Tag: Investor Relations

Microsoft Cloud and AI Strength Drives Third Quarter Results

REDMOND, Wash. — April 30, 2025 — Microsoft Corp. today announced the following results for the quarter ended March 31, 2025, as compared to the corresponding period of last fiscal year:

·        Revenue was $70.1 billion and increased 13% (up 15% in constant currency)

·        Operating income was $32.0 billion and increased 16% (up 19% in constant currency)

·        Net income was $25.8 billion and increased 18% (up 19% in constant currency)

·        Diluted earnings per share was $3.46 and increased 18% (up 19% in constant currency)

“Cloud and AI are the essential inputs for every business to expand output, reduce costs, and accelerate growth,” said Satya Nadella, chairman and chief executive officer of Microsoft. “From AI infra and platforms to apps, we are innovating across the stack to deliver for our customers.”

“We delivered a strong quarter with Microsoft Cloud revenue of $42.4 billion, up 20% (up 22% in constant currency) year-over-year driven by continued demand for our differentiated offerings,” said Amy Hood, executive vice president and chief financial officer of Microsoft.

Business Highlights

Revenue in Productivity and Business Processes was $29.9 billion and increased 10% (up 13% in constant currency), with the following business highlights:

·        Microsoft 365 Commercial products and cloud services revenue increased 11% (up 14% in constant currency) driven by Microsoft 365 Commercial cloud revenue growth of 12% (up 15% in constant currency)

·        Microsoft 365 Consumer products and cloud services revenue increased 10% (up 12% in constant currency) driven by Microsoft 365 Consumer cloud revenue growth of 10% (up 12% in constant currency)

·        LinkedIn revenue increased 7% (up 8% in constant currency)

·        Dynamics products and cloud services revenue increased 11% (up 13% in constant currency) driven by Dynamics 365 revenue growth of 16% (up 18% in constant currency)

Revenue in Intelligent Cloud was $26.8 billion and increased 21% (up 22% in constant currency), with the following business highlights:

·        Server products and cloud services revenue increased 22% (up 24% in constant currency) driven by Azure and other cloud services revenue growth of 33% (up 35% in constant currency)

Revenue in More Personal Computing was $13.4 billion and increased 6% (up 7% in constant currency), with the following business highlights:

·        Windows OEM and Devices revenue increased 3%

·        Xbox content and services revenue increased 8% (up 9% in constant currency)

·        Search and news advertising revenue excluding traffic acquisition costs increased 21% (up 23% in constant currency)

Microsoft returned $9.7 billion to shareholders in the form of dividends and share repurchases in the third quarter of fiscal year 2025.

Business Outlook

Microsoft will provide forward-looking guidance in connection with this quarterly earnings announcement on its earnings conference call and webcast.

Quarterly Highlights, Product Releases, and Enhancements 

Every quarter Microsoft delivers hundreds of products, either as new releases, services, or enhancements to current products and services. These releases are a result of significant research and development investments, made over multiple years, designed to help customers be more productive and secure and to deliver differentiated value across the cloud and the edge.

Here are the major product releases and other highlights for the quarter, organized by product categories, to help illustrate how we are accelerating innovation across our businesses while expanding our market opportunities.

Environmental, Social, and Governance (ESG)

To learn more about Microsoft’s corporate governance and our environmental and social practices, please visit our investor relations Board and ESG website and reporting at Microsoft.com/transparency. 

Webcast Details

Satya Nadella, chairman and chief executive officer, Amy Hood, executive vice president and chief financial officer, Alice Jolla, chief accounting officer, Keith Dolliver, corporate secretary and deputy general counsel, and Jonathan Neilson, vice president of investor relations, will host a conference call and webcast at 2:30 p.m. Pacific time (5:30 p.m. Eastern time) today to discuss details of the company’s performance for the quarter and certain forward-looking information. The session may be accessed at http://www.microsoft.com/en-us/investor. The webcast will be available for replay through the close of business on April 30, 2026.

Constant Currency

Microsoft presents constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars using the average exchange rates from the comparative period rather than the actual exchange rates in effect during the respective periods. All growth comparisons relate to the corresponding period in the last fiscal year. Microsoft has provided this non-GAAP financial information to aid investors in better understanding our performance. The non-GAAP financial measures presented in this release should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.

Financial Performance Constant Currency Reconciliation

	Three Months Ended March 31,
($ in millions, except per share amounts)	Revenue	Operating Income	Net Income	Diluted Earnings per Share
2024 As Reported (GAAP)	$61,858	$27,581	$21,939	$2.94
2025 As Reported (GAAP)	$70,066	$32,000	$25,824	$3.46
Percentage Change Y/Y (GAAP)	13%	16%	18%	18%
Constant Currency Impact	$(1,059)	$(703)	$(392)	$(0.05)
Percentage Change Y/Y Constant Currency	15%	19%	19%	19%

 

Segment Revenue Constant Currency Reconciliation

	Three Months Ended March 31,
($ in millions)	Productivity and Business Processes	Intelligent Cloud	More Personal Computing
2024 As Reported (GAAP)	$27,113	$22,141	$12,604
2025 As Reported (GAAP)	$29,944	$26,751	$13,371
Percentage Change Y/Y (GAAP)	10%	21%	6%
Constant Currency Impact	$(626)	$(308)	$(125)
Percentage Change Y/Y Constant Currency	13%	22%	7%

We have recast certain prior period amounts to conform to the way we internally manage and monitor our business.

Selected Product and Service Revenue Constant Currency Reconciliation           

	Three Months Ended March 31, 2025
	Percentage Change Y/Y (GAAP)	Constant Currency Impact	Percentage Change Y/Y Constant Currency
Microsoft Cloud	20%	2%	22%
Microsoft 365 Commercial products and cloud services	11%	3%	14%
Microsoft 365 Commercial cloud	12%	3%	15%
Microsoft 365 Consumer products and cloud services	10%	2%	12%
Microsoft 365 Consumer cloud	10%	2%	12%
LinkedIn	7%	1%	8%
Dynamics products and cloud services	11%	2%	13%
Dynamics 365	16%	2%	18%
Server products and cloud services	22%	2%	24%
Azure and other cloud services	33%	2%	35%
Windows OEM and Devices	3%	0%	3%
Xbox content and services	8%	1%	9%
Search and news advertising excluding traffic acquisition costs	21%	2%	23%

 

About Microsoft

Microsoft (Nasdaq “MSFT” @microsoft) creates platforms and tools powered by AI to deliver innovative solutions that meet the evolving needs of our customers. The technology company is committed to making AI available broadly and doing so responsibly, with a mission to empower every person and every organization on the planet to achieve more.

Forward-Looking Statements

Statements in this release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors such as:

·        intense competition in all of our markets that may adversely affect our results of operations;

·        focus on cloud-based and AI services presenting execution and competitive risks;

·        significant investments in products and services that may not achieve expected returns;

·        acquisitions, joint ventures, and strategic alliances that may have an adverse effect on our business;

·        impairment of goodwill or amortizable intangible assets causing a significant charge to earnings;

·        cyberattacks and security vulnerabilities that could lead to reduced revenue, increased costs, liability claims, or harm to our reputation or competitive position;

·        disclosure and misuse of personal data that could cause liability and harm to our reputation;

·        the possibility that we may not be able to protect information stored in our products and services from use by others;

·        abuse of our advertising, professional, marketplace, or gaming platforms that may harm our reputation or user engagement;

·        products and services, how they are used by customers, and how third-party products and services interact with them, presenting security, privacy, and execution risks;

·        issues about the use of AI in our offerings that may result in reputational or competitive harm, or legal liability;

·        excessive outages, data losses, and disruptions of our online services if we fail to maintain an adequate operations infrastructure;

·        supply or quality problems;

·        government enforcement under competition laws and new market regulation may limit how we design and market our products;

·        potential consequences of trade and anti-corruption laws;

·        potential consequences of existing and increasing legal and regulatory requirements;

·        laws and regulations relating to the handling of personal data that may impede the adoption of our services or result in increased costs, legal claims, fines, or reputational damage;

·        claims against us that may result in adverse outcomes in legal disputes;

·        uncertainties relating to our business with government customers;

·        additional tax liabilities;

·        sustainability regulations and expectations that may expose us to increased costs and legal and reputational risk;

·        an inability to protect and utilize our intellectual property may harm our business and operating results;

·        claims that Microsoft has infringed the intellectual property rights of others;

·        damage to our reputation or our brands that may harm our business and results of operations;

·        adverse economic or market conditions that may harm our business;

·        catastrophic events or geo-political conditions, such as the COVID-19 pandemic, that may disrupt our business;

·        exposure to increased economic and operational uncertainties from operating a global business, including the effects of foreign currency exchange; and

·        the dependence of our business on our ability to attract and retain talented employees.

For more information about risks and uncertainties associated with Microsoft’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of Microsoft’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Microsoft’s Investor Relations department at (800) 285-7772 or at Microsoft’s Investor Relations website at http://www.microsoft.com/en-us/investor.

All information in this release is as of March 31, 2025. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.

For more information, press only:

Microsoft Media Relations, WE Communications for Microsoft, (425) 638-7777, [email protected]

For more information, financial analysts and investors only:

Jonathan Neilson, Vice President, Investor Relations, (425) 706-4400

Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://www.microsoft.com/news. Web links, telephone numbers, and titles were correct at time of publication, but may since have changed. Shareholder and financial information, as well as today’s 2:30 p.m. Pacific time conference call with investors and analysts, is available at http://www.microsoft.com/en-us/investor.

 

MICROSOFT CORPORATION

INCOME STATEMENTS

(In millions, except per share amounts) (Unaudited)

	Three Months Ended  March 31,				Nine Months Ended  March 31,
	2025		2024		2025		2024
Revenue:
Product	$15,319		$17,080		$46,810		$51,556
Service and other	54,747		44,778		158,473		128,839
Total revenue	70,066		61,858		205,283		180,395
Cost of revenue:
Product	3,037		4,339		10,187		13,834
Service and other	18,882		14,166		53,630		40,596
Total cost of revenue	21,919		18,505		63,817		54,430
Gross margin	48,147		43,353		141,466		125,965
Research and development	8,198		7,653		23,659		21,454
Sales and marketing	6,212		6,207		18,369		17,640
General and administrative	1,737		1,912		5,233		5,363
Operating income	32,000		27,581		94,205		81,508
Other expense, net	(623)		(854)		(3,194)		(971)
Income before income taxes	31,377		26,727		91,011		80,537
Provision for income taxes	5,553		4,788		16,412		14,437
Net income	$25,824		$21,939		$74,599		$66,100
Earnings per share:
Basic	$3.47		$2.95		$10.03		$8.90
Diluted	$3.46		$2.94		$9.99		$8.85
Weighted average shares outstanding:
Basic	7,434		7,431		7,434		7,431
Diluted	7,461		7,472		7,466		7,467

 

 

COMPREHENSIVE INCOME STATEMENTS

(In millions) (Unaudited)

	Three Months Ended  March 31,				Nine Months Ended  March 31,
	2025		2024		2025		2024
Net income	$25,824		$21,939		$74,599		$66,100
Other comprehensive income (loss), net of tax:
Net change related to derivatives	(20)		10		4		28
Net change related to investments	450		(202)		1,130		869
Translation adjustments and other	353		(294)		(377)		11
Other comprehensive income (loss)	783		(486)		757		908
Comprehensive income	$26,607		$21,453		$75,356		$67,008

 

 

BALANCE SHEETS

(In millions) (Unaudited)

	March 31, 2025	June 30,  2024
Assets
Current assets:
Cash and cash equivalents	$28,828	$18,315
Short-term investments	50,790	57,228
Total cash, cash equivalents, and short-term investments	79,618	75,543
Accounts receivable, net of allowance for doubtful accounts of $695 and $830	51,700	56,924
Inventories	848	1,246
Other current assets	24,478	26,021
Total current assets	156,644	159,734
Property and equipment, net of accumulated depreciation of $87,074 and $76,421	183,939	135,591
Operating lease right-of-use assets	24,475	18,961
Equity and other investments	16,035	14,600
Goodwill	119,329	119,220
Intangible assets, net	23,968	27,597
Other long-term assets	38,234	36,460
Total assets	$562,624	$512,163
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$26,250	$21,996
Short-term debt	0	6,693
Current portion of long-term debt	2,999	2,249
Accrued compensation	10,579	12,564
Short-term income taxes	6,805	5,017
Short-term unearned revenue	44,636	57,582
Other current liabilities	22,937	19,185
Total current liabilities	114,206	125,286
Long-term debt	39,882	42,688
Long-term income taxes	25,061	27,931
Long-term unearned revenue	2,840	2,602
Deferred income taxes	2,522	2,618
Operating lease liabilities	17,686	15,497
Other long-term liabilities	38,536	27,064
Total liabilities	240,733	243,686
Commitments and contingencies
Stockholders’ equity:
Common stock and paid-in capital – shares authorized 24,000; outstanding 7,434 and 7,434	106,965	100,923
Retained earnings	219,759	173,144
Accumulated other comprehensive loss	(4,833)	(5,590)
Total stockholders’ equity	321,891	268,477
Total liabilities and stockholders’ equity	$562,624	$512,163

 

 

CASH FLOWS STATEMENTS

(In millions) (Unaudited)

	Three Months Ended  March 31,				Nine Months Ended  March 31,
	2025		2024		2025		2024
Operations
Net income	$25,824		$21,939		$74,599		$66,100
Adjustments to reconcile net income to net cash from operations:
Depreciation, amortization, and other	8,740		6,027		22,950		15,907
Stock-based compensation expense	2,980		2,703		8,901		8,038
Net recognized losses (gains) on investments and derivatives	(298)		49		553		261
Deferred income taxes	(2,244)		(1,323)		(4,835)		(3,593)
Changes in operating assets and liabilities:
Accounts receivable	(2,461)		(2,028)		5,598		6,055
Inventories	52		260		390		1,229
Other current assets	1,076		951		642		880
Other long-term assets	(518)		(2,137)		(3,368)		(5,577)
Accounts payable	1,179		648		1,221		(659)
Unearned revenue	(1,032)		(645)		(12,923)		(10,309)
Income taxes	1,298		2,622		(1,081)		2,493
Other current liabilities	2,839		2,803		576		215
Other long-term liabilities	(391)		48		292		313
Net cash from operations	37,044		31,917		93,515		81,353
Financing
Proceeds from issuance (repayments) of debt, maturities of 90 days or less, net	0		(3,810)		(5,746)		6,392
Proceeds from issuance of debt	0		6,352		0		24,198
Repayments of debt	(2,250)		(11,589)		(3,216)		(16,005)
Common stock issued	546		522		1,508		1,468
Common stock repurchased	(4,781)		(4,213)		(13,874)		(13,044)
Common stock cash dividends paid	(6,169)		(5,572)		(17,913)		(16,197)
Other, net	(382)		(498)		(1,614)		(1,006)
Net cash used in financing	(13,036)		(18,808)		(40,855)		(14,194)
Investing
Additions to property and equipment	(16,745)		(10,952)		(47,472)		(30,604)
Acquisition of companies, net of cash acquired and divestitures, and purchases of intangible and other assets	(981)		(1,575)		(4,235)		(67,790)
Purchases of investments	(4,474)		(2,183)		(8,144)		(14,901)
Maturities of investments	6,721		3,350		11,461		23,218
Sales of investments	2,161		1,941		6,688		8,871
Other, net	604		(1,281)		(325)		(916)
Net cash used in investing	(12,714)		(10,700)		(42,027)		(82,122)
Effect of foreign exchange rates on cash and cash equivalents	52		(80)		(120)		(107)
Net change in cash and cash equivalents	11,346		2,329		10,513		(15,070)
Cash and cash equivalents, beginning of period	17,482		17,305		18,315		34,704
Cash and cash equivalents, end of period	$28,828		$19,634		$28,828		$19,634

 

 

SEGMENT REVENUE AND OPERATING INCOME

(In millions) (Unaudited)

	Three Months Ended  March 31,				Nine Months Ended  March 31,
	2025		2024		2025		2024
Revenue
Productivity and Business Processes	$29,944		$27,113		$87,698		$78,193
Intelligent Cloud	26,751		22,141		76,387		63,679
More Personal Computing	13,371		12,604		41,198		38,523
Total	$70,066		$61,858		$205,283		$180,395
Operating Income
Productivity and Business Processes	$17,379		$15,143		$50,780		$43,955
Intelligent Cloud	11,095		9,515		32,449		27,978
More Personal Computing	3,526		2,923		10,976		9,575
Total	$32,000		$27,581		$94,205		$81,508
We have recast certain prior period amounts to conform to the way we internally manage and monitor our business.

 

REDMOND, Wash. — January 24, 2023 — Microsoft Corp. today announced the following results for the quarter ended December 31, 2022, as compared to the corresponding period of last fiscal year:

• Revenue was $52.7 billion and increased 2%
• Operating income was $20.4 billion GAAP and $21.6 billion non-GAAP, and decreased 8% and 3%, respectively
• Net income was $16.4 billion GAAP and $17.4 billion non-GAAP, and decreased 12% and 7%, respectively
• Diluted earnings per share was $2.20 GAAP and $2.32 non-GAAP, and decreased 11% and 6%, respectively

“The next major wave of computing is being born, as the Microsoft Cloud turns the world’s most advanced AI models into a new computing platform,” said Satya Nadella, chairman and chief executive officer of Microsoft. “We are committed to helping our customers use our platforms and tools to do more with less today and innovate for the future in the new era of AI.”

“We are focused on operational excellence as we continue to invest to drive growth. Microsoft Cloud revenue was $27.1 billion, up 22% (up 29% in constant currency) year-over-year as our commercial offerings continue to drive value for our customers,” said Amy Hood, executive vice president and chief financial officer of Microsoft.

The following table reconciles our financial results reported in accordance with generally accepted accounting principles (GAAP) to non-GAAP financial results. Additional information regarding our non-GAAP definition is provided below. All growth comparisons relate to the corresponding period in the last fiscal year.

	Three Months Ended December 31,
($ in millions, except per share amounts)		Revenue	Operating Income	Net Income	Diluted Earnings per Share
2021 As Reported (GAAP)		$51,728	$22,247	$18,765	$2.48
2022 As Reported (GAAP)		$52,747	$20,399	$16,425	$2.20
Severance, hardware-related impairment, and lease consolidation costs		–	1,171	946	0.12
2022 As Adjusted		$52,747	$21,570	$17,371	$2.32
Percentage Change Y/Y (GAAP)		2%	(8)%	(12)%	(11)%
Percentage Change Y/Y Constant Currency		7%	0%	(4)%	(3)%
Percentage Change Y/Y (As Adjusted)		2%	(3)%	(7)%	(6)%
Percentage Change Y/Y (As Adjusted) Constant Currency		7%	6%	1%	2%

Business Highlights

Revenue in Productivity and Business Processes was $17.0 billion and increased 7% (up 13% in constant currency), with the following business highlights:

• Office Commercial products and cloud services revenue increased 7% (up 14%in constant currency) driven by Office 365 Commercial revenue growth of 11% (up 18% in constant currency)
• Office Consumer products and cloud services revenue decreased 2% (up 3% in constant currency) and Microsoft 365 Consumer subscribers grew to 63.2 million
• LinkedIn revenue increased 10% (up 14% in constant currency)
• Dynamics products and cloud services revenue increased 13% (up 20% in constant currency) driven by Dynamics 365 revenue growth of 21% (up 29% in constant currency)

Revenue in Intelligent Cloud was $21.5 billion and increased 18% (up 24% in constant currency), with the following business highlights:

• Server products and cloud services revenue increased 20% (up 26% in constant currency) driven by Azure and other cloud services revenue growth of 31% (up 38% in constant currency)

Revenue in More Personal Computing was $14.2 billion and decreased 19% (down 16% in constant currency), with the following business highlights:

• Windows OEM revenue decreased 39%
• Windows Commercial products and cloud services revenue decreased 3% (up 3% in constant currency)
• Xbox content and services revenue decreased 12% (down 8% in constant currency)
• Search and news advertising revenue excluding traffic acquisition costs increased 10% (up 15% in constant currency)
• Devices revenue decreased 39% (down 34% in constant currency)

Microsoft returned $9.7 billion to shareholders in the form of share repurchases and dividends in the second quarter of fiscal year 2023, a decrease of 11% compared to the second quarter of fiscal year 2022.

Business Outlook

Microsoft will provide forward-looking guidance in connection with this quarterly earnings announcement on its earnings conference call and webcast.

Quarterly Highlights, Product Releases, and Enhancements 

Every quarter Microsoft delivers hundreds of products, either as new releases, services, or enhancements to current products and services. These releases are a result of significant research and development investments, made over multiple years, designed to help customers be more productive and secure and to deliver differentiated value across the cloud and the edge.

Here are the major product releases and other highlights for the quarter, organized by product categories, to help illustrate how we are accelerating innovation across our businesses while expanding our market opportunities.

Environmental, Social, and Governance (ESG)

To better execute on Microsoft’s mission, we focus our Environmental, Social, and Governance (ESG) efforts where we can have the most positive impact. To learn more about our latest initiatives and priorities, please visit our investor relations ESG website.

Webcast Details

Satya Nadella, chairman and chief executive officer, Amy Hood, executive vice president and chief financial officer, Alice Jolla, chief accounting officer, Keith Dolliver, deputy general counsel, and Brett Iversen, vice president of investor relations, will host a conference call and webcast at 2:30 p.m. Pacific time (5:30 p.m. Eastern time) today to discuss details of the company’s performance for the quarter and certain forward-looking information. The session may be accessed at http://www.microsoft.com/en-us/investor. The webcast will be available for replay through the close of business on January 24, 2024.

Non-GAAP Definition

Q2 charge. In the second quarter of fiscal year 2023, Microsoft recorded costs related to decisions announced on January 18th, including employee severance expenses of $800 million, impairment charges resulting from changes to our hardware portfolio, and costs related to lease consolidation activities.

Microsoft has provided non-GAAP financial measures related to the impact of these strategic reprioritization actions to aid investors in better understanding our performance. Microsoft believes these non-GAAP measures assist investors by providing additional insight into its operational performance and help clarify trends affecting its business. For comparability of reporting, management considers non-GAAP measures in conjunction with GAAP financial results in evaluating business performance. The non-GAAP financial measures presented in this release should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.

Constant Currency

Microsoft presents constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars using the average exchange rates from the comparative period rather than the actual exchange rates in effect during the respective periods. All growth comparisons relate to the corresponding period in the last fiscal year. Microsoft has provided this non-GAAP financial information to aid investors in better understanding our performance. The non-GAAP financial measures presented in this release should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.

Financial Performance Constant Currency Reconciliation

	Three Months Ended December 31,
($ in millions, except per share amounts)	Revenue	Operating Income	Net Income	Diluted Earnings per Share
2021 As Reported (GAAP)	$51,728	$22,247	$18,765	$2.48
2022 As Reported (GAAP)	$52,747	$20,399	$16,425	$2.20
2022 As Adjusted	$52,747	$21,570	$17,371	$2.32
Percentage Change Y/Y (GAAP)	2%	(8)%	(12)%	(11)%
Percentage Change Y/Y (As Adjusted)	2%	(3)%	(7)%	(6)%
Constant Currency Impact	$(2,645)	$(1,931)	$(1,563)	$(0.21)
Percentage Change Y/Y Constant Currency	7%	0%	(4)%	(3)%
Percentage Change Y/Y (As Adjusted) Constant Currency	7%	6%	1%	2%

Segment Revenue Constant Currency Reconciliation

	Three Months Ended December 31,
($ in millions)	Productivity and Business Processes	Intelligent Cloud	More Personal Computing
2021 As Reported (GAAP)	$15,936	$18,262	$17,530
2022 As Reported (GAAP)	$17,002	$21,508	$14,237
Percentage Change Y/Y (GAAP)	7%	18%	(19)%
Constant Currency Impact	$(1,002)	$(1,078)	$(565)
Percentage Change Y/Y Constant Currency	13%	24%	(16)%

We have recast certain prior period amounts to conform to the way we internally manage and monitor our business.

Selected Product and Service Revenue Constant Currency Reconciliation        

	Three Months Ended December 31, 2022
	Percentage Change Y/Y (GAAP)	Constant Currency Impact	Percentage Change Y/Y Constant Currency
Microsoft Cloud revenue	22%	7%	29%
Office Commercial products and cloud services	7%	7%	14%
Office 365 Commercial	11%	7%	18%
Office Consumer products and cloud services	(2)%	5%	3%
LinkedIn	10%	4%	14%
Dynamics products and cloud services	13%	7%	20%
Dynamics 365	21%	8%	29%
Server products and cloud services	20%	6%	26%
Azure and other cloud services	31%	7%	38%
Windows OEM	(39)%	0%	(39)%
Windows Commercial products and cloud services	(3)%	6%	3%
Xbox content and services	(12)%	4%	(8)%
Search and news advertising excluding traffic acquisition costs	10%	5%	15%
Devices	(39)%	5%	(34)%

About Microsoft

Microsoft (Nasdaq “MSFT” @microsoft) enables digital transformation for the era of an intelligent cloud and an intelligent edge. Its mission is to empower every person and every organization on the planet to achieve more.

Forward-Looking Statements

Statements in this release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors such as:

• intense competition in all of our markets that may lead to lower revenue or operating margins;
• increasing focus on cloud-based services presenting execution and competitive risks;
• significant investments in products and services that may not achieve expected returns;
• acquisitions, joint ventures, and strategic alliances that may have an adverse effect on our business;
• impairment of goodwill or amortizable intangible assets causing a significant charge to earnings;
• cyberattacks and security vulnerabilities that could lead to reduced revenue, increased costs, liability claims, or harm to our reputation or competitive position;
• disclosure and misuse of personal data that could cause liability and harm to our reputation;
• the possibility that we may not be able to protect information stored in our products and services from use by others;
• abuse of our advertising, professional, marketplace, or gaming platforms that may harm our reputation or user engagement;
• the development of the internet of things presenting security, privacy, and execution risks;
• issues about the use of artificial intelligence in our offerings that may result in competitive harm, legal liability, or reputational harm;
• excessive outages, data losses, and disruptions of our online services if we fail to maintain an adequate operations infrastructure;
• quality or supply problems;
• government litigation and regulatory activity relating to competition rules that may limit how we design and market our products;
• potential consequences under trade, anti-corruption, and other laws resulting from our global operations;
• laws and regulations relating to the handling of personal data that may impede the adoption of our services or result in increased costs, legal claims, fines, or reputational damage;
• claims against us that may result in adverse outcomes in legal disputes;
• uncertainties relating to our business with government customers;
• additional tax liabilities;
• the possibility that we may fail to protect our source code;
• legal changes, our evolving business model, piracy, and other factors may decrease the value of our intellectual property;
• claims that Microsoft has infringed the intellectual property rights of others;
• damage to our reputation or our brands that may harm our business and operating results;
• adverse economic or market conditions that may harm our business;
• catastrophic events or geo-political conditions, such as the COVID-19 pandemic, that may disrupt our business;
• exposure to increased economic and operational uncertainties from operating a global business, including the effects of foreign currency exchange and
• the dependence of our business on our ability to attract and retain talented employees.

For more information about risks and uncertainties associated with Microsoft’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of Microsoft’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Microsoft’s Investor Relations department at (800) 285-7772 or at Microsoft’s Investor Relations website at http://www.microsoft.com/en-us/investor.

All information in this release is as of December 31, 2022. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.

For more information, press only:

Microsoft Media Relations, WE Communications for Microsoft, (425) 638-7777, [email protected]

For more information, financial analysts and investors only:

Brett Iversen, Vice President, Investor Relations, (425) 706-4400

Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://www.microsoft.com/news. Web links, telephone numbers, and titles were correct at time of publication, but may since have changed. Shareholder and financial information, as well as today’s 2:30 p.m. Pacific time conference call with investors and analysts, is available at http://www.microsoft.com/en-us/investor.

REDMOND, Wash. — April 26, 2022 — Microsoft Corp. today announced the following results for the quarter ended March 31, 2022, as compared to the corresponding period of last fiscal year:

• Revenue was $49.4 billion and increased 18%
• Operating income was $20.4 billion and increased 19%
• Net income was $16.7 billion and increased 8% GAAP (up 13% non-GAAP)
• Diluted earnings per share was $2.22 and increased 9% GAAP (up 14% non-GAAP)

Revenue and diluted earnings per share results include $(302) million and $(0.03) of additional impact from unfavorable foreign exchange rate movement within the quarter and $111 million and $(0.01) from Nuance, which closed on March 4, 2022, neither of which were included in the forward-looking guidance provided on January 25, 2022. Additional details are provided in the Earnings Call Slides.

“Going forward, digital technology will be the key input that powers the world’s economic output,” said Satya Nadella, chairman and chief executive officer of Microsoft. “Across the tech stack, we are expanding our opportunity and taking share as we help customers differentiate, build resilience, and do more with less.”

“Continued customer commitment to our cloud platform and strong sales execution drove better than expected commercial bookings growth of 28% and Microsoft Cloud revenue of $23.4 billion, up 32% year over year,” said Amy Hood, executive vice president and chief financial officer of Microsoft.

The following table reconciles our financial results reported in accordance with generally accepted accounting principles (GAAP) to non-GAAP financial results. Additional information regarding our non-GAAP definition is provided below. All growth comparisons relate to the corresponding period in the last fiscal year.

	Three Months Ended March 31,
($ in millions, except per share amounts)		Revenue	Operating Income	Net Income	Diluted Earnings per Share
2021 As Reported (GAAP)		$41,706	$17,048	$15,457	$2.03
Net income tax benefit related to India Supreme Court decision on withholding taxes		–	–	(620)	(0.08)
2021 As Adjusted (non-GAAP)		$41,706	$17,048	$14,837	$1.95
2022 As Reported (GAAP)		$49,360	$20,364	$16,728	$2.22
Percentage Change Y/Y (GAAP)		18%	19%	8%	9%
Percentage Change Y/Y (non-GAAP)		18%	19%	13%	14%
Percentage Change Y/Y (non-GAAP) Constant Currency		21%	23%	17%	18%

Business Highlights

Revenue in Productivity and Business Processes was $15.8 billion and increased 17%, with the following business highlights:

• Office Commercial products and cloud services revenue increased 12% (up 14% CC) driven by Office 365 Commercial revenue growth of 17% (up 20% CC)
• Office Consumer products and cloud services revenue increased 11% (up 12% CC) and Microsoft 365 Consumer subscribers grew to 58.4 million
• LinkedIn revenue increased 34% (up 35% CC)
• Dynamics products and cloud services revenue increased 22% (up 25% CC) driven by Dynamics 365 revenue growth of 35% (up 38% CC)

Revenue in Intelligent Cloud was $19.1 billion and increased 26%, with the following business highlights:

• Server products and cloud services revenue increased 29% (up 32% CC) driven by Azure and other cloud services revenue growth of 46% (up 49% CC)

Revenue in More Personal Computing was $14.5 billion and increased 11%, with the following business highlights:

• Windows OEM revenue increased 11%
• Windows Commercial products and cloud services revenue increased 14% (up 19% CC)
• Xbox content and services revenue increased 4% (up 6% CC)
• Search and news advertising revenue excluding traffic acquisition costs increased 23% (up 25% CC)
• Surface revenue increased 13% (up 18% CC)

Microsoft returned $12.4 billion to shareholders in the form of share repurchases and dividends in the third quarter of fiscal year 2022, an increase of 25% compared to the third quarter of fiscal year 2021.

Business Outlook

Microsoft will provide forward-looking guidance in connection with this quarterly earnings announcement on its earnings conference call and webcast.

Quarterly Highlights, Product Releases, and Enhancements  

Every quarter Microsoft delivers hundreds of products, either as new releases, services, or enhancements to current products and services. These releases are a result of significant research and development investments, made over multiple years, designed to help customers be more productive and secure and to deliver differentiated value across the cloud and the edge.

Here are the major product releases and other highlights for the quarter, organized by product categories, to help illustrate how we are accelerating innovation across our businesses while expanding our market opportunities.

Environmental, Social, and Governance (ESG)

To better execute Microsoft’s mission, we focus our Environmental, Social, and Governance (ESG) efforts where we can have the most positive impact. To learn more about our latest initiatives and priorities, please visit our investor relations ESG website.

Webcast Details

Satya Nadella, chairman and chief executive officer, Amy Hood, executive vice president and chief financial officer, Alice Jolla, chief accounting officer, Keith Dolliver, deputy general counsel, and Brett Iversen, general manager of investor relations, will host a conference call and webcast at 2:30 p.m. Pacific time (5:30 p.m. Eastern time) today to discuss details of the company’s performance for the quarter and certain forward-looking information. The session may be accessed at http://www.microsoft.com/en-us/investor. The webcast will be available for replay through the close of business on April 26, 2023.

Non-GAAP Definition

The India Supreme Court Decision Impact. In March 2021, the India Supreme Court issued a decision on withholding taxes in the case of Engineering Analysis Centre of Excellence Private Limited vs The Commissioner of Income Tax. Microsoft has historically paid India withholding taxes on software sales through distributor withholding and tax audit assessments in India. The India Supreme Court ruled favorably for companies in 86 separate appeals, some dating back to 2012, holding that software sales are not subject to India withholding taxes. Although Microsoft was not a party to the appeals, Microsoft’s software sales in India were determined to be not subject to withholding taxes. Therefore, Microsoft 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.

Microsoft has provided non-GAAP financial measures related to the India Supreme Court decision to aid investors in better understanding our performance. Microsoft believes these non-GAAP measures assist investors by providing additional insight into its operational performance and help clarify trends affecting its business. For comparability of reporting, management considers non-GAAP measures in conjunction with GAAP financial results in evaluating business performance. The non-GAAP financial measures presented in this release should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.

Constant Currency

Microsoft presents constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars using the average exchange rates from the comparative period rather than the actual exchange rates in effect during the respective periods. All growth comparisons relate to the corresponding period in the last fiscal year. Microsoft has provided this non-GAAP financial information to aid investors in better understanding our performance. The non-GAAP financial measures presented in this release should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.

Financial Performance Constant Currency Reconciliation

	Three Months Ended March 31,
($ in millions, except per share amounts)	Revenue	Operating Income	Net Income	Diluted Earnings per Share
2021 As Reported (GAAP)	$41,706	$17,048	$15,457	$2.03
2021 As Adjusted (non-GAAP)	$41,706	$17,048	$14,837	$1.95
2022 As Reported (GAAP)	$49,360	$20,364	$16,728	$2.22
Percentage Change Y/Y (GAAP)	18%	19%	8%	9%
Percentage Change Y/Y (non-GAAP)	18%	19%	13%	14%
Constant Currency Impact	$(1,003)	$(677)	$(577)	$(0.08)
Percentage Change Y/Y (non-GAAP) Constant Currency	21%	23%	17%	18%

Segment Revenue Constant Currency Reconciliation

	Three Months Ended March 31,
($ in millions)	Productivity and Business Processes	Intelligent Cloud	More Personal Computing
2021 As Reported (GAAP)	$13,552	$15,118	$13,036
2022 As Reported (GAAP)	$15,789	$19,051	$14,520
Percentage Change Y/Y (GAAP)	17%	26%	11%
Constant Currency Impact	$(332)	$(418)	$(253)
Percentage Change Y/Y (non-GAAP) Constant Currency	19%	29%	13%

Selected Product and Service Revenue Constant Currency Reconciliation           

	Three Months Ended March 31, 2022
	Percentage Change Y/Y (GAAP)	Constant Currency Impact	Percentage Change Y/Y (non-GAAP) Constant Currency
Office Commercial products and cloud services	12%	2%	14%
Office 365 Commercial	17%	3%	20%
Office Consumer products and cloud services	11%	1%	12%
LinkedIn	34%	1%	35%
Dynamics products and cloud services	22%	3%	25%
Dynamics 365	35%	3%	38%
Server products and cloud services	29%	3%	32%
Azure and other cloud services	46%	3%	49%
Windows OEM	11%	0%	11%
Windows Commercial products and cloud services	14%	5%	19%
Xbox content and services	4%	2%	6%
Search and news advertising excluding traffic acquisition costs	23%	2%	25%
Surface	13%	5%	18%

About Microsoft

Microsoft (Nasdaq “MSFT” @microsoft) enables digital transformation for the era of an intelligent cloud and an intelligent edge. Its mission is to empower every person and every organization on the planet to achieve more.

Forward-Looking Statements

Statements in this release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors such as:

• intense competition in all of our markets that may lead to lower revenue or operating margins;
• increasing focus on cloud-based services presenting execution and competitive risks;
• significant investments in products and services that may not achieve expected returns;
• acquisitions, joint ventures, and strategic alliances that may have an adverse effect on our business;
• impairment of goodwill or amortizable intangible assets causing a significant charge to earnings;
• cyberattacks and security vulnerabilities that could lead to reduced revenue, increased costs, liability claims, or harm to our reputation or competitive position;
• disclosure and misuse of personal data that could cause liability and harm to our reputation;
• the possibility that we may not be able to protect information stored in our products and services from use by others;
• abuse of our advertising or social platforms that may harm our reputation or user engagement;
• the development of the internet of things presenting security, privacy, and execution risks;
• issues about the use of artificial intelligence in our offerings that may result in competitive harm, legal liability, or reputational harm;
• excessive outages, data losses, and disruptions of our online services if we fail to maintain an adequate operations infrastructure;
• quality or supply problems;
• government litigation and regulatory activity relating to competition rules that may limit how we design and market our products;
• potential consequences under trade, anti-corruption, and other laws resulting from our global operations;
• laws and regulations relating to the handling of personal data that may impede the adoption of our services or result in increased costs, legal claims, fines, or reputational damage;
• claims against us that may result in adverse outcomes in legal disputes;
• uncertainties relating to our business with government customers;
• additional tax liabilities;
• the possibility that we may fail to protect our source code;
• legal changes, our evolving business model, piracy, and other factors may decrease the value of our intellectual property;
• claims that Microsoft has infringed the intellectual property rights of others;
• damage to our reputation or our brands that may harm our business and operating results;
• adverse economic or market conditions that may harm our business;
• catastrophic events or geo-political conditions, such as the COVID-19 pandemic, that may disrupt our business;
• exposure to increased economic and operational uncertainties from operating a global business, including the effects of foreign currency exchange and
• the dependence of our business on our ability to attract and retain talented employees.

For more information about risks and uncertainties associated with Microsoft’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of Microsoft’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Microsoft’s Investor Relations department at (800) 285-7772 or at Microsoft’s Investor Relations website at http://www.microsoft.com/en-us/investor.

All information in this release is as of March 31, 2022. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.

For more information, press only:

Microsoft Media Relations, WE Communications for Microsoft, (425) 638-7777, [email protected]

For more information, financial analysts and investors only:

Brett Iversen, General Manager, Investor Relations, (425) 706-4400

Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://www.microsoft.com/news. Web links, telephone numbers, and titles were correct at time of publication, but may since have changed. Shareholder and financial information, as well as today’s 2:30 p.m. Pacific time conference call with investors and analysts, is available at http://www.microsoft.com/en-us/investor.

REDMOND, Wash. — October 27, 2020 — Microsoft Corp. today announced the following results for the quarter ended September 30, 2020, as compared to the corresponding period of last fiscal year:

• Revenue was $37.2 billion and increased 12%
• Operating income was $15.9 billion and increased 25%
• Net income was $13.9 billion and increased 30%
• Diluted earnings per share was $1.82 and increased 32%

“The next decade of economic performance for every business will be defined by the speed of their digital transformation,” said Satya Nadella, chief executive officer of Microsoft. “We are innovating across our full modern tech stack to help our customers in every industry improve time to value, increase agility, and reduce costs.”

“Demand for our cloud offerings drove a strong start to the fiscal year with our commercial cloud revenue generating $15.2 billion, up 31% year over year,” said Amy Hood, executive vice president and chief financial officer of Microsoft. “We continue to invest against the significant opportunity ahead of us to drive long-term growth.”

Business Highlights

Revenue in Productivity and Business Processes was $12.3 billion and increased 11%, with the following business highlights:

• Office Commercial products and cloud services revenue increased 9% driven by Office 365 Commercial revenue growth of 21% (up 20% in constant currency)
• Office Consumer products and cloud services revenue increased 13% and Microsoft 365 Consumer subscribers increased to 45.3 million
• LinkedIn revenue increased 16%
• Dynamics products and cloud services revenue increased 19% (up 18% in constant currency) driven by Dynamics 365 revenue growth of 38% (up 37% in constant currency)

Revenue in Intelligent Cloud was $13.0 billion and increased 20% (up 19% in constant currency), with the following business highlights:

• Server products and cloud services revenue increased 22% (up 21% in constant currency) driven by Azure revenue growth of 48% (up 47% in constant currency)

Revenue in More Personal Computing was $11.8 billion and increased 6%, with the following business highlights:

• Windows OEM revenue declined 5%
• Windows Commercial products and cloud services revenue increased 13% (up 12% in constant currency)
• Xbox content and services revenue increased 30%
• Surface revenue increased 37% (up 36% in constant currency)
• Search advertising revenue excluding traffic acquisition costs decreased 10% (down 11% in constant currency)

Microsoft returned $9.5 billion to shareholders in the form of share repurchases and dividends in the first quarter of fiscal year 2021, an increase of 21% compared to the first quarter of fiscal year 2020.

Business Outlook

Microsoft will provide forward-looking guidance in connection with this quarterly earnings announcement on its earnings conference call and webcast.

Quarterly Highlights, Product Releases, and Enhancements 

Every quarter Microsoft delivers hundreds of products, either as new releases, services, or enhancements to current products and services. These releases are a result of significant research and development investments, made over multiple years, designed to help customers be more productive and secure and to deliver differentiated value across the cloud and the edge.

Here are the major product releases and other highlights for the quarter, organized by product categories, to help illustrate how we are accelerating innovation across our businesses while expanding our market opportunities.

Responding to COVID-19

At Microsoft, our focus remains on ensuring the safety of our employees, striving to protect the health and well-being of the communities in which we operate, and providing technology and resources to our customers and partners to help them do their best work while remote. Additional information about Microsoft’s COVID-19 response can be found here.

Environmental, Social, and Governance (ESG)

To better execute on Microsoft’s mission, we focus our Environmental, Social, and Governance (ESG) efforts where we can have the most positive impact. To learn more about our latest initiatives and priorities, please visit our investor relations ESG website.

Webcast Details

Satya Nadella, chief executive officer, Amy Hood, executive vice president and chief financial officer, Alice Jolla, chief accounting officer, Keith Dolliver, deputy general counsel, and Michael Spencer, general manager of investor relations, will host a conference call and webcast at 2:30 p.m. Pacific time (5:30 p.m. Eastern time) today to discuss details of the company’s performance for the quarter and certain forward-looking information. The session may be accessed at http://www.microsoft.com/en-us/investor. The webcast will be available for replay through the close of business on October 27, 2021.

Constant Currency

Microsoft presents constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars using the average exchange rates from the comparative period rather than the actual exchange rates in effect during the respective periods. All growth comparisons relate to the corresponding period in the last fiscal year. Microsoft has provided this non-GAAP financial information to aid investors in better understanding our performance. The non-GAAP financial measures presented in this release should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.

Financial Performance Constant Currency Reconciliation

	Three Months Ended September 30,
($ in millions, except per share amounts)	Revenue	Operating Income	Net Income	Diluted Earnings per Share
2019 As Reported	$33,055	$12,686	$10,678	$1.38
2020 As Reported	$37,154	$15,876	$13,893	$1.82
Percentage Change Y/Y	12%	25%	30%	32%
Constant Currency Impact	$108	$71	$231	$0.03
Percentage Change Y/Y Constant Currency	12%	25%	28%	30%

Segment Revenue Constant Currency Reconciliation

	Three Months Ended September 30,
($ in millions)	Productivity and Business Processes	Intelligent Cloud	More Personal Computing
2019 As Reported	$11,077	$10,845	$11,133
2020 As Reported	$12,319	$12,986	$11,849
Percentage Change Y/Y	11%	20%	6%
Constant Currency Impact	$32	$42	$34
Percentage Change Y/Y Constant Currency	11%	19%	6%

Selected Product and Service Revenue Constant Currency Reconciliation           

	Three Months Ended September 30, 2020
	Percentage Change Y/Y (GAAP)	Constant Currency Impact	Percentage Change Y/Y Constant Currency
Office Commercial products and cloud services	9%	0%	9%
Office 365 Commercial	21%	(1)%	20%
Office Consumer products and cloud services	13%	0%	13%
LinkedIn	16%	0%	16%
Dynamics products and cloud services	19%	(1)%	18%
Dynamics 365	38%	(1)%	37%
Server products and cloud services	22%	(1)%	21%
Azure	48%	(1)%	47%
Windows OEM	(5)%	0%	(5)%
Windows Commercial products and cloud services	13%	(1)%	12%
Xbox content and services	30%	0%	30%
Surface	37%	(1)%	36%
Search advertising excluding traffic acquisition costs	(10)%	(1)%	(11)%

About Microsoft

Microsoft (Nasdaq “MSFT” @microsoft) enables digital transformation for the era of an intelligent cloud and an intelligent edge. Its mission is to empower every person and every organization on the planet to achieve more.

Forward-Looking Statements

Statements in this release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors such as:

• intense competition in all of our markets that may lead to lower revenue or operating margins;
• increasing focus on cloud-based services presenting execution and competitive risks;
• significant investments in products and services that may not achieve expected returns;
• acquisitions, joint ventures, and strategic alliances that may have an adverse effect on our business;
• impairment of goodwill or amortizable intangible assets causing a significant charge to earnings;
• cyberattacks and security vulnerabilities that could lead to reduced revenue, increased costs, liability claims, or harm to our reputation or competitive position;
• disclosure and misuse of personal data that could cause liability and harm to our reputation;
• the possibility that we may not be able to protect information stored in our products and services from use by others;
• abuse of our advertising or social platforms that may harm our reputation or user engagement;
• the development of the internet of things presenting security, privacy, and execution risks;
• issues about the use of artificial intelligence in our offerings that may result in competitive harm, legal liability, or reputational harm;
• excessive outages, data losses, and disruptions of our online services if we fail to maintain an adequate operations infrastructure;
• quality or supply problems;
• the possibility that we may fail to protect our source code;
• legal changes, our evolving business model, piracy, and other factors may decrease the value of our intellectual property;
• claims that Microsoft has infringed the intellectual property rights of others;
• claims against us that may result in adverse outcomes in legal disputes;
• government litigation and regulatory activity relating to competition rules that may limit how we design and market our products;
• potential liability under trade protection, anti-corruption, and other laws resulting from our global operations;
• laws and regulations relating to the handling of personal data that may impede the adoption of our services or result in increased costs, legal claims, fines, or reputational damage;
• additional tax liabilities;
• damage to our reputation or our brands that may harm our business and operating results;
• exposure to increased economic and operational uncertainties from operating a global business, including the effects of foreign currency exchange;
• uncertainties relating to our business with government customers;
• adverse economic or market conditions that may harm our business;
• catastrophic events or geo-political conditions, such as the COVID-19 pandemic, that may disrupt our business; and
• the dependence of our business on our ability to attract and retain talented employees.

For more information about risks and uncertainties associated with Microsoft’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of Microsoft’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Microsoft’s Investor Relations department at (800) 285-7772 or at Microsoft’s Investor Relations website at http://www.microsoft.com/en-us/investor.

All information in this release is as of September 30, 2020. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.

For more information, press only:

Microsoft Media Relations, WE Communications for Microsoft, (425) 638-7777, [email protected]

For more information, financial analysts and investors only:

Michael Spencer, General Manager, Investor Relations, (425) 706-4400

Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://www.microsoft.com/news. Web links, telephone numbers, and titles were correct at time of publication, but may since have changed. Shareholder and financial information, as well as today’s 2:30 p.m. Pacific time conference call with investors and analysts, is available at http://www.microsoft.com/en-us/investor.

REDMOND, Wash. — July 22, 2020 — Microsoft Corp. today announced the following results for the quarter ended June 30, 2020, as compared to the corresponding period of last fiscal year:

• Revenue was $38.0 billion and increased 13%
• Operating income was $13.4 billion and increased 8%
• Net income was $11.2 billion and decreased 15% GAAP (up 5% non-GAAP)
• Diluted earnings per share was $1.46 and decreased 15% GAAP (up 7% non-GAAP)

“The last five months have made it clear that tech intensity is the key to business resilience. Organizations that build their own digital capability will recover faster and emerge from this crisis stronger,” said Satya Nadella, chief executive officer of Microsoft. “We are the only company with an integrated, modern technology stack – powered by cloud and AI and underpinned by security and compliance –  to help every organization transform and reimagine how they meet customer needs.”

“Our commercial cloud surpassed $50 billion in annual revenue for the first time this year. And this quarter our Commercial bookings were better than expected, growing 12% year-over-year,” said Amy Hood, executive vice president and chief financial officer of Microsoft. “As we drive growth across the company, we remain committed to investing in long-term strategic opportunities.”

The following table reconciles our financial results reported in accordance with generally accepted accounting principles (GAAP) to non-GAAP financial results. Additional information regarding our non-GAAP definition is provided below. All growth comparisons relate to the corresponding period in the last fiscal year.

	Three Months Ended June 30,
($ in millions, except per share amounts)	Revenue	Operating Income	Net Income	Diluted Earnings per Share
2019 As Reported (GAAP)	$33,717	$12,405	$13,187_	$1.71_
Net Tax Impact of Transfer of Intangible Properties	–	–	(2,567)	(0.34)
2019 As Adjusted (non-GAAP)	$33,717	$12,405	$10,620_	$1.37_
2020 As Reported (GAAP)	$38,033	$13,407	$11,202_	$1.46_
Percentage Change Y/Y (GAAP)	13%	8%	(15%)	(15%)
Percentage Change Y/Y (non-GAAP)	13%	8%	5%_	7%_
Percentage Change Y/Y (non-GAAP) Constant Currency	15%	12%	8%_	9%_

GAAP results include a $450 million charge for the closure of the Microsoft Store physical locations in the fourth quarter of fiscal year 2020. GAAP results also include a net income tax benefit of $2.6 billion for the fourth quarter of fiscal year 2019, which is excluded from our non-GAAP results and explained in the non-GAAP definition section below.

COVID-19 Impact

In the fourth quarter of fiscal year 2020, similar business trends to the previous quarter continued.

In the Productivity and Business Processes and Intelligent Cloud segments, cloud usage and demand increased as customers continued to work and learn from home. Transactional license purchasing continued to slow, particularly in small and medium businesses, and LinkedIn was negatively impacted by the weak job market and reductions in advertising spend.

In the More Personal Computing segment, Windows OEM, Surface, and Gaming benefited from increased demand to support work-, play-, and learn-from-home scenarios, while Search was negatively impacted by reductions in advertising spend.

 Business Highlights

Revenue in Productivity and Business Processes was $11.8 billion and increased 6% (up 8% in constant currency), with the following business highlights:

• Office Commercial products and cloud services revenue increased 5% (up 7% in constant currency) driven by Office 365 Commercial revenue growth of 19% (up 22% in constant currency)
• Office Consumer products and cloud services revenue increased 6% (up 7% in constant currency) and Office 365 Consumer subscribers increased to 42.7 million
• LinkedIn revenue increased 10% (up 11% in constant currency)
• Dynamics products and cloud services revenue increased 13% (up 15% in constant currency) driven by Dynamics 365 revenue growth of 38% (up 40% in constant currency)

Revenue in Intelligent Cloud was $13.4 billion and increased 17% (up 19% in constant currency), with the following business highlights:

• Server products and cloud services revenue increased 19% (up 21% in constant currency) driven by Azure revenue growth of 47% (up 50% in constant currency)
• Enterprise Services revenue was relatively unchanged (up 2% in constant currency)

Revenue in More Personal Computing was $12.9 billion and increased 14% (up 16% in constant currency), with the following business highlights:

• Windows OEM revenue increased 7%
• Windows Commercial products and cloud services revenue increased 9% (up 11% in constant currency)
• Xbox content and services revenue increased 65% (up 68% in constant currency)
• Surface revenue increased 28% (up 30% in constant currency)
• Search advertising revenue excluding traffic acquisition costs decreased 18% (down 17% in constant currency)

Operating expenses were $12.3 billion and increased 13%, including the $450 million charge for the closure of the Microsoft Store physical locations.

Microsoft returned $8.9 billion to shareholders in the form of share repurchases and dividends in the fourth quarter of fiscal year 2020, an increase of 16% compared to the fourth quarter of fiscal year 2019.

Fiscal Year 2020 Results

Microsoft Corp. today announced the following results for the fiscal year ended June 30, 2020, as compared to the corresponding period of last fiscal year:

• Revenue was $143.0 billion and increased 14%
• Operating income was $53.0 billion and increased 23%
• Net income was $44.3 billion and increased 13% GAAP and 20% non-GAAP
• Diluted earnings per share was $5.76 and increased 14% GAAP and 21% non-GAAP

The following table reconciles our financial results reported in accordance with GAAP to non-GAAP financial results. Additional information regarding our non-GAAP definition is provided below. All growth comparisons relate to the corresponding period in the last fiscal year.

	Twelve Months Ended June 30,
($ in millions, except per share amounts)	Revenue	Operating Income	Net Income	Diluted Earnings per Share
2019 As Reported (GAAP)	$125,843	$42,959	$39,240_	$5.06_
Net Tax Impact of Transfer of Intangible Properties	–	–	(2,567)	(0.33)
Net Impact of the Tax Cuts and Jobs Act (TCJA)	–	–	157_	0.02_
2019 As Adjusted (non-GAAP)	$125,843	$42,959	$36,830_	$4.75_
2020 As Reported (GAAP)	$143,015	$52,959	$44,281_	$5.76_
Percentage Change Y/Y (GAAP)	14%	23%	13%_	14%_
Percentage Change Y/Y (non-GAAP)	14%	23%	20%_	21%_
Percentage Change Y/Y (non-GAAP) Constant Currency	15%	27%	24%_	25%_

GAAP results include a net income tax benefit of $2.6 billion and a net income tax charge of $157 million for the twelve months ended June 30, 2019. These net tax impacts are excluded from our non-GAAP results and explained in the Non-GAAP Definition section below.

Business Outlook

Microsoft will provide forward-looking guidance in connection with this quarterly earnings announcement on its earnings conference call and webcast.

Responding to COVID-19

At Microsoft, our focus remains on ensuring the safety of our employees, striving to protect the health and well-being of the communities in which we operate, and providing technology and resources to our customers and partners to help them do their best work while remote. Additional information about Microsoft’s COVID-19 response can be found here.

Quarterly Highlights, Product Releases, and Enhancements 

Every quarter Microsoft delivers hundreds of products, either as new releases, services, or enhancements to current products and services. These releases are a result of significant research and development investments, made over multiple years, designed to help customers be more productive and secure and to deliver differentiated value across the cloud and the edge.

Here are the major product releases and other highlights for the quarter, organized by product categories, to help illustrate how we are accelerating innovation across our businesses while expanding our market opportunities.

Environmental, Social, and Governance (ESG)

To better execute on Microsoft’s mission, we focus our Environmental, Social, and Governance (ESG) efforts where we can have the most positive impact. To learn more about our latest initiatives and priorities, please visit our investor relations ESG website.

Webcast Details

Satya Nadella, chief executive officer, Amy Hood, executive vice president and chief financial officer, Frank Brod, chief accounting officer, Keith Dolliver, deputy general counsel, and Michael Spencer, general manager of investor relations, will host a conference call and webcast at 2:30 p.m. Pacific time (5:30 p.m. Eastern time) today to discuss details of the company’s performance for the quarter and certain forward-looking information. The session may be accessed at http://www.microsoft.com/en-us/investor. The webcast will be available for replay through the close of business on July 22, 2021.

Non-GAAP Definition

Transfer of Intangible Properties. In the fourth quarter of fiscal year 2019, in response to the TCJA and recently issued regulations, Microsoft transferred certain intangible properties held by its foreign subsidiaries to the United States and Ireland. The transfers of intangible properties resulted in a net $2.6 billion 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 United States Global Intangible Low-Taxed Income (GILTI) tax.

The TCJA Impact. Microsoft recorded a net charge of $157 million during the twelve months ended June 30, 2019 related to the TCJA.

Microsoft has provided non-GAAP financial measures related to the transfer of intangible properties and the TCJA to aid investors in better understanding our performance. Microsoft believes these non-GAAP measures assist investors by providing additional insight into its operational performance and help clarify trends affecting its business. For comparability of reporting, management considers non-GAAP measures in conjunction with GAAP financial results in evaluating business performance. The non-GAAP financial measures presented in this release should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.

Constant Currency

Microsoft presents constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars using the average exchange rates from the comparative period rather than the actual exchange rates in effect during the respective periods. All growth comparisons relate to the corresponding period in the last fiscal year. Microsoft has provided this non-GAAP financial information to aid investors in better understanding our performance. The non-GAAP financial measures presented in this release should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.

 Financial Performance Constant Currency Reconciliation

	Three Months Ended June 30,
($ in millions, except per share amounts)	Revenue	Operating Income	Net Income	Diluted Earnings per Share
2019 As Reported	$33,717_	$12,405_	$13,187_	$1.71_
2019 As Adjusted (non-GAAP)	$33,717_	$12,405_	$10,620_	$1.37_
2020 As Reported	$38,033_	$13,407_	$11,202_	$1.46_
Percentage Change Y/Y (GAAP)	13%	8%_	(15%)	(15%)
Percentage Change Y/Y (non-GAAP)	13%	8%_	5%_	7%_
Constant Currency Impact	$(598)	$(454)	$(314)	$(0.04)
Percentage Change Y/Y (non-GAAP) Constant Currency	15%	12%	8%_	9%_
	Twelve Months Ended June 30,
($ in millions, except per share amounts)	Revenue	Operating Income	Net Income	Diluted Earnings per Share
2019 As Reported	$125,843_	$42,959_	$39,240_	$5.06_
2019 As Adjusted (non-GAAP)	$125,843_	$42,959_	$36,830_	$4.75_
2020 As Reported	$143,015_	$52,959_	$44,281_	$5.76_
Percentage Change Y/Y (GAAP)	14%_	23%_	13%_	14%_
Percentage Change Y/Y (non-GAAP)	14%_	23%_	20%_	21%_
Constant Currency Impact	$(1,974)	$(1,567)	$(1,348)	$(0.18)
Percentage Change Y/Y (non-GAAP) Constant Currency	15%_	27%_	24%_	25%_

 Segment Revenue Constant Currency Reconciliation

	Three Months Ended June 30,
($ in millions)	Productivity and Business Processes	Intelligent Cloud	More Personal Computing
2019 As Reported	$11,047_	$11,391_	$11,279_
2020 As Reported	$11,752_	$13,371_	$12,910_
Percentage Change Y/Y	6%_	17%_	14%_
Constant Currency Impact	$(209)	$(238)	$(151)
Percentage Change Y/Y Constant Currency	8%_	19%_	16%_

 Selected Product and Service Revenue Constant Currency Reconciliation           

	Three Months Ended June 30, 2020
	Percentage Change Y/Y (GAAP)	Constant Currency Impact	Percentage Change Y/Y Constant Currency
Office Commercial products and cloud services	5%	2%	7%
Office 365 Commercial	19%	3%	22%
Office Consumer products and cloud services	6%	1%	7%
LinkedIn	10%	1%	11%
Dynamics products and cloud services	13%	2%	15%
Dynamics 365	38%	2%	40%
Server products and cloud services	19%	2%	21%
Azure	47%	3%	50%
Enterprise Services	0%	2%	2%
Windows OEM	7%	0%	7%
Windows Commercial products and cloud services	9%	2%	11%
Xbox content and services	65%	3%	68%
Surface	28%	2%	30%
Search advertising excluding traffic acquisition costs	(18)%	1%	(17)%

About Microsoft

Microsoft (Nasdaq “MSFT” @microsoft) enables digital transformation for the era of an intelligent cloud and an intelligent edge. Its mission is to empower every person and every organization on the planet to achieve more.

Forward-Looking Statements

Statements in this release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors such as:

• intense competition in all of our markets that may lead to lower revenue or operating margins;
• increasing focus on cloud-based services presenting execution and competitive risks;
• significant investments in products and services that may not achieve expected returns;
• acquisitions, joint ventures, and strategic alliances that may have an adverse effect on our business;
• impairment of goodwill or amortizable intangible assets causing a significant charge to earnings;
• cyberattacks and security vulnerabilities that could lead to reduced revenue, increased costs, liability claims, or harm to our reputation or competitive position;
• disclosure and misuse of personal data that could cause liability and harm to our reputation;
• the possibility that we may not be able to protect information stored in our products and services from use by others;
• abuse of our advertising or social platforms that may harm our reputation or user engagement;
• the development of the internet of things presenting security, privacy, and execution risks;
• issues about the use of artificial intelligence in our offerings that may result in competitive harm, legal liability, or reputational harm;
• excessive outages, data losses, and disruptions of our online services if we fail to maintain an adequate operations infrastructure;
• quality or supply problems;
• the possibility that we may fail to protect our source code;
• legal changes, our evolving business model, piracy, and other factors may decrease the value of our intellectual property;
• claims that Microsoft has infringed the intellectual property rights of others;
• claims against us that may result in adverse outcomes in legal disputes;
• government litigation and regulatory activity relating to competition rules that may limit how we design and market our products;
• potential liability under trade protection, anti-corruption, and other laws resulting from our global operations;
• laws and regulations relating to the handling of personal data that may impede the adoption of our services or result in increased costs, legal claims, fines, or reputational damage;
• additional tax liabilities;
• damage to our reputation or our brands that may harm our business and operating results;
• exposure to increased economic and operational uncertainties from operating a global business, including the effects of foreign currency exchange;
• uncertainties relating to our business with government customers;
• adverse economic or market conditions that may harm our business;
• catastrophic events or geo-political conditions, such as the COVID-19 pandemic, that may disrupt our business; and
• the dependence of our business on our ability to attract and retain talented employees.

For more information about risks and uncertainties associated with Microsoft’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of Microsoft’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Microsoft’s Investor Relations department at (800) 285-7772 or at Microsoft’s Investor Relations website at http://www.microsoft.com/en-us/investor.

All information in this release is as of June 30, 2020. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.

For more information, press only:

Microsoft Media Relations, WE Communications for Microsoft, (425) 638-7777, [email protected]

For more information, financial analysts and investors only:

Michael Spencer, General Manager, Investor Relations, (425) 706-4400

Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://www.microsoft.com/news. Web links, telephone numbers, and titles were correct at time of publication, but may since have changed. Shareholder and financial information, as well as today’s 2:30 p.m. Pacific time conference call with investors and analysts, is available at http://www.microsoft.com/en-us/investor.