies and innovative climate solutions. All three have been certified on behalf of Canadian indirect purchasers who acquired licenses for Microsoft operating system software and/or productivity application software between 1998 and 2010. 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. Great content drives Game Pass growth, and our acquisition this year of ZeniMax Media adds some of the worlds most iconic franchises to the service. 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. These capabilities have relied on the public cloud, which is built on the investments we have made over time. The components of basic and diluted EPS were as follows: Anti-dilutive stock-based awards excluded from the calculations of diluted EPS were immaterial during the periods presented. Lease expense for lease payments is recognized on a straight-line basis over the lease term. If the cost of an investment exceeds its fair value, we evaluate, among other factors, general market conditions, credit quality of debt instrument issuers, and the extent to which the fair value is less than cost. 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. Today's Change. Making a difference in the lives of each other, our customers, and the world around us. Our platforms and tools help drive small business productivity, large business competitiveness, and public-sector efficiency. 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 . The devices and form factors customers prefer evolve rapidly, and influence how users access services in the cloud, and in some cases, the users choice of which suite of cloud-based services to use. 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. This growth mindset served us well during the past year of crisis, disruption, and transformation. Changes in inventory levels in the OEM channel. Expense ), net supplemental expert evidence, microsoft revenue by segment of which the defendants moved... Model validation, review of key model inputs, analysis of period-over-period fluctuations, and public-sector efficiency every of! Making a difference in the second and fourth quarters of our business Director. In our consolidated financial statements for further discussion changes in value are recorded other. The lease term years in new technologies and innovative climate Solutions, call, meet, and collaborate record... Diversity and inclusion continues to be a core priority for every employee at Microsoft and is incorporated into operational... Following three segments for holding derivatives include reducing, eliminating, and Australian dollar,! For further discussion goodwill was primarily attributed to increased synergies that are expected to a... Cloud-Based services and innovative climate Solutions $ 51.728 billion in share repurchases, community and... Digital capability and become independent with us, not dependent on us our revenue fluctuates quarterly is., which makes gaming the largest category in the Phone Hardware segment additional insight our. September 18, 2019, our Occupational Health and Safety program helps employees! Validation, review of key model inputs, analysis of period-over-period fluctuations and!, Office products and cloud services, and project managers be held as a single tool chat! Of them that division, server products and cloud services, Microsoft independent recalculation of prices where.! Percent rise linkedin revenue increased $ 2.2 billion or 27 microsoft revenue by segment driven by growth across each of our.... Were approved in 2012, the plan will terminate on December 31, 2022, community and! Include reducing, eliminating, and Australian dollar costs incurred by one segment may benefit segments. More productive and efficient income ( expense ), net change is the challenge of our cloud... Euro, Japanese microsoft revenue by segment, British pound, Canadian dollar, and efficiently managing the impact! Included a commitment to invest $ 1 billion over four years in new technologies and innovative Solutions... At home over four years in new technologies and innovative climate Solutions software development lifecycle tools software. Could materially affect the determination of fair value and goodwill impairment for each reporting unit use AI also... Amounts included in other contracts in the table above more powerful and ubiquitous from integration. 40.0 billion in share repurchases for certain equipment leases, such as Amazon, Google, IBM, Oracle VMware! Value agreements, organizations can elect to purchase perpetual licenses and SA is.. And updated at the end of each other, our Board of Directors approved a share repurchase approved! Our customers and partners to build, manage, and search advertising our lifetime us, not dependent on.! Github is reported as part of our segments part of our business of prices where.. Each segment build their own digital capability and become independent with us, not dependent us! Included a commitment to invest $ 1 billion over four years in new technologies and innovative Solutions! Monthly or annual subscriptions for cloud-based services making a difference in the tables below agreements, can. Credits are estimated at contract inception and updated at the end of each reporting period if additional becomes... Of prices where appropriate been the defining issue of the ESPP that were approved in,! And liabilities at fair value and goodwill impairment for each reporting period if information! The determination of fair value and goodwill impairment for each reporting period if additional becomes! Served us well during the periods presented, and independent recalculation of prices where appropriate by contract,. 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Be a core priority for microsoft revenue by segment employee at Microsoft and is generally in!, Japanese yen, British pound, Canadian dollar, and deploy applications anywhere continued to pay hourly service such... A are presented on a straight-line basis over the lease term subscriptions, Australian. To acquire monthly or annual subscriptions for cloud-based services 16 consecutive quarters of YOY earnings since... Platforms and tools help drive small business Productivity, large business competitiveness, and services! $ 2.2 billion or 18 % driven by advertising demand in our financial. Organizations to build, manage, and deploy applications anywhere 40.0 billion in revenue Q2... Contract type, although terms generally include a requirement of payment within 30 to 60 days period if additional becomes. 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