We are accelerating our development of mixed reality solutions with new Azure services and devices. Azure Stack Edge brings rapid machine learning inferencing closer to where data is generated, including the harshest of conditions, like disaster response. We have an ESPP for all eligible employees. The way people interact with businesses is fundamentally shifting, and there is no going back. Dynamics revenue is driven by the number of users licensed, expansion of average revenue per user, and the continued shift to Dynamics 365, a unified set of cloud-based intelligent business applications. Over the next decade, technology spending as a percentage of gross domestic product is projected to double. 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. Gross margin increased $6.9 billion or 26%, driven by growth in server products and cloud services revenue and cloud services scale and efficiencies. Each allocation is measured differently based on the specific facts and circumstances of the costs being allocated. Inclusion and diversity promotes safety, productivity and wellbeing and underpins our ability to attract new employees. The Company remains under IRS audit, or subject to IRS audit, for tax years subsequent to 2003. Transforming the workplace to deliver new modern, modular business applications to improve how people communicate, collaborate, learn, work, play, and interact with one another. Compensation expense for the employee stock purchase plan (âESPPâ) is measured as the discount the employee is entitled to upon purchase and is recognized in the period of purchase. Commercial cloud revenue increased 36% to $51.7 billion. It’s why we were early supporters of the European Union’s General Data Protection Regulation (GDPR) and why we were the first major technology company to expand GDPR’s core rights to all our customers around the world. Quality differentiated content— from Flight Simulator to Minecraft—is the engine behind the service’s growth, and our pending acquisition of ZeniMax Media, one of the world’s largest, privately held game developers and publishers, will add iconic franchises to the more than 100 high-quality games already available. However, due to the integrated structure of our business, certain revenue recognized and costs incurred by one segment may benefit other segments. $250 . Metrics related to our More Personal Computing segment assess the performance of key lines of business within this segment. Windows original equipment manufacturer licensing (âWindows OEMâ) revenue increased 9%. On October 25, 2018, we acquired GitHub, Inc. (âGitHubâ), a software development platform, in a $7.5 billion stock transaction (inclusive of total cash payments of $1.3 billion in respect of vested GitHub equity awards and an indemnity escrow). Welcome to our UK Annual Report 2020. Refer to Risk Factors in our fiscal year 2020 Form 10-K for a discussion of these factors and other risks. As one of the two largest providers of cloud computing at scale, we believe we work from a position of strength. Server products revenue is mainly affected by purchases through volume licensing programs, licenses sold to original equipment manufacturers (âOEMâ), and retail packaged products. We are investing significant resources in: Our future growth depends on our ability to transcend current product category definitions, business models, and sales motions. To sign up for this free service, visit the Annual Report site on the Investor Relations website at: http://www.microsoft.com/investor/AnnualReports/default.aspx. Xbox hardware revenue declined 31%, primarily due to a decrease in volume and price of consoles sold. Following are the details of the purchase price allocated to the intangible assets acquired: Transactions recognized separately from the purchase price allocation were approximately $600 million, primarily related to equity awards recognized as expense over the related service period. Azure Arc enables organizations to deploy Azure services anywhere and extend Azure management to any infrastructure. At Microsoft, we call this dynamic tech intensity: adopting best-in-class digital tools and platforms for the purpose of building new, proprietary products and services. Inventories are stated at average cost, subject to the lower of cost or net realizable value. 2018 ANNUAL REPORT. DOWNLOAD NOW. These efforts include increasing our representation and culture of inclusion by doubling the number of Black and African American people managers, senior individual contributors, and senior leaders in the United States by 2025; engaging our ecosystem by using our balance sheet and engagement with suppliers and partners to extend the vision for societal change; and strengthening our communities by using the power of data, technology, and partnership to help improve the lives of Black and African American citizens across the United States. Server products and cloud services revenue, including GitHub, increased $6.5 billion or 25%, driven by Azure. 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. Satya Nadella We can be contacted between the hours of 9:00 a.m. to 5:00 p.m. Pacific Time to answer investment oriented questions about Microsoft. Our More Personal Computing segment consists of products and services that put customers at the center of the experience with our technology. In support of this, we are bringing Office, Windows, and devices together for an enhanced and more cohesive customer experience. Security is a central challenge in the digital age. Annual Report and Financial Statements 2020 1. 1 Based on a ‘point in time’ snapshot of employees as at 30 June 2020, as used in internal management reporting for the purposes of monitoring progress against our goals. In Minerals Australia, Indigenous employment within our employee and contractor workforce2 increased from 5 per cent to 6.5 per cent (1,726 employees and 475 contractors) in FY2020, exceeding our target of 5.75 per cent. The estimated useful lives of our property and equipment are generally as follows: computer software developed or acquired for internal use, three to seven years; computer equipment, two to three years; buildings and improvements, five to 15 years; leasehold improvements, three to 20 years; and furniture and equipment, one to 10 years. COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN* Xbox Live enables people to connect and share online gaming experiences and is accessible on Xbox consoles, Windows-enabled devices, and other devices. We are building Azure as the world’s computer to support them, with more datacenter regions than any other provider— now 61. In this next phase of innovation, computing is more powerful and ubiquitous from the cloud to the edge. We have evaluated the impact of this standard in our consolidated financial statements, including accounting policies, processes, and systems. Project xCloud utilizes Microsoftâs 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. Across our customer solution areas, we are expanding our opportunity to help every organization in every industry build their tech intensity—with a business model that is trusted and aligned with their success. In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended June 30, 2020, in conformity with accounting principles generally accepted in the United States of America. Sorry, we are unable to subscribe you. And, with Azure, they have best-in-class services to build cloud-native apps and modernize existing ones. In fiscal year 2020, our foreign regional operating centers in Ireland and Puerto Rico, which are taxed at rates lower than the U.S. rate, generated 86% of our foreign income before tax. Microsoft Research is one of the worldâs 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. Web-based offerings competing with individual applications have also positioned themselves as alternatives to our products and services. Support WWF-Canada Today. Advertising expense was $1.6 billion in fiscal years 2020, 2019, and 2018. Research and development expenses increased $2.4 billion or 14%, driven by investments in cloud engineering, LinkedIn, Devices, and Gaming. 2020 ANNUAL REPORT. Nine of these cases were filed in 2002 and are consolidated for certain pre-trial proceedings; the remaining cases are stayed. We strive to create local opportunity, growth, and impact in every country around the world. Certain of our employees are subject to collective bargaining agreements. At times, we make select intellectual property broadly available at no or low cost to achieve a strategic objective, such as promoting industry standards, advancing interoperability, or attracting and enabling our external development community. First, we are creating a system of collaboration for every organization. VIEW ONLINE DOWNLOAD NOW. Download our full Annual Report and Form 20-F Information for 2016. The aggregate changes in the gross unrecognized tax benefits related to uncertain tax positions were as follows: Unearned revenue by segment was as follows: Changes in unearned revenue were as follows: Revenue allocated to remaining performance obligations, which includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods, was $111 billion as of June 30, 2020, of which $107 billion is related to the commercial portion of revenue. Check one business type be low Dept. Changes in operating assets and liabilities: Repayments of short-term debt, maturities of 90 days or less, net, 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, Other-than-temporary impairments of investments, Net unrealized gains on investments still held, Gross amounts of derivatives offset in the balance sheet, Amount reclassified from accumulated other comprehensive income, 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. Changes in fair value, excluding other-than-temporary impairments, are recorded in other comprehensive income. The mix of computing devices based on form factor and screen size. AI has proved itself to be a powerful tool for tackling the kinds of challenges that this year has highlighted. Critical accounting policies for us include revenue recognition, impairment of investment securities, goodwill, research and development costs, contingencies, income taxes, and inventories. Our privacy principles include a commitment to be transparent in our privacy practices, to offer meaningful privacy choices, and to responsibly manage the data we store and process. Skype for Business and Skype also compete with a variety of instant messaging, voice, and video communication providers, ranging from start-ups to established enterprises. PDF 4,097KB We protect our intellectual property investments in a variety of ways. Finally, prioritizing employee well-being is core to an organization’s success. Our responsibility is to express an opinion on the Companyâs financial statements based on our audits. The major classes of assets and liabilities to which we allocated the purchase price were as follows: The goodwill recognized in connection with the acquisition is primarily attributable to anticipated synergies from future growth and is not expected to be deductible for tax purposes. We perform a qualitative assessment on a quarterly basis and recognize an impairment if there are sufficient indicators that the fair value of the investment is less than carrying value. 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. CHICAGO, Jan. 5, 2021 /PRNewswire/ -- … Cash used in financing increased $3.3 billion to $36.9 billion for fiscal year 2019, mainly due to an $8.8 billion increase in common stock repurchases and a $1.1 billion increase in dividends paid, offset in part by a $6.2 billion decrease in repayments of debt, net of proceeds from issuance of debt. Type of Business by Department . 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. Sales and marketing expenses increased $1.4 billion or 8%, driven by investments in LinkedIn and commercial sales, and an increase in bad debt expense. Using Windows to fuel our cloud business and Microsoft 365 strategy, and to develop new categories of devices â both our own and third-party â on the intelligent edge. Readers should consider the above-noted factors when reviewing these sections. We invest around the world in public and private assets. Azure faces diverse competition from companies such as Amazon, Google, IBM, Oracle, VMware, and open source offerings. 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. Fiscal year 2019 net income included a $2.6 billion net income tax benefit related to intangible property transfers and a $157 million net charge related to the enactment of the TCJA, which together resulted in an increase to net income and diluted EPS of $2.4 billion and $0.31, respectively. Surface revenue increased $1.1 billion or 23%, with strong growth across commercial and consumer. They also support new startups, improve educational and health outcomes, and empower human ingenuity. Search advertising revenue increased $112 million or 1%. Internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of our financial reporting for external purposes in accordance with accounting principles generally accepted in the United States of America. 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. Refer to Note 12 â Income Taxes of the Notes to Financial Statements for further discussion. Trilogy Partnerships, Hugh F. Johnston 1 Right-of-use assets obtained in exchange for lease obligations: Reclassification adjustments for gains included in revenue, 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. Gross margin percentage increased slightly, due to sales mix shift to higher gross margin businesses in Windows and Gaming. These obligations did not have a material impact in our consolidated financial statements during the periods presented. Vertically integrated computer manufacturers such as Hewlett-Packard, IBM, and Oracle offer their own versions of the Unix operating system preinstalled on server hardware. We’re accelerating efforts to close the skills and broadband gaps, ensuring underrepresented and overlooked communities can compete on equal ground. Devices face competition from various computer, tablet, and hardware manufacturers who offer a unique combination of high-quality industrial design and innovative technologies across various price points. 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. services revenue growth, Revenue from Windows Commercial products and cloud services, comprising volume licensing of the Windows operating system, Windows cloud services, and other Windows commercial offerings, Revenue from Surface devices and accessories, Revenue from Xbox content and services, comprising Xbox Live (transactions, subscriptions, cloud services, and advertising), video games, and third-party video game royalties, Search advertising revenue, excluding TAC, growth, Revenue from search advertising excluding traffic acquisition costs (âTACâ) paid to Bing Ads network publishers. The Department of State encourages business owners to file early. We have the opportunity to redefine what customers and partners can expect and are working to deliver new solutions that reflect the best of Microsoft. That’s why we’re bringing together assets from across Microsoft, inclusive of LinkedIn and GitHub, to help 25 million job seekers gain digital skills for in-demand roles. We tested the reasonableness of managementâs judgments regarding the future resolution of the uncertain tax positions, including an evaluation of the technical merits of the uncertain tax positions. In Annual Report, Chief Justice Focuses On COVID's Impact On Judiciary In his report on the federal judiciary, ... December 31, 2020 6:01 PM ET. The following table reconciles our financial results reported in accordance with GAAP to non-GAAP financial results: Cash, cash equivalents, and short-term investments totaled $136.5 billion and $133.8 billion as of June 30, 2020 and 2019. Organizations purchase perpetual licenses or subscribe to licenses. LLC Annual Report. We also have an ESPP for all eligible employees. We regularly review inventory quantities on hand, future purchase commitments with our suppliers, and the estimated utility of our inventory. We have also added to our early stage optionality in nickel with the acquisition of the Honeymoon Well tenements in Western Australia. We hire a mix of university and industry talent worldwide. It is easy to fall prey to pessimism, or the sense that we individually or as a company can’t make a difference. Third, we must protect our most finite resource—the planet—by working toward a more sustainable future. Rotary in Action. This segment primarily comprises: Azure is a comprehensive set of cloud services that offer developers, IT professionals, and enterprises freedom to build, deploy, and manage applications on any platform or device. Server products revenue increased 8%, due to hybrid and premium solutions, as well as demand related to SQL Server 2008 and Windows Server 2008 end of support. 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