assets liabilities revenue recognition invoicing. equipment contracts revenue recognized. balance unbilled revenue exceeds invoiced. invoices time contractual milestones. liabilities include advance payments right consideration. recognized. Linde assets $196 million 2023 $124 million December 31, 2022. liabilities $2,950 million 2023 $1,901 million $1,049 million. 2023 Linde $418 million liabilities engineering projects Russia. liabilities $3,986 million December 31, 2022 $3,073 million $913 million. decrease reclassification project Russia. Revenue recognized twelve months December 2023 $1,017 million. Engineering business.


Linde receives payment after obligations prepayments not typical industrial gases. Payment terms vary country practices. extended financing outside terms. sales value-added excise taxes not included in. sales returns allowances not significant.


company manages industrial gases geographic Engineering Other global. reporting sales distribution geographic segment illustrates timing customer contract terms revenues.


tables sales consolidated segment years 2023 2022 2021.


dollars Ended December 31, Sales Merchant,370,773,242#9,603% On-Site,246% Packaged Gas,735,654 Other,160,772%,304#8,542#6,559,160#1,289,854% (Millions dollars Ended December 31, Sales Merchant,786#2,509,220,691% On-Site,048,415,471% Packaged Gas####1,523,871% Other,762,874,443#6,480#2,762#1,80564% dollars Ended December 31, Sales Merchant,279,227,181 On-Site,225,296,345 Packaged Gas,456,551 Other####2,867####1,850,037#12,103#7,643,133#2,867,793


Linde's contracts with customers long-term supply minimum requirements. plant sales fixed price. estimates future minimum purchase requirements sales $48 billion (excludes Russian projects. excludes-site sales above. amounts different timing inflationary price escalations currency exchange rates pass-through costs. duration long-term contracts to twenty years. half revenue minimum purchase requirements earned next five years remaining thereafter.


Linde €700 million. €850 million. €700 million. 40% 2036.


DISAGREEMENTS DISCLOSURE


evaluation Linde’s disclosure controls procedures management concluded as December 31, 2023 controls effective information Linde reports under Exchange Act of 1934 recorded processed summarized reported within periods Securities and Exchange Commission’s rules forms to management timely decisions disclosure.


Item 8 December 31, 2023.


no changes in Linde’s control financial reporting quarter December 31, 2023.


information incorporated sections Governance Director Nominees Section 16 Reports Linde’s Proxy Statement.


Linde Audit Committee 3 Securities Exchange Act 1934. members. Martin. Richenhagen. Enders. Victoria Ossadnik Alberto Weisser independent Board Directors Nasdaq.


Linde Board Alberto Weisser criteria SEC committee financial Item 407 Regulation S-K Exchange Act independent standards Nasdaq.


Linde adopted code ethics directors employees Chief Financial Accounting Officer. standards approved Board Directors “Code Business Integrity”. posted website. linde. not incorporated.


incorporated sections Compensation Governance Board Director Linde’s Proxy Statement.


SECURITY OWNERSHIP STOCKHOLDER


Equity Compensation Plans table December 2023 shares options warrants rights Linde’s Board equity compensation awards.


Plan Category securities issued options warrants rights-average exercise price securities future issuance equity compensation plans plans approved,034,362. 58#7,661,431 not approved Total,034,362.,431


637,600 571,628.


shares future 2021 Linde Incentive Plan approved July.


information ownership shares incorporated section Share Linde’s Proxy Statement.


incorporated sections Governance Board Matters Review Approval Ratification Transactions Relationships Transactions Director Linde’s Proxy Statement.


incorporated section Linde’s Proxy Statement.


documents filed report


2023 Statements Accounting Firm Part II 8. Statements.


)Financial Statement Schedules omitted applicable required information statements notes.


)Exhibits Annual Report Form 10-K index.


Exhibit. Combination Agreement Linde Aktiengesellschaft Praxair. Zamalight PLC Zamalight Holdco. June 1 2017 Exhibit 2. Report Form Filing. 1-11037 incorporated. 1 August 10 2017 Combination Agreement Praxair. Linde Zamalight Zamalight Subco. Exhibit 2. Purchase Agreement July 5 2018 Praxair. Taiyo Nippon Sanso Corporation Linde businesses Europe Taiyo Exhibit 2. Quarterly Report Form 10-Q File. 1-38730 incorporated. Purchase Agreement July 16 2018 Linde AG Praxair. MG Industries GmbH Messer Canada. Industries USA. Linde Linde AG Praxair. Exhibit.Quarterly Report Form 10-Q September 30 2018 File. 1-38730 incorporated. Amendment September 21, 2018 Sale Purchase Agreement July 16 Linde AG Praxair. Messer Linde assets Linde Messer Exhibit 2. 3 Report 10-Q File. 1-38730 incorporated. Amendment October 19, 2018 Sale Agreement Linde Praxair. Exhibit 2. Quarterly Report 10-Q File. 1-11037 incorporated. Amendment February 20, 2019 Sale Purchase Agreement July 16 2018 Linde AG Praxair. Messer Linde assets Linde AG Messer Business Combination Agreement June 1, 2017 Praxair. Exhibit 2. 4 Current Report Form 8-K March 7 2019 File. 1-11037 incorporated.Constitution Linde Exhibit 3. Form 8-K March 2023 File.-38730 incorporated. Linde plc Shares Exhibit 4. July 15 1992 Praxair. Bank Association successor Bank America Illinois Exhibit 4. Report Form 8-K March 19, 2007, Filing. 1-11037 incorporated. Subordinated Indenture Praxair. Exhibit 4. Form S-3 May 12 2015,. incorporated. Indenture Debt Securities Linde Bank New York Mellon Trust. trustee guarantees Exhibit 4. Form May 3 2023. 001-38730 incorporated. Indenture Debt Securities Linde. Bank New York Mellon Trust. Exhibit 4. Form 2023. 001-38730.


. Debt Securities Linde Finance. Bank New York Mellon Trust. trustee securities guarantees Exhibit. Linde plc Form May 3 2023 Filing.-38730 incorporated. Indenture March 1 2023 Linde. Linde GmbH. Bank Trust Company Association. July 15 1992. Exhibit. Report Form 8-K 2023 File.-38730 incorporated. Indenture March 1 2023 Linde. Bank Trust. August 10 2020 Linde. Bank National Association Exhibit. Report Form 8-K 1 2023 File.-38730 incorporated. Indenture September 3 2019 Linde plc Praxair. Linde. Bank National Association trustee Exhibit. Form 8-K September 2019 Filing. 1-38730 incorporated.Pledge Linde May 11 2020 Exhibit 4. Form 8-K Filing. 1-38730 incorporated. Guarantee Linde Exhibit 4. Report Form.-38730 incorporated. Guarantee Linde. Exhibit 4.-38730 incorporated. Restated Fiscal Agency Agreement May 2023 Linde Deutsche Bank Aktiengesellschaft Exhibit 4. Form Filing. 1-38730 incorporated. Agency Agreement May 11 2020 Linde plc Linde Finance. Deutsche Bank Aktiengesellschaft Exhibit 4. 6 Form 8-K 26. Filing 1-37830 incorporated. August 10 2020 Praxair. Linde plc U. S. Bank National Association Exhibit 4. Form. 1-38730 incorporated.Fiscal Agency Agreement August 3 2021 Linde plc Linde Finance. Deutsche Bank Aktiengesellschaft Exhibit 4. Form 8-K 2021. 1-38730. agreements long debt Securities Exchange Commission. Non Director Restricted Stock Unit Award 2021 Linde plc Long Term Incentive Plan Exhibit 10. Annual Report. 1-38730. Restated Five Year Credit Agreement December 7 2022 Linde plc subsidiaries lenders Bank of America. Exhibit 10. 1-38730. Credit Agreement December 6 2023 Linde plc Borrowers Guarantors lenders Bank America. Exhibit 10. 1-38730. Linde Long Term Incentive Plan July 26, 2021 Exhibit 10.Linde Quarterly Report 10-Q June 2021 Filing. 1-38730. Transferable Stock Option Award Incentive Plan Exhibit. September 2021 Filing. 1-38730.


. 03b Restricted Stock Unit Award 2021 Linde Incentive Plan Exhibit 10. 02 Quarterly Report September 30 2021 Filing. 1-38730. Performance Share Unit Award Linde Return Capital metrics Exhibit. 03 2021. 1-38730. Performance Share Unit Award Linde Shareholder Return metrics Exhibit. 04. 1-38730. plc Annual Variable Compensation Plan January 1 2019 Exhibit 10. 1 Report Form 8-K. 1-38730. Retirement Income Plan January 1 2008 Exhibit. 05a. Annual Report. 1-11037. amendment Praxair. Retirement Income Plan January 1 2010 Exhibit. 05b. 2009 Annual Report. Amendment Praxair.Retirement Income Plan A February 28, 2017 Exhibit. Praxair. 2016 Annual Report Form. 1-11037 incorporated. Amendment Praxair. Plan December 1 2017. Annual Report Form. Supplemental Retirement Income Plan B December 31, 2007 Exhibit. 2008 Annual Report. 1-11037 amendment Praxair. Retirement Income Plan B January 1 2010 Exhibit. 2009 Annual Report. 1-11037 Amendment Praxair. Plan July 1 2012 Exhibit. Annual Report Form. Amendment Praxair. Plan February 28, 2017. 2016 Annual Report. 1-11037 Amendment Praxair. Retirement Income Plan B December 1 2017 Exhibit.2017 Annual Report Form 10-K File. 1-11037 incorporated. Equalization Benefit Plan December 31, 2007 Exhibit. 2008 Annual Report. 1-11037. amendment Praxair. Plan January 1 2010 Exhibit. 2009 Annual Report. Amendment Praxair. February 28, 2017 Exhibit. 2016 Annual Report. 1-11037. Amendment Praxair. Plan December 1 2017 Exhibit. 2017 Annual Report File. 1-11037. 2018 Equalization Benefit Plan Amended Restated September 1 2020 Exhibit. Quarterly Report Filing. 1-38730. 2018 Supplemental Retirement Income Plan Restated September 1 2020 Exhibit. Quarterly Report Filing.


. 2018 Retirement Income Plan Amended Restated September 1 2020 Exhibit. 4 Quarterly Report. 1-38730. Director’s Fees Deferral Plan January 26, 2010 Exhibit. 2009 Annual Report Form Filing. Compensation Deferral Program Amended Restated September 1 2020 Exhibit. 2 Report. Filing 1-38730. Amendment Linde Compensation Deferral Program April 1 2021. Exhibit. Report. 1-38730 2009 Praxair. Long Term Incentive Plan Exhibit 4. 03. Form October 31, 2018. Amendment April 25 2017 Praxair. Long Term Incentive Plan Exhibit. Quarterly Report Filing. 1-11037.Amendment September 8 2020 2009 Praxair Incentive Plan Exhibit. Linde Quarterly Report Form 10-Q 2020 Filing. 1-38730. Standard Option Award 2009 Praxair. Incentive Plan Exhibit. 22. Annual Report Form. 1-11037. Transferable Option Award Praxair. Plan Exhibit. 23. Annual Report. 1-11037. Transferable Option Award Praxair. Plan grants 2015-2017 Exhibit. 26. Annual Report. 1-11037. Transferable Option Award Praxair. grants 2018 Exhibit. 26a. Annual Report. 1-11037. Restricted Stock Unit Award Praxair. Incentive Plan 2018 Exhibit. 27a. Annual Report Form. 1-11037.Non Director Stock Unit Award 2009 Praxair. Plan 2019 Exhibit 10. Linde 2019 Annual Report Form 10-K. 1-38730 Transferable Option Award Praxair. 2019 Exhibit 10. 11L Linde 2018 Annual Report 10-K. Restricted Stock Unit Award. 2019 Exhibit 10. 11M Annual Report. Performance Share Unit Award. 2019 Return Capital performance metrics Exhibit 10. 11N 2018 Annual Report. Performance Share Unit Award Praxair. 2019 Total Shareholder Return metrics Exhibit 10. 11O 2018 Annual Report. Agreement Linde AG Holding GmbH. Sanjiv Lamba December 20 2019 Exhibit 10. 13a Linde 2019 Annual Report Form 10-K.incorporated.


. Letter Linde Sanjiv Lamba November 12 2021 Exhibit 10. Form 8-K November 18 2021 File. 1-38730 incorporated. Nonsolicitation Noncompetition Agreement Linde. Sanjiv Lamba November 7 2021 Exhibit 10. 2 Form 8-K November 18 2021 File. 1-38730 incorporated. Linde plc Director Indemnification Agreement Exhibit 10. 1 Report Form 8-K October 31, 2018 File. incorporated. Linde plc. Public Accounting Firm. 13a-14 Certification. Certification. plc Executive Clawback Policy Board Directors October 23, 2023. Instance Document Interactive Data File tags Inline XBRL document. Taxonomy.Taxonomy Extension Label 101. Presentation. Definition


exhibits reference SEC File. 1-11037.


management plan.


schedules omitted Item 601(b)(2) Regulation S-K. Registrant agrees SEC.


Securities Exchange Act 1934 registrant report. plc February 28, 2024 KELCEY. HOYT. Accounting Officer


Securities Exchange Act 1934 report signed Registrant February 28, 2024. STEPHEN. ANGEL SANJIV LAMBA MATTHEW. WHITE. Chairman Executive. Financial Officer.-KRISTIN ROBERT L. WOOD. THOMAS. JOSEF KAESER. VICTORIA ALBERTO WEISSER. MARTIN. RICHENHAGEN HUGH GRANT


report includes estimates projections business plans objectives operating results-looking Private Securities Litigation Reform Act 1995 Section 27A Securities Act 1933 Section 21E Securities Exchange Act 1934. Forward-looking statements “Risk “Management’s Discussion Analysis Financial Condition Results II Item 7. forward-looking statements identified by “believe “opportunity. based expectations assumptions subject to risks uncertainties results. risks in “Risk Factors Discussion Analysis Financial Condition Results Disclosures Market Risk” II Item 7A. reliance on forward-looking statements. no obligation to update revise statements.


Microsoft organization. local opportunity growth impact. creating platforms tools faster solutions business competitiveness educational health outcomes public-sector efficiency empower ingenuity. infrastructure data business applications collaboration provide value.


economic complexity AI work. Microsoft innovating expanding portfolio AI overcome challenges stronger. Customers unlock value digital spend AI security management. Microsoft Cloud advancements innovation. investment AI Teams Outlook Bing Xbox infusing AI consumer commercial offerings capability.


committed AI. fairness reliability safety privacy inclusiveness transparency accountability.


1975 develop support software services devices solutions value.


services cloud software platforms content support consulting. online advertising global audience.


products cross business software video games. design sell PCs tablets gaming consoles devices accessories.


ambitions productivity business processes. intelligent cloud platform. personal computing.


Microsoft provide technology resources secure productive work environment. family products world.


growth innovation productivity collaboration Office 365 Dynamics LinkedIn. Microsoft 365 Windows Enterprise Mobility Security compliance data protection. Teams meetings calls chat collaboration business automation. Viva communications knowledge learning resources. 365 Copilot AI business data Graph.


Microsoft Cloud Dynamics 365 Teams AI collaborative functions value. Microsoft Power Platform productivity low-code automation virtual agents business. dynamic labor market LinkedIn connect learn grow.


digital transformation AI business organizations challenges. digital technology empowers employees optimizes operations engages customers changes products services. high performance sustainable computing Microsoft services cloud computing infrastructure.


cloud business benefits economies lower cost demand patterns computing storage network resources multi-tenancy locations lower costs.


Microsoft Cloud integration openness time value costs agility. global-scale Azure offers hybrid consistency developer productivity AI security compliance. emerging use cases compute security accelerating innovation devices hardware.


Azure organizations transform intelligence insights employees challenges. Organizations large small deploying Azure enterprise-level AI protections.


long-term partnership OpenAI AI. deploy models consumer enterprise products. Azure powers workloads. increased investments supercomputing research.


hybrid infrastructure security compliance identity management. industry clouds Microsoft industry-specific customizations. Azure Arc multi-cloud on-premises management platform.


Nuance conversational AI ambient intelligence joined Microsoft 2022. Nuance goals cloud solutions.


accelerating mixed reality Azure services. Microsoft Mesh experiences remote hybrid workers.


data AI competitive advantage. Microsoft Intelligent Data Platform integrates databases analytics governance. creating value. Microsoft Fabric end-end analytics platform tools.


GitHub Copilot AI-powered software development tool faster creative problem-solving. GitHub to Visual Studio developer tool chain platforms Azure Windows.


Windows cloud 365 cloud service. internet Android macOS run Windows 365 virtual machine.


extending infrastructure cloud computing. Azure Orbital station downlinking.


strive computing personal intuitive engaging dynamic.


Windows 11 productivity Copilot AI Dev Home. security privacy system application user identity.


Search News Mapping Browser Microsoft trust privacy safety. February 2023 AI-powered Edge engine Chat better search answers content. fast secure data. AI tools apps.


committed designing marketing first-party devices innovation Windows. Surface family Pro Laptop.


Microsoft gaming cloud services. broadened approach gaming subscription Xbox Game Pass devices mobile. January 2022 acquire Activision Blizzard. leader game development interactive entertainment publisher.


focused helping customers use Microsoft Cloud value digital spend leading AI wave. develop intelligent solutions businesses IT management. goal lead industry technology sustained growth. investing •Transforming workplace business applications. running cloud-based services ubiquitous computing experiences. •Applying AI ambient work productivity. security integrated end-to solutions compliance identity management clouds platforms. gaming experiences pushing boundaries innovation console PC gaming. Windows fuel cloud business grow PC market engagement Microsoft 365 Consumer Microsoft Teams Edge Bing Xbox Game Pass.


future growth models sales motions.


climate change business. committed carbon water positive zero waste 2030.


May 2023 Environmental Sustainability Report progress fiscal 2022. emissions. 5 percent. 1 2 3 increased. 5 percent. 96 percent emissions operations suppliers products customers.


power agreements carbon-free energy 13. gigawatts. water replenishment projects 15. 6 million cubic meters water. 12,159 tons waste landfills incinerators. 12,270 acres Belize 11,206.


Microsoft climate solutions no solution company. sustainability customers global community. Microsoft Cloud for Sustainability Manager record report reduce Scope 1 2 3 emissions. tools unify data intelligence.


committed addressing racial injustice Black African American experiences Microsoft communities. Racial Equity Initiative three pillars progress 2025. communities data technology partnerships Black African American. ecosystem change opportunities. representation strengthening inclusion $150 million investment double Black African American Hispanic Latinx leaders by 2025.


2023 projects 103 organizations 165 cities counties Justice Reform Initiative racial equity fairness. affordable broadband digital literacy training 14 geographies 11 cities three states south. Tech Acceleration Black African American Communities 2,000 organizations. Technology Support 400 high schools 21 computer science Black students.


exceeded 2020 goal double Black institutions 2023. increasing investment asset managers 45 percent group funds. $100 million program mission-driven banks. enriched supplier pipeline $500 million suppliers. increased Black Partner Growth Initiative 250 percent.


progress representation inclusion Microsoft. June 2023 93 percent 2025 Black African American managers. 107 percent directors. 28 percent Hispanic Latinx managers 74 percent Hispanic Latinx directors.


80 million jobseekers introduced Skills for Jobs initiative skills-based labor market flexibility learning paths in-demand jobs. certification tools LinkedIn GitHub Microsoft Learn Economic Graph.


launched national campaign 250,000 cybersecurity workforce by 2025 half workforce shortage. curriculum free higher training faculty scholarships resources 25,000 students. expanded cyber skills initiative 27 countries cyberthreat nonprofits institutions.


Generative AI workers skills. June 2023 launched AI Skills Initiative. includes LinkedIn learning pathway coursework foundations generative AI. global grant challenge training access digital learning events resources AI fluency.


Microsoft recruit develop retain talent. environment thrive best. maximize human capital respectful rewarding inclusive work environment employees create products services mission.


June 30 2023 221,000 full-time 120,000. 101,000. 89,000 operations 72,000 research 45,000 sales marketing 15,000 general administration. bargaining.


culture growth mindset. continuous journey learn company businesses.


employee listening systems feedback programs needs. surveys inclusion team culture wellbeing learning development. Daily Signals real-time insights. insights onboarding exit surveys Viva Engage channels Q&A AskHR Service support.


Diversity inclusion core business model accountable change inclusive environment. support Employee Resource Groups women families racial minorities military disabilities LGBTQIA+ support community-building. annual performance compensation reviews contributions employee culture diversity. disclose progress workforce metrics gender racial ethnic minority representation. EEO-1 report. representation. equity.


develop sustainable market-driven strategic programs differentiated portfolio retain top talent. reinforce collaboration growth. Managers evaluate rewards. monitor pay equity career progress. compensation opportunity differentiated market competitive.


manage costs fiscal year 2023 base salaries 2022 levels. Pay increases rewards-eligible hourly employees. investing stock rewards-eligible bonuses.


2016, reported pay equity Diversity Inclusion. 2022 racial ethnic minority employees. earn $1. 008 $1. 000 white women. $1. 007 $1. 000 outside. $1. $1. 000. expanded pay equity. 61 countries. 8% global Microsoft workforce.


began reporting unadjusted median pay annual comparing job title tenure. rewards pay women 89. 6% men. 86. 2% outside. racial ethnic minorities. 9% white employees. representation women minorities senior levels ensure pay equity gap medians.


global performance culture competitive compensation equitable pay role performance.


Microsoft wellbeing. invested wellbeing differentiated benefits financial wellness programs counseling mental wellbeing fitness disability accommodations savings investment adoption care children elders. Occupational Health Safety program.


introduced Hybrid Workplace Flexibility Guidance leaders hybrid. 93% value flexibility location hours 78% connection. no one-size-fits-all Microsoft. data research decision making business team individual.


opportunities personalized in-classroom compliance-job advancement manager coaching. customized manager learning employee orientation tools hybrid environment.


Microsoft employees Viva Learning. principles Business Conduct Privacy Security Foundations Harassment Prevention. skills training profession.


27,000 managers complete 20-33 hours leadership assigned training management compliance culture.


operate report financial performance segments Productivity Processes Intelligent Cloud Personal Computing. segments financial view. strategies development sales marketing services allocation resources.


segments product Note 19 Segment Financial Statements Item 8 Form 10-K.


segments.


Productivity Business Processes segment communication devices platforms. Commercial on Exchange SharePoint Teams Security Compliance Viva Copilot. Consumer on-premises services. Talent Solutions Marketing Premium Subscriptions Sales Solutions. business solutions 365 cloud applications ERP CRM Power Apps Automate on-premises ERP CRM.


Office Commercial team organizational productivity products services. Growth new users workers businesses growth markets value core offerings communication collaboration security compliance. revenue affected base growth revenue user expansion shift 365.


Office Consumer productivity creativity products services. Growth depends users add value new markets. revenue affected shift Microsoft 365 subscriptions. Services revenue demand communication storage Skype Outlook. OneDrive driven subscriptions advertising sale minutes.


LinkedIn connects professionals transforms market sell. vision economic opportunity for global workforce Economic Graph digital economy. offers monetized solutions Talent Solutions Marketing Solutions Premium Subscriptions Sales Solutions. Talent Solutions workforce planning develop talent. Learning Solutions skills gaps. Marketing Solutions. Premium Subscriptions identity grow network find jobs talent. Sales Solutions relationships digital selling opportunities. LinkedIn 950 million members offices. Growth members services. revenue affected by demand subscriptions Talent Solutions Sales member engagement quality sponsored content.


Dynamics solutions financial customer supply chain businesses large organizations enterprises. revenue driven users licensed applications consumed average revenue user shift Dynamics 365 Power Apps Automate.


Competitors Office include Apple Cisco Systems Meta Google Okta Proofpoint Slack Symantec Zoom web mobile competitors local developers. Apple distributes software PCs tablets phones. Cisco Systems. Meta. Google. Slack. Zoom videoconferencing phone. Okta Proofpoint Symantec security information protection identity. Web-based alternatives products. We compete flexible secure easy-use productivity collaboration tools services technologies.


LinkedIn competition networks recruiting talent management job boards recruiting firms learning development. Marketing Solutions advertisers marketers Sales Solutions lead generation customer intelligence.


cloud-premises Oracle Salesforce SAP.


Intelligent Cloud public hybrid server business. products services Azure SQL Server Windows Server Visual Studio System Center Client Licenses Nuance GitHub. Services Industry Solutions.


Azure cloud services developers professionals enterprises build deploy manage applications platform. Customers use computing networking storage mobile web AI cognitive machine learning. resources development hardware. revenue affected infrastructure platform Enterprise Mobility Security.


Azure AI competitive advantage machine learning. infrastructure allows GPT-4 more less. integrate models develop AI apps services.


server products professionals developers productive efficient. software Windows Server. platform database business storage management operations virtualization service-oriented architecture security identity. standalone tools architects developers testers project managers. revenue affected retail products. access rights products SQL Windows Server revenue.


Nuance GitHub. healthcare AI. collaboration code hosting.


Enterprise Services Industry Professional assist developing Microsoft desktop conversational AI training certification developers IT professionals products.


Azure competition Amazon Google IBM Oracle VMware open source. advantage hybrid cloud deployment datacenters infrastructure. AI offerings compete Amazon Bedrock CodeWhisperer Google AI emerging competitors Meta’s LLaMA2 open source solutions. Enterprise Mobility + Security compete with identity security. global scale broad portfolio identity security solutions cybersecurity challenges differentiates.


server products competition operating systems applications. manufacturers Hewlett-Packard IBM Oracle offer Unix server hardware. manufacturers offer hardware Linux contribute to development. competitive Linux compatible applications software developers. Red Hat supply versions Linux.


compete enterprise-wide computing software vendors connectivity security hosting database e-business servers. IBM Oracle Java Platform Enterprise Edition. competitors CA Technologies IBM Oracle. web open source Apache Linux MySQL PHP. Java vendors.


database business warehousing IBM Oracle SAP Snowflake. system management server virtualization BMC CA Technologies Hewlett-Packard IBM VMware. Adobe IBM Oracle open source PHP Ruby Rails.


server products advantages performance costs productivity applications tools compatibility security manageability.


Enterprise Services strategy planning application development infrastructure multinational consulting businesses.


Personal Computing segment products services customers center. OEM Commercial cloud services patent licensing. Surface HoloLens PC accessories. Xbox hardware content services first third content Game Pass subscriptions Cloud Gaming advertising disc royalties cloud services. news advertising Bing News Edge third-party affiliates.


Windows operating system personal computing experience consistency across devices. Windows OEM revenue impacted by licenses OEMs pre devices. revenue mix devices form screen size. demand developed growth markets. Windows to devices shipped. mix. inventory OEM. changes promotions different pricing Windows versions. •Constraints supply chain components. •Piracy.


Windows Commercial revenue volume licensing cloud services affected commercial customers licensing Software Assurance advanced security. reflects workers licensed enterprise independent PCs sold.


Patent licensing patents mobile devices cloud offerings.


Windows IoT operating systems tools services embedded devices.


design sell devices Surface HoloLens PC accessories. connect Windows Microsoft products services. Surface students consumers. Growth PC shipments customers product roadmap categories.


gaming platform entertainment content community cloud services. exclusive content Xbox Game Studios first-party. studios intellectual property leverage creators. experiences Xbox Game Pass subscription community 400 first third-party PC titles.


gamer Xbox ecosystem. identifying opportunities first third-party content business diversification subscriptions ads digital stores. devices third PC mobile end points. focused growing platform expanding ecosystems gamers.


Xbox enables online gaming consoles Windows devices. certified applications services large customer base. revenue affected subscriptions sales third-party content advertising. Growth determined active user base Xbox content availability games exclusive content computational power reliability devices experiences first-party content.


Search news advertising business search native display advertising global audience. Microsoft Edge Bing Chat user acquisition engagement technology platform digital advertising. partnerships Yahoo search. Growth users content.


Windows competition platforms Apple Google. Windows choice value flexibility security easy interface compatibility hardware software productivity.


Devices competition computer tablet hardware manufacturers design technologies price points. include Apple Windows OEMs.


Xbox cloud gaming services online Amazon Apple Meta Tencent. compete video streaming. platform competes Nintendo Sony customers. platform products innovation hardware user interface developer tools online gaming entertainment services exclusive content first-party franchises digital content.


Search news Google websites social platforms Meta portals content.


regional centers billing vendor logistics. Ireland African Asia-Pacific European Middle East Arlington Fargo Dakota Lauderdale Redmond Reno Nevada Puerto Rico.


operations operate datacenters regions. expand locations increase server capacity needs growing demand AI services. datacenters depend land energy networking supplies servers processing units.


devices manufactured third-party contract manufacturers. majority use other manufacturers if current vendor unavailable. contain components few qualified suppliers. disruptions impact.


develop products services groups. AI IT professionals developers software vendors systems Azure AI platform infrastructure server database CRM ERP software development tools AI services business process applications. Missions Technologies products solutions cloud computing growth quantum computing Azure Space Missions Engineering telecommunications Microsoft Federal Sales Delivery. Devices value-user experiences Microsoft 365 Windows Teams Search Chat Surface. Security digital infrastructure cloud security data protection identity network access device management. Research research product business incubations AI innovations. professionals businesses market sell. hardware content services platforms user base.


Internal development competitive advantages product differentiation technical control. freedom decide modifications enhancements. strive obtain information usage patterns hardware advances. Before provide vendors resources guidelines development training testing. create product documentation.


protect intellectual property investments. work. internationally copyright trademark secret protections software hardware services business plans branding. leader patents 70,000 U. international patents 19,000 worldwide. employ internally-developed intellectual property services outbound licensing patented technologies. cross-license agreements patents. purchase license technology. intellectual property available no low cost industry standards interoperability environmental efforts development community. engagement open source software intellectual property.


necessary future seek renew licenses products services experience licenses obtained reasonable terms. research product development not dependent on license agreement third party.


success products services experiences disruptive technology trends new markets drive adoption. invest in emerging technology trends breakthroughs value growth. maintain commitment to research development technologies tools platforms digital cloud computing AI devices operating systems.


main product research facilities Redmond Washington operate other U. S. world. global approach competitive top talent.


plan continue investments product research development coordinate research segments leverage results company.


operate Microsoft Research. largest corporate research universities advancing state-art computer science other disciplines. investment fundamental research perspective future contributes innovation.


market distribute products OEMs distributors resellers. sales organization enterprises public-sector organizations technology digital transformation OEM relationships system integrators software vendors partners sales fulfillment.


distribute products OEMs software devices servers. largest Windows system. sell devices pre-installed Microsoft products Office Office 365.


two categories OEMs. largest direct Microsoft. distribution agreements multinational OEMs Dell Hewlett-Packard Lenovo regional local OEMs. second system builders lower-volume PC manufacturers source Microsoft software Microsoft distributor channel.


organizations products transact Enterprise Agreements Services contracts support system integrators software vendors web agencies partners. Microsoft direct sales programs small medium corporate customers. partner advisors support.


sell products services cloud services search gaming digital marketplaces stores. Microsoft Experience Centers engagement.


Organizations license products distributors resellers retailers. LSPs large distributors VARs VARs small medium. ESAs authorized LSPs resellers. Microsoft Cloud Solution Provider main cloud services.


distribute products distributors replicators resellers outlets. consumers obtain. devices retailers. field sales representatives orders provide training support.


Dynamics licensed partners vertical specialized services.


offer options organizations cloud services on-premises software SA. license software volume licensing agreements multiple licenses retail. use programs flexibility various sizes. include below.


rights software upgrades perpetual licenses. provides support tools training licensing benefits. licensing agreements optional.


Enterprise Agreements offer organizations licensing program cloud services software licenses. organizations cloud services software three-year. purchase perpetual licenses subscribe.


Microsoft Customer Agreement simplified purchase digital experience. non-expiring customers time partner or Microsoft.


Microsoft Online Subscription Agreement small organizations activate cloud services. monthly annual subscriptions cloud services.


Microsoft Products Services Agreements organizations cloud-premises software no commitment non-expiring agreement. purchase. SA optional.


Open Value agreements Microsoft technology. small organizations cloud services on-premises software three-year. purchase perpetual subscribe SA.


Select Plus agreement organizations licenses. purchase perpetual licenses SA optional.


Microsoft Cloud Solution Provider Program cloud services systems integrator cloud reseller partner. Partners package products services support subscriptions.


Microsoft Services Provider License Agreement vendors Microsoft. Partners license three-year billed monthly consumption.


Independent Software Vendor Royalty Program Microsoft license solution.


customers include consumers organizations enterprises public institutions Internet providers developers OEMs. backlog.


executive officers July 2023 Satya Nadella Judson. Althoff. Capossela Kathleen. Hogan Amy. Hood Bradford. Smith Chair President Christopher. Young Vice President Business Development Strategy Ventures


. Nadella Chairman 2021 Chief 2014. Vice President Cloud 2013. 2011. President Server Tools. 2009 Senior Vice Online Services. 2008 Search Portal Advertising. Microsoft 1992. Vice President Business. Board Starbucks.


. Althoff Vice President Commercial Officer July 2021. Worldwide July 2017. President Microsoft North America. joined 2013.


. Capossela Vice President Chief Officer July 2016. March 2014. 1991. roles Consumer Channels Microsoft Office Division Office 365 SharePoint Exchange Skype Business Project Visio.


. Hogan Executive Vice President Resources 2014. Vice President Microsoft. Customer joined Microsoft 2003. Board Alaska Air Group.


. Hood Executive Vice President Chief Financial Officer May 2013. 2010 2013,. Financial Microsoft Business Division. Server Tools corporate. Board 3M Corporation.


. Smith Vice Chair President 2021. President Chief Legal Officer 2015. Executive Vice President 2011 Senior Vice 2001 2011. Chief Compliance Officer 2002. Deputy General Counsel Sales European Law Affairs. Board Netflix.


. Young Executive Vice President Microsoft 2020. Chief Executive Officer McAfee 2017 Senior Vice President Manager Intel Security Group 2014 2017 McAfee. Board American Express.


. microsoft. com. Investor Relations website. free information investors. goal portal annual 10-K quarterly 10-Q current reports Form 8-K amendments Securities Exchange Commission. business strategies financial results metrics. investor conferences speeches strategies. Archives. releases quarterly earnings product announcements legal developments international news. governance information articles incorporation bylaws governance guidelines committee charters codes conduct ethics corporate social responsibility initiatives policies. news announcements. sign email alerts.


publish Corporate Social Responsibility Hub. sustainability sourcing accessibility digital trust public policy.


information on websites not report SEC. use social media public. possible information material to investors. encourage investors media Microsoft review information social media channels Investor Relations website.


results risks uncertainties business financial condition cash flows trading price common stock.


face competition products lower revenue margins.


competitors range companies to small specialized firms product lines resources. Barriers entry low areas evolve with technologies user needs new products services. competitive depends on success innovative products devices services.


business model platform-based ecosystems diverse solutions. ecosystem creates network effects growth. scale necessary margins. face competition from competing platforms. vertically-integrated model single firm controls software hardware succeeded with computers tablets phones gaming consoles wearables devices. Competitors earn revenue from services. claim security performance benefits. We offer vertically-integrated hardware software products services. business increase cost reduce operating margins. revenue from Windows operating systems. competition from platforms smartphones tablet computers. price utility. Users functions. attract developers. Competing with low cost decrease margins. Popular products increase competitive strength. devices compete with partners affect commitment. platforms have content application marketplaces installed bases. variety content important purchasing decisions. Users incur costs move data buy new content applications switching platforms.compete enlist developers platform ensure high quality security customer appeal value. compete marketplaces increase cost lower operating margins. rules restrict products objectives.


Companies compete business models. infrastructure platform software-as-a-service license-based software model generates revenue. bear costs converting ideas revenue licensing. competitors develop sell software. investing in artificial consumer commercial offerings. expect AI technology competitive evolving. bear development operational costs AI capabilities products services. to technological change regulatory developments public scrutiny. competitors develop offer free applications online services content third-party advertising. Advertising revenue funds products with. companies open source software cost AI models revenue advertising. bear full costs research development. Some products mimic features.


competitive pressures sales price reductions operating costs. revenue margins operating income.


focus on cloud services presents competitive risks. business involves. vision platforms productivity services ubiquitous computing ambient intelligence. competitors developing cloud services. Pricing delivery models evolving. Devices form factors influence. industries customers requirements risks. devoting resources cloud strategies. Windows ecosystem. embrace cultural organizational changes obstacles innovation. intelligent cloud edge offerings connected to Internet of Things sensors data computing AI. success on adoption Azure AI IoT Edge. market share objectives.


software development incurring costs infrastructure cloud services. costs reduce operating margins. depends execution compelling experiences traffic market share. utility compatibility performance devices PCs smartphones tablets gaming consoles sensors endpoints. attractiveness platforms third-party developers. services meet reliability security compliance needs. services platform-agnostic available devices ecosystems competitors.


uncertain strategies attract users generate revenue. changes efficiency innovation generate usage new products grow revenue infrastructure investments. impact margins operating income.


users fraudulent activities cloud services. include unauthorized stolen credentials stolen credit cards failure pay services cryptocurrency mining cyberattacks. violations fraud adverse impacts reputational damage.


investments in products returns. continue research development marketing products technologies Windows Microsoft 365 Bing SQL Server Server Azure Office 365 Xbox LinkedIn. developing AI services products. invest development acquisition hardware for productivity communication entertainment PCs tablets gaming devices HoloLens. Investments new technology speculative. Commercial success depends on innovativeness developer support distribution marketing. customers functionality reduce purchases revenue. revenue from new investments years. New products services profitable operating margins high. Microsoft Edge Bing Chat post-sale monetization. data handling practices scrutiny. mismanagement impact design quality.


technologies complex. long testing. delays problems products affect revenue.


Acquisitions joint ventures strategic alliances business. continue acquisitions long strategy. March 2021 ZeniMax Media. $8. 1 billion March 2022 Nuance Communications. $18. 8 billion. January 2022 Activision Blizzard. $68. 7 billion. January 2023 third phase OpenAI partnership. Acquisitions transactions involve challenges risks business strategy unsatisfactory return compliance obligations challenges integrating retaining employees systems technology distract management transactions. arrangement changing circumstances early termination renegotiation. success products services develop new policies data governance privacy cybersecurity. longer benefits revenue benefits smaller. affect financial statements.


goodwill assets impaired record charge earnings. acquire companies assets not realize economic benefit impairment. review assets for impairment value. test goodwill for impairment annually. include decline stock price market capitalization reduced future cash flow slower growth rates industry. past recorded record significant charge in consolidated financial statements impairment goodwill affecting results operations.


Cyberattacks revenue costs liability claims reputation.


Threats to IT security. hackers organizations state-sponsored undertake attacks customers IT. actors methods developing malicious software exploiting vulnerabilities hardware software infrastructure social engineering passwords sensitive information distributed denial of service attacks. Nation-state actors deploy resources attacks. attacks intensify during conflict Ukraine. Inadequate in unauthorized access to confidential data. system administrators fail remove employee account access. Employees third parties compromise security systems reveal confidential information. actors introduce malware through software updates compromised supplier accounts hardware.


Cyberthreats evolving sophisticated complex difficulty detecting defending. no capability detect vulnerabilities new attack methods. Cyberthreats cascading impacts internal networks partners customers. Breaches facilities network data security disrupt applications impair services privacy delays compromise information reputation theft misuse intellectual property ransomware attacks resources affect business. subject supply chain cyberattacks malware introduced software updates.


internal IT environment. early adopters new devices technologies. sharing data social networking consumer technologies. generative AI attack methods. business policies security controls threats cybersecurity regulations.


security products services important in decisions cloud on-premises. Security threats to companies technology. Threats IT infrastructure affect customers. Customers cloud services rely on security infrastructure hardware reliability protection data. Adversaries focus on popular operating systems programs services expect. adversaries attack on-premises cloud environments exploiting unknown vulnerabilities Exchange Server. Vulnerabilities persist after security patches updates attackers exploited vulnerabilities malware. Adversaries attack digital transformation. user account information compromise accounts. Inadequate account security in unauthorized access ransomware malicious software. incorporating open source software into products. vulnerabilities susceptible to cyberattacks. adding generative AI features services. AI security risks susceptible to threats.


customers operate complex systems third-party hardware software multiple vendors acquired years. expect products services support all including security advances standards. discontinue support product secure alternative. Failure current security advances standards vulnerability. customers varied size technical sophistication use technology limited capabilities resources cybersecurity practices technologies. account for defining default settings impact IT operations review reset.


Cyberattacks impact customers production services not compromised. committed notifying customers impacted actionable information. providing guidance support detection tracking remediation. detect attacks information on-premises software Exchange Server no limited visibility computing environments.


defend security threats cloud systems engineer secure products services enhance security threat detection reliability improve deployment software updates develop mitigation technologies maintain digital security infrastructure network products services provide security tools firewalls anti-virus advanced security information. financial services health care government requirements engineer products.


measures products services reduce operating margins. fail security vulnerabilities data corruption reduced performance harm reputation purchases use competing. Customers spend protecting systems delay adoption additional products services. Customers fail update run software install security patches adopt security practices. affect reputation revenue. vulnerabilities lead claims. license agreements exposure liability no assurance legal challenges. enter agreements larger liability exposure.


products on third parties. security vulnerability exploit increased costs liability claims reduced revenue harm reputation position.


Disclosure misuse of personal data could liability harm reputation. grow cloud-based offerings store process large amounts personal data. high-profile data breaches environment hostile to information security. security controls possible controls training practices may not prevent improper disclosure misuse data. third parties access may use unauthorized. Improper disclosure misuse could harm reputation legal exposure liability increased costs loss revenue. software products services enable store process personal data on-premises cloud-based environment. Government authorities require produce data. advocate for transparency limitations on government authority disclosure. data collection could inhibit sales limit adoption cloud-based solutions. Additional security measures constraints flexibility may cause higher operating expenses growth.


protect information products. LinkedIn Microsoft products services contain valuable information protected by contractual restrictions technical measures. commitments limit access. Changes law weaken prevent third parties scraping information bots value products services.


harm reputation engagement.


platform products services content ads influenced by third parties GitHub LinkedIn Microsoft Advertising Microsoft News Store Bing Xbox reputation user engagement activity hostile inappropriate. users impersonating AI technologies misleading use terms service objectionable illegal ends. Preventing investments people technology business financial statements.


hosted consumer enterprise services generate harmful content law. discover content scale conflicting legal frameworks. content reputation brands engagement. Regulations initiatives harmful content enacted expect continue. enhanced regulatory oversight liability reputational damage content moderation business financial statements.


IoT presents security privacy execution risks. intelligent cloud developing products services technologies IoT. potential risks. products services contain defects design insecure ineffective. IoT solution layers hardware sensors processors software firmware. security. devices limited interfaces. collect data satisfy regulatory requirements. affect health safety. violate law harm legal claims enforcement actions. risks increase costs damage reputation brands impact revenues margins.


development AI reputational competitive harm liability. building AI into offerings productivity services making available for customers. AI developed by Microsoft OpenAI. expect business grow. envision future AI cloud helps. AI presents risks challenges. algorithms training methodologies. Datasets overbroad insufficient biased information. Content offensive illegal harmful. Ineffective AI development deployment harm products services. review outputs required. implementation AI competitive harm regulatory action legal liability legislation data protection privacy intellectual property laws brand reputational harm. AI scenarios ethical issues impacts society. AI solutions unintended consequences usage controversial human rights privacy employment social issues brand reputational harm business financial statements.


outages data losses disruptions online operations infrastructure. increasing traffic growth complexity demand more computing power. spend datacenters upgrade technology traffic. datacenters depend land energy networking supplies servers processing units. transition clean energy environmental regulations geopolitical disruptions. demands increase new products growth Bing Azure Microsoft 365 Teams Dynamics 365 OneDrive SharePoint Online Skype Xbox Outlook. AI. growing platform back-end hosting third parties. Maintaining expanding infrastructure expensive complex safety risks. Internet connectivity storage compute capacity robust reliable regulatory constraints. Inefficiencies failures loss data insufficient Internet connectivity power inadequate storage quality experience liability claims regulatory actions damage reputation loss users advertisers impact financial statements.


experience quality supply problems. Xbox Surface complex defects. incur expenses lost revenue reputational harm recalls safety alerts liability claims prevent repairs.


software products services experience quality reliability problems. software bugs defects. customers rely business functions workloads. products services interdependent. quality issues. defects cause reduced sales revenue damage reputation costs delays legal liability. license agreements exposure liability no legal challenge.


limited suppliers device datacenter components. competitors use demand affect capacity. components delayed unavailable changes obtain replacement reduced sales inadequate datacenter capacity. Component shortages excess inventory price reductions increase cost revenue. Xbox consoles Surface devices datacenter servers hardware Asia disruptions revenue margins.


Government regulatory limit products. scrutinize U. foreign competition laws. competition laws large markets EU U. S. China. jurisdictions allow anti-competitive conduct. federal state antitrust authorities business.


European Commission scrutinizes design Microsoft products technologies formats interfaces protocols companies. Flagship Windows scrutiny EU competition laws.


portfolio first-party devices OEM partners offer variety platforms. cooperate compete risk competition rules. Regulatory scrutiny may increase. foreign governments China arguments royalties intellectual property.


Competition law actions court decisions fines hinder benefits software reducing attractiveness products revenue. New actions initiated using previous actions precedent. outcome actions affect us withdraw modify markets value assets monetize products consummate acquisition impose conditions.


Laws regulations anti-corruption trade costs fines penalties reputational damage. Foreign Corrupt Practices Act anti-corruption laws prohibit payments accounting provisions require accurate books records internal controls. receive inquiries U. business activities. compliance Anti-Corruption Laws. cooperate. foreign. international regulatory complexity EU Whistleblower Directive 2021 compliance challenges. countries competition laws prohibit competitors. devote resources. international compliance programs policies training controls risk payments activity employees vendors agents may violate policies. failure Anti Laws fines penalties criminal sanctions prohibitions damage reputation.


trade laws policies sanctions requirements affect operations U. S. Economic sanctions U. EU prohibit business with restricted entities. U. export controls restrict Microsoft products. import controls restrict information communication technologies government review transactions foreign. Supply chain regulations impact availability goods regulatory scrutiny. intense conflict sanctions trade restrictions trade negative impacts trade. Non-compliance reputational harm delays fines loss costs export privileges criminal sanctions.


Laws regulations personal data impede services costs legal claims fines damage. growth Internet cloud services relies movement data across boundaries. Legal requirements collection storage handling transfer personal data evolve. EU-U. S. Data Privacy Framework transfers data EU U. S legal challenge requirements. EU data authorities block U. S. services. new rules restrictions increase cost complexity products.


EU General Data Protection Regulation applies activities compliance obligations handling personal data. EU developing new requirements Digital Markets Act Digital Services Act Data Act rules data products services. Engineering efforts compliance involve expense diversion resources from. reduced demand products legal duties obligations offerings less attractive. Compliance depends on regulators. to regulatory enforcement actions penalties lawsuits reputational damage blockage data transfers loss customers. fines under GDPR increasing against large technology companies. Jurisdictions China India states U. S. adopted laws regulations collection handling transfer personal data.


investment in data central to value services AI operational efficiency monetization perceptions quality. data regulatory developments return. legal analyses reviews inquiries requirements data sovereignty localization location movement collection use customer employee data management. Compliance laws data changes services costs lower revenue reduced efficiency difficulty foreign firms. Compliance data regulations limit features functionality jurisdictions. Failure penalties orders stop negative publicity diversion management time effort.


legal requirements affect operations. subject to laws regulations U. S. globally including products online services user privacy telecommunications data storage advertising online content. define services regulated telecommunications services. trend additional data protection security law enforcement surveillance obligations. Regulators litigants assert collection management customer data with laws regulations tracking cookies. laws mandatory disclosure reporting diligence requirements. cybersecurity increase costs products. Compliance digital accessibility laws engineering. action emerging AI content moderation could increase costs restrict opportunity. EU AI Act considered increased costs opportunities.


laws regulations business unclear change inconsistent. enforcement products services. Compliance with laws regulations costs changes products practices results. Noncompliance penalties. increasing pressure from advocacy groups regulators competitors customers stakeholders. products meet expectations requirements lose sales face regulatory legal actions.


claims lawsuits against us adverse outcomes. subject. from business practices product releases AI services business transactions warranty claims employment practices regulation. Adverse outcomes damages relief affect business. litigation uncertainties view may change. adverse impact financial statements unfavorable outcome probable.


business with government customers uncertainties. revenue from government contracts. contracts risks challenges private. to audits investigations suspended incur fines penalties contracts. agreements terminate higher liability. contracts funding approval reductions cancellations delays impact demand. impact financial condition reputation.


additional tax liabilities. subject to income taxes U. S. foreign jurisdictions. judgment worldwide provision income taxes. transactions tax determination uncertain. compliance 2017 United States Tax Cuts and Jobs Act future changes require collection information estimates financial judgment. regulations results differ affect financial statements.


under audit tax. provision income taxes estimates reasonable disagree. economic pressures increase tax revenue tax disputes difficult. under Internal Revenue Service audit prior tax years unresolved issues transfer pricing. final resolution differ consolidated financial statements affect.


earn income outside U. S. change earnings losses differing tax rates changes business structure disputes tax agreements higher tax rates. changes U. S. federal state international tax laws law. taxing jurisdictions’ impact financial statements.


face risks protection intellectual property business results. Protecting rights combating unlicensed copying difficult. absence harmonized patent laws respect rights.


Changes law weaken prevent patented technology collect revenue. licensees fail royalties contest. increasing engagement open source software license intellectual property rights broadly. If property revenue affected.


Source code commands operating systems critical to business. leaks lose trade secret protection. third parties functionality affect revenue results. Unauthorized disclosure security risks.


parties claim infringe intellectual property. claim infringe. resolve claims enter royalty licensing agreements stop selling redesign products pay damages commitments. Adverse outcomes include monetary damages injunctive relief importing selling. paid settle claims procure rights risk continue.


reputation brands damaged business results harmed. globally recognized important business. affect customers. include product safety quality environmental impact sustainability supply chain practices human rights record. backlash customers government groups employees decisions policy. Damage new features products services terms. scrutiny privacy data content. security breaches compliance failures actions partners employees.


social media likelihood negative brand events. brands damaged impact revenues margins qualified employees.


conditions harm business. Worsening inflation recession lower IT spending revenue. demand PCs servers devices spending revenue.


product distribution system partner retail network. OEMs building. economic conditions bankruptcy distributor sales channel disruption.


economic conditions impair customers pay products. doubtful accounts write-offs increase.


maintain investment portfolio holdings maturities. subject to credit liquidity market interest rate risks exacerbated market downturns global markets. U. S. government securities. markets decline. government credit rating default debt portfolio impairment charges financial statements.


Catastrophic events disrupt business. earthquake weather cyberattack terrorist pandemic delays sales services functions. corporate headquarters research development business operations Seattle Washington Silicon Valley California seismically active regions. catastrophic event critical business IT systems infrastructure power harm normal business operations. services solutions cloud resilience business continuity management impact service outages financial statements.


political change terrorist activity armed conflict Ukraine risk economic disruption increase operating costs impact. uncertainty technology investment decisions supply disruptions hardware. Geopolitical change regulatory systems market interventions operating strategies access markets hiring profitability. Geopolitical instability sanctions. impact revenues.


regional epidemics global pandemic COVID-19 affect operations financial condition results. pandemics business duration business actions impact economic activity recession financial instability. Measures pandemic intensify risks.


incur costs. unsuccessful impact revenues cash flows market reputation.


long-term effects climate change economy IT industry unclear. Environmental regulations changes energy affect cost goods services. Changes climate increase costs powering cooling hardware.


global business exposes operational economic risks. customers revenue international sales. creates operational economic geopolitical risks. developments monetary policy inflation recession political military disputes. growth strategy includes markets risks deterioration social political labor economic conditions difficulties staffing operations. nationalist protectionist trends concerns rights alter trade commercial environments. policy populism protectionism nationalism tariffs restrictions export controls investment restrictions. Disruptions markets impact demand increase costs. international currency exposure fluctuations foreign exchange rates. affect.


business depends on talented employees. diverse backgrounds experiences skill sets. market for skilled workers leaders competitive. Maintaining brand reputation diverse work environment important. limited internationally by restrictive domestic immigration laws. Changes. immigration policies talent may inhibit research development. less successful recruiting skilled workers leaders products services. succession planning important success. transfer knowledge transitions hinder strategic planning. employment-related laws increased operating costs less flexibility. global workforce predominantly non-unionized some employees. represented by unions. increase in workers form union. unionization could higher costs operational changes.


received no comments Securities Exchange Commission 180 fiscal year 2023 unresolved.


headquarters Redmond Washington. 16 million square feet King County engineering sales marketing operations. 11 million feet 530 acres 5 million square feet.


own lease facilities offices datacenters research development. properties China India Ireland Netherlands. leased Australia Canada China France Israel Japan United Kingdom. Research Development Item Form 10-K.


fiscal year 2023 consolidate office leases higher density real estate needs.


table square footage properties owned leased June 30, 2023 feet millions Location. International


Note 15 Financial Statements 8 Form 10-K legal proceedings.


EQUITY STOCKHOLDER EQUITY SECURITIES


stock traded NASDAQ MSFT. July 2023 83,883 holders.


monthly share repurchases fourth quarter fiscal 2023 Shares Purchased Price Paid Plans Programs Dollar Value Shares millions April 1 2023 30,.,467 May 1 May 31,,355,638. June 1, 30,,960.,777,254


share repurchases cash. market Rule 10b5-1 trading plan. excludes shares tax withholding.


Board declared dividends fourth quarter 2023 Declaration Share June 13, 17, 14.


returned $9. 7 billion repurchases dividends quarter 2023. Note 16 Stockholders’ Equity Statements Form 10-K.


DISCUSSION FINANCIAL RESULTS


Management’s Discussion Analysis Financial Condition Results Operations understand Microsoft Corporation. consolidated financial statements Notes II Item 8 Form 10-K. discusses results June 30 2023 2022. 2022 2021 Part II Item 7 Discussion Analysis Financial Condition Results Annual Report Form 10-K June 30 2022.


Microsoft organization. local opportunity growth impact. creating platforms tools better faster solutions business competitiveness improve educational health outcomes public-sector efficiency empower ingenuity.


generate revenue cloud solutions content services software online advertising designing selling devices. expenses compensating employees cloud services designing manufacturing marketing selling income taxes.


2023 Cloud revenue increased 22% $111. 6 billion. Commercial 10% growth 13%. Consumer 2% subscribers 67. million. 10%. 16% 24%. 19% Azure growth 29%. decreased 25%. revenue decreased 24%. Commercial increased 5%. decreased 3%. news advertising increased 11%.


industry dynamic competitive changes technologies business models. shift new products technologies ideas business. Microsoft push boundaries research development changing demands industry trends competitive forces.


markets for software devices cloud services dynamic competitive. competitors developing software devices deploying services. devices form factors evolve choice. demand for to global macroeconomic geopolitical factors dynamic. evolve adapt changing environment.


investments in cloud AI infrastructure increase costs decrease margins. expand datacenter locations increase server capacity growing demand AI. datacenters depend on land energy networking servers units. devices manufactured by third-party contract manufacturers. use other manufacturers if vendor unavailable. some contain components few qualified suppliers. disruptions impact.


success qualified employees. hire university industry talent worldwide. compete exceptional environment reach resources grow career competitive compensation benefits.


international operations revenue expenses. dollar changes foreign exchange rates affect revenue expenses. Fluctuations. dollar revenue expenses fiscal year 2023.


January 18, 2023 cost revenue demand prioritize investments consolidate office space. recorded $1. 2 billion charge second quarter employee severance expenses $800 million impairment charges hardware lease consolidation. reduced workforce 10,000 jobs less than 5% employee base. eliminated strategic. allocating capital talent growth divesting. consolidating leases higher density impacted financial results decisions real estate needs.


Risk Factors Item 1A Form 10-K.


revenue quarterly higher second fourth quarters. Second driven-end spending holiday season spending fourth multi-year-premises contracts.


July 2022 completed assessment lives server network equipment. investments software advances technology increase estimated lives four six years. effective 2023. June 2022 operating income $3. 7 billion net income $3. 0 billion $0. 40 per basic diluted share.


report financial performance Productivity Processes Intelligent Cloud Personal Computing. segment amounts MD&A internal management reporting. amounts.


Note 19 Segment Data Financial Statements Item 8 Form 10-K.


use metrics performance business decisions allocation resources. disclose metrics progress transparency evolution products. commercial business metrics customers. disclosed MD&A Notes Financial Statements II Item 8 Form 10-K. metrics calculated results accounting principles growth comparisons last fiscal year.


first quarter fiscal 2023 updates calculation metrics expanding Surface Devices metric revenue minor changes businesses.


commercial business Server cloud services Office Windows LinkedIn Enterprise Services Dynamics. metrics indicators future performance.


Commercial performance obligation obligations unearned revenue invoiced future


Cloud Azure Office 365 LinkedIn Dynamics 365 properties


Microsoft Cloud margin percentage


Metrics Productivity Business Processes Intelligent Cloud assess businesses. metrics reflect cloud on-premises strategies trends. Office Commercial cloud services revenue growth services 365 on Office Exchange SharePoint Teams Security Compliance Viva Copilot Office Consumer services Microsoft 365 on-premises Commercial seat growth Commercial seats Dynamics cloud services revenue cloud applications ERP CRM Power Apps Automate on-premises CRM LinkedIn revenue growth Solutions Marketing Server products cloud services Azure SQL Server Windows Server Visual Studio System Center Client Access Licenses Nuance GitHub


Metrics Personal Computing segment. product insights commercial consumer businesses. target audiences sales motions metrics. Windows OEM revenue growth Pro non-Pro licenses Commercial products cloud services volume licensing cloud services Devices revenue growth Surface HoloLens PC accessories Xbox content services revenue-party content Game Pass subscriptions Cloud Gaming advertising disc royalties services Search news advertising revenue costs Bing Ads publishers partners


millions percentages share Revenue,270 Gross margin Operating income,383 Net income,361,738 earnings share. gross margin,204 operating income,383 net income,307,447 earnings share.


Adjusted gross margin net income diluted earnings non-GAAP. exclude Q2 charge severance expenses impairment charges hardware lease consolidation. Prior exclude income tax transfer intangible properties 2022. Note 12 Income Taxes Form 10-K. Non-GAAP Measures reconciliation non-GAAP.


Revenue increased. billion 7% Intelligent Cloud Productivity Business Processes Computing. Cloud Azure. Office 365 Commercial LinkedIn. Computing Windows Devices.


revenue $3. billion Microsoft Cloud accounting.


margin increased $10. 4 billion 8% growth Intelligent Cloud Productivity Business Processes accounting decline More Personal Computing. percentage increased. decreased 1 point declines Intelligent Cloud sales shift. Cloud increased 2 72%. decreased decline Azure sales Office 365 Commercial.


expenses increased. severance growth Nuance Xandr cloud LinkedIn.


income increased. billion 6% Productivity Processes Cloud accounting Personal Computing.


Revenue margin income foreign currency 4% 6%. expenses foreign currency 2%.


margin diluted EPS Q2 charge $152 million $1. billion $946 million. year income EPS tax benefit transfer intangible properties EPS $3. billion.


millions Revenue Productivity,274,364 Intelligent Cloud,965 Personal Computing,734 Total,270 Operating Income,189,690 Intelligent Cloud,884,203 Personal Computing,450,490 Total,383


increased $5. 9 billion. Commercial $3. 7 billion 10%. 13% 11%. declined 21% cloud. Consumer $140 million 2%. 12% 67. million. $1. 3 billion 10% Talent Solutions. $750 million 16% 365 24%.


income increased $4. 5 billion 15%. margin increased $5. 8 billion 12% Office 365 Commercial LinkedIn. 365 cloud. expenses $1. 3 billion 7% LinkedIn severance.


Revenue income foreign currency 5% 8%.


Revenue increased $12. 9 billion 17%. increased $12. 6 billion 19%. 29% consumption. decreased 1%. increased $315 million 4% Industry.


income increased $4. 7 billion 14%. margin increased $8. 9 billion 17% Azure accounting. 3 sales. expenses increased $4. 2 billion 21% Azure Nuance severance expenses.


Revenue income foreign currency 4% 6%. expenses currency 2%.


Revenue decreased $5. 2 billion. decreased $3. 2 billion 13%. 25% inventory. increased 5% 365. revenue decreased $1. 8 billion 24%. revenue decreased $764 million 5% Xbox hardware content services. 11% volume price. 3% first content Game Pass. advertising increased $617 million 5%. 11% volume Xandr acquisition.


income $4. billion 20%. margin $4. 2 billion 13% Windows Devices. expenses decreased $195 million 2% Search 2 Xandr.


Revenue income currency 3% 4% 6%. expenses 2%.


millions percentages Change Research development,195 percent revenue


development expenses include payroll benefits stock compensation. third-party amortization software services.


expenses $2. billion cloud LinkedIn.


millions percentages Change Sales marketing,759 percent revenue


marketing expenses payroll benefits stock compensation advertising promotions seminars programs.


marketing expenses increased $934 million 4% Nuance Xandr Windows advertising. foreign currency 2%.


millions percentages Change administrative,900 percent revenue


expenses include payroll benefits stock compensation severance finance legal facilities human resources taxes fees.


expenses increased $1. billion 28% severance Irish Data Protection Commission. currency 2%.


income millions Ended June 30 Interest dividends income,994 Interest expense gains investments losses derivatives gains foreign currency remeasurements(75 Other Total


derivative instruments risks currencies equity prices interest rates enhance returns diversification. Gains losses recognized.


Interest dividends higher yields portfolio balances. Interest expense debt. gains decreased gains equity losses fixed. losses derivatives investments.


tax rate 2023 2022 19% 13%. increase $3. billion benefit 2022 transfer intangible decrease stock-based compensation.


2022 transferred properties Puerto Rico U. $3. 3 billion net income tax benefit future. tax deductions exceeded current tax liability.


tax rate lower. federal due earnings taxed foreign jurisdictions producing products Ireland.


. foreign impacted tax rate demand. 2023. income $52. 9 billion foreign income $36. 4 billion. 2022. income $47. 8 billion foreign $35. 9 billion.


settled Internal Revenue audit 2004 2006 2011. 2012, withdrew 2011 Revenue Agents Report reopened audit. settled 2007 2009 2016, 2010 2013 2018. 2021 settled 2004 2013 payment $1. 7 billion tax interest. audit 2004 to 2017.


June 30, 2023 unresolved issues IRS transfer pricing financial statements. allowances income tax contingencies adequate. proposed assessment transfer pricing issues. final resolution 12 months. increase tax contingencies 12 months.


subject income tax jurisdictions outside U. S. operations 1996 to 2022 audit. resolution not financial statements.


Adjusted gross margin operating income net income diluted EPS non-GAAP measures. Current exclude Q2 charge employee severance expenses impairment charges hardware lease consolidation. Prior exclude income tax benefit transfer intangible properties 2022.-GAAP measures aid trends. considers non-GAAP measures GAAP results. GAAP.


table results GAAP non-GAAP millions percentages share amounts Gross margin hardware lease consolidation costs Adjusted margin-GAAP,204 Operating income,383 costs Adjusted income-GAAP,383 Net income,361,738 lease consolidation costs income tax benefit transfer Adjusted net income-GAAP,307,447 Diluted earnings per share. lease consolidation costs. tax benefit transfer. Adjusted diluted earnings per share-GAAP.


expect cash equivalents investments flows capital markets commitments dividends share repurchases debt maturities capital expenditures transition tax 12 months foreseeable future.


Cash equivalents short-term investments $111. 3 billion $104. 8 billion June 30 2023 2022. Equity investments $9. 9 billion $6. 9 billion 2023 2022. liquidity capital preservation. liquid securities diversified issuers. U. dollar foreign. exposed interest rate credit. settlement risk insignificant.


use quoted prices fair value financial instruments. Level 1 investments. securities stock mutual funds. If use. Level 2 investments commercial paper certificates deposit. securities foreign bonds mortgage securities corporate notes bonds municipal securities. Level 3 investments valued models unobservable inputs. Assets measured unobservable inputs immaterial portfolio.


investments priced by vendors Level 1 or 2 provide quoted market price or observable inputs adjustments. Broker pricing quoted price not available not fair values. broker-priced investments Level 2 similar assets without adjustments. trading volume fair values appropriate. fair value processes include controls values. model validation review inputs analysis-over fluctuations independent recalculation.


operations decreased $1. billion $87. 6 billion 2023. financing decreased $14. billion $43. billion $10. billion common stock repurchases $6. billion repayments debt $1. billion dividends. investing decreased. billion $22. billion $20. 4 billion purchases $8. 2 billion sales $4. 2 billion property equipment.


issue debt pricing liquidity credit rating low interest. proceeds corporate purposes capital expenditures repurchases acquisitions repayment debt. Note 11 Debt Statements Item 8 Form 10-K.


Unearned revenue volume licensing programs Software Assurance cloud services. invoiced annually recognized. payments offerings paid advance revenue control. Note 1 Accounting Policies Financial Statements II Item 8 Form 10-K.


table unearned revenue June 30 2023 September 30,673 December 31,,600 March,801 June 30,813


customers license cloud revenue transaction subscription or consumption. Note 13 Unearned Revenue Notes Financial Statements (Part II Item 8 Form 10-K.


table summarizes payments obligations June 30, 2023 Long-term debt Principal payments,250,866 Interest,746,125 Construction commitments,237 Operating leases,852 Purchase commitments,115,557,547,104


Note 11 Debt Statements 8 10-K.


Note 7 Property Equipment Financial Statements 8.


Note 14 Financial Statements 8 10-K.


commitments datacenters orders take-or-pay contracts construction.


TCJA-time tax deferred foreign income. eight years 8% first five 15% six 20% 25% eight. paid $7. billion $1. billion 2023. remaining $10. billion three years $2. billion 12 months.


2023 paid tax $4. billion research TCJA July 1 2022.


2023 2022 69 95 $18. billion $28. billion. June 30 2023 $22. 3 billion $60 billion repurchase. Note 16 Stockholders’ Equity 10-K.


2023 2022 Board Directors declared dividends. 68. 62 $20. 2 billion $18. 6 billion. returning dividends. Note 16 Stockholders’ Equity 10-K.


January 18, 2022 Activision Blizzard. $95. 00 per share-cash $68. 7 billion net cash. approved shareholders. transaction regulatory approvals conditions. extend merger agreement October 18, 2023 concerns.


sales marketing infrastructure technology acquisitions strategy. Additions property equipment facilities datacenters computer systems research sales marketing administrative staff. expect capital expenditures increase cloud AI infrastructure. leases datacenters corporate offices research facilities Microsoft Experience Centers equipment. transactions liquidity capital.


consolidated financial statements GAAP. estimates assumptions assets liabilities revenue expenses. Critical accounting estimates uncertainty financial condition. revenue recognition goodwill research costs legal contingencies income taxes inventories.


contracts include promises transfer products services. Determining obligations judgment. cloud-based service includes software licenses cloud services judgment software. cloud services primarily Office 365 depend on integration between desktop applications cloud services accounted together obligation. Revenue from Office 365 recognized over.


Judgment stand selling price performance obligation. single amount SSP not sold separately on-premises licenses software updates. range amounts estimate SSP products separately discount SSP.


SSP not observable separately determine SSP market conditions observable inputs. more than one SSP products services stratification. use size customer geographic region SSP.


benefits SA program judgment assess pattern delivery benefits portfolio customers.


products sold right return provide credits incentives estimate customer usage variable consideration revenue. Returns credits estimated contract inception updated end information. Changes estimated material periods.


review debt investments quarterly credit losses impairment. cost exceeds fair value market conditions credit quality fair value cost. judgment. systematic methodology evidence. adverse conditions financial health business. plans sell decline fair value below cost recorded impairment charge new cost basis. market industry investee conditions deteriorate incur impairments.


Equity investments without values written impaired less than value. perform assessment. estimate fair value determine impairment loss. impaired impairment charge recorded in income.


allocate goodwill units business combination. evaluate units reassign goodwill fair value allocation approach. Goodwill tested for impairment unit level (May 1) reduce fair value unit below. business climate legal factors operating performance indicators competition sale disposition portion unit.


goodwill impairment test requires judgment identification units assignment assets liabilities goodwill fair value. estimated discounted cash flow methodology. requires judgments future cash flows forecasts long-term growth useful life weighted average cost capital.


estimates fair value unit change results market conditions. Changes affect fair value goodwill impairment.


Costs researching developing charged until technological feasibility established. costs capitalized until available. Judgment required feasibility. feasibility reached after high-risk issues resolved coding testing. before products production. amortization costs included in revenue.


outcomes of legal proceedings claims uncertainty. estimated loss from contingency accrued by charge to income if asset impaired liability incurred estimated. loss probability unfavorable outcome ability estimate loss. Changes impact financial statements.


objectives accounting taxes taxes payable current deferred tax liabilities assets future tax consequences recognized financial statements tax returns. tax benefit uncertain tax position sustained. tax benefits measured largest benefit 50% likelihood settlement. literature derecognition classification deferred tax assets liabilities accounting interest penalties disclosures. Judgment required future tax consequences consolidated financial statements. Variations impact financial statements.


Inventories average cost net realizable value. materials labor overhead. value selling price less completion disposal transportation. review inventory quantities future commitments estimated utility. demand forecasts cycle sales pricing strategy cost trends. reduction utility inventory new cost.


Management responsible consolidated financial statements information report. estimates judgments prepared accounting principles United States.


Company designs maintains accounting control systems assurance assets unauthorized financial records reliable statements accountability. augmented policies organizational structure selection training internal audits.


Company engaged Deloitte Touche audit consolidated statements Public Company Accounting Oversight Board.


Board Directors meets management auditors accounting firm internal controls financial reporting. Deloitte & Touche LLP auditors access Audit Committee.


exposed economic risk interest credit equity prices. impact financial statements.


transactions assets liabilities foreign currency risk. monitor. Euro Japanese yen British pound Canadian Australian dollar.


Securities portfolio interest rate risks. manage average maturity returns global indices.


fixed-income portfolio diversified investment securities. manage credit.


Securities equity risk.


table potential loss future earnings values changes market rates prices millions Risk Categories Change 30, 2023 Foreign currency Revenue decrease Investments Interest. treasury interest rates Credit credit spreads Equity decrease equity prices(705


millions share Year Ended June 30 Revenue Product,732,074 Service,216,538,014 Total revenue,270 Product,064,219 Service,586,013,863,650,232 Gross margin Research development,195 Sales marketing,759,117 General administrative Operating income,383 Other income taxes,311,716,102 taxes,950,978 Net income,361,738,271 Earnings share Basic. average shares Basic


notes.


millions Ended June 30 Net income,361,271 income net tax derivatives investments,444,360,266 Translation adjustments,146 comprehensive loss,665,500,374 Comprehensive income,696,238


millions June 30 Cash Short-term investments,826,757 Accounts receivable $650 $633,261 Inventories,742 assets,684 Property equipment depreciation $68,251 $59,660,398 lease assets,148 Equity investments Goodwill Intangible assets,298 long-term assets Total assets Liabilities stockholders’ Accounts payable,095 long debt,749 Accrued compensation,661-term income taxes unearned revenue,538 liabilities,082 Long-term debt,032 income taxesrevenue Deferred taxes lease liabilities,489 liabilities,298 Commitments equity Common stock capital shares 24,000 outstanding 7,464 earnings,281 loss,343,678 equity,542 liabilities equity


millions Ended June 30 Net income,361,738,271 Adjustments income Depreciation amortization,686 Stock compensation expense,118 losses investments derivatives Deferred income taxes(6,059,702 Changes operating assets liabilities Accounts receivable,087,834 Inventories assets assets,805 Accounts payable Unearned revenue Income taxes liabilities,149 Net cash,740 Cash premium debt exchange,754 Repayments debt,750,023 Common stockCommon stock repurchased(22,245(32,696(27,385 dividends,800#,135,006(863(769 cash financing(58,876(48,486 Additions property equipment(28,107(23,886(20,622 Acquisition cash purchases intangible assets,670(8,909 Purchases(37,651(26,456(62,924 Maturities,792 Sales,008,116(2,825(922 cash investing(22,680(30,311(27,577 foreign exchange rates cash equivalents#(141 Net change cash equivalents end,224


millions share Ended June 30 Common stock paid,111,552 stock issued repurchased,696,688,539 Stock expense,118 net end period,111 Retained,566 Net income,271 Common stock cash dividends(20,226,552 stock repurchased,568,960(21,879 accounting changes end period,055 income (loss period,678,186 loss,665,500,374 accounting changes end period,343,678 stockholders’ equity,223,542,988 Cash dividends common share. 72. 24


consolidated financial statements notes prepared accounting principles.


recast prior period amounts current. consolidated balance sheets income cash flows.


consolidated statements subsidiaries. Intercompany eliminated.


financial statements estimates assets liabilities revenue expenses. revenue recognition obligations price variable returns refunds loss contingencies warranties value impairment goodwill product life cycles useful lives allowances doubtful accounts market value inventory stock-based compensation forfeiture rates technological feasibility uncertain tax positions impairments investments. results outcomes differ estimates risks uncertainties.


July 2022 completed assessment lives server network equipment. investments software advances technology increase estimated lives four six years. effective 2023. June 2022 operating income $3. 7 billion net income $3. 0 billion $0. 40 per basic diluted share.


Assets liabilities translated exchange rate balance. Revenue expenses translated rates. adjustments recorded income.


revenue operating business software video games hardware PCs tablets gaming consoles devices accessories.


revenue cloud Office 365 Azure Dynamics 365 Xbox support consulting. online advertising LinkedIn.


Revenue recognized transfer control promised products services customers consideration. enter contracts combinations products services separate obligations. recognized net returns taxes remitted governmental authorities.


Licenses for on-premises software provide customer right to use software. purchase perpetual or subscribe same functionality duration. Revenue from licenses recognized upfront software available. revenue to software updates charge revenue recognized over life device license.


licensing programs Enterprise Agreements on-premises licenses Software Assurance. conveys rights new software upgrades provides support training. licenses performance obligations SA. Revenue SA recognized benefits obligations.


Cloud services use hosted software without provided subscription or consumption. Revenue subscription recognized over contract period. consumption storage recognized customer utilization. services require significant integration interdependency components not distinct revenue recognized over period provided.


Revenue search advertising recognized action completed. consulting services recognized provided.


hardware dependent on operating system function without. hardware software license single performance obligation revenue recognized ownership to resellers customers.


Note 19 Segment Data product service.


contracts include promises transfer products services. Determining obligations judgment. cloud-based service includes software licenses cloud services judgment software. cloud services primarily Office 365 depend on integration between desktop applications cloud services accounted together obligation. Revenue from Office 365 recognized over.


Judgment SSP performance obligation. single amount estimate SSP not sold separately on-premises licenses software updates. range amounts estimate SSP products separately discount SSP.


SSP not observable separately determine SSP market conditions observable inputs. more than one SSP products services stratification. use size customer geographic region SSP.


benefits SA program judgment assess pattern delivery benefits portfolio customers.


products sold right return provide credits incentives estimate customer usage variable consideration revenue. Returns credits estimated contract inception updated end information. Changes estimated material periods.


revenue recognition invoicing. record receivable unearned. multi-year agreements invoice annually. record receivable revenue multi-year on-premises licenses unconditional right to invoice receive payment.


Unearned revenue volume licensing programs SA cloud services. invoiced annually contract recognized ratably period. includes consulting services LinkedIn Office 365 Xbox Windows Dynamics solutions paid advance revenue control.


Note 13 Unearned Revenue information segment changes.


Payment terms conditions vary contract type within 30 to 60 days. revenue recognition invoicing contracts significant financing. invoicing not. Examples invoicing subscription term revenue recognized multi-year-premises licenses invoiced annually revenue recognized upfront.


June 30 2022-term accounts receivable $4. 5 billion $3. billion balance.


allowance doubtful accounts losses receivable balance. accounts experience evidence.


doubtful accounts millions Ended June 30 Balance period#710#798#816 Charged costs Write-offs Balance end period#716


doubtful accounts balance millions June 30 Accounts receivable#650#751 long assets#716#710


June 30 2023 2022 receivables $9. billion $6. 1 billion balance.


record financing receivables software limited countries. June 30 2023 2022 receivables $5. 3 billion $4. 1 billion short long-term balance sheets. allowance losses troubled accounts experience evidence.


Recognized Obtain Contract


recognize asset incremental costs contract longer year. sales incentive programs meet. capitalized costs contract immaterial included assets consolidated balance sheets.


apply expense costs contract amortization year less. costs include compensation partner sales incentive programs compensation sales activities.


revenue includes manufacturing distribution operating costs software PCs traffic online advertising cloud online products services datacenter royalties warranty inventory valuation adjustments consulting services amortization capitalized software development costs. amortized lives products.


provide estimated costs hardware software warranties revenue recognized. failure rates repair costs knowledge failures. warranty terms conditions vary product country include parts labor 90 days to three years. software warranties estimate costs bug fixes life. reevaluate estimates liabilities adjust amounts.


Research development expenses include payroll benefits stock compensation headcount-related expenses. third-party costs amortization purchased software code services. until technological feasibility reached before production. costs capitalized amortized to revenue.


expenses payroll benefits compensation advertising promotions seminars. incurred. $904 million $1. 5 billion. billion 2023 2022 2021.


Compensation cost stock awards measured fair value grant date expense net forfeitures service period. fair value based quoted price common stock less dividends. Monte Carlo valuation model. RSUs straight-line PSUs accelerated.


Compensation employee stock purchase plan measured discount recognized period.


January 18, 2023 reduce workforce 10,000 jobs 2023. December 2022 recorded $800 million employee severance expenses benefit plan. included consolidated income allocated segments margin. Note 19 Segment Information Geographic Data.


. taxes interest penalties positions. expenses not returns financial statements. tax deferred taxes. tax assets net valuation allowance tax benefit. taxes long-term consolidated balance sheets.


liquid investments three months cash equivalents. fair values approximate carrying values. maturities three months less than one year short-term. beyond one year short-term liquid nature cash operations.


Debt investments available-for-sale gains losses recorded identification method. Changes fair value losses recorded income. Fair value calculated market information estimates management. cost exceeds fair value market conditions credit quality. credit losses systematic methodology quantitative evidence. adverse conditions financial health. sell decline fair value below cost impairment new cost basis. market industry investee conditions deteriorate impairments.


Equity investments measured at value. without cost adjustments changes price impairments. qualitative assessment recognize impairment if fair value less than value. Changes value recorded income.


Derivative instruments assets liabilities measured fair value. accounting use designation.


fair value hedges gains losses recognized income offsetting hedged items. hedge components excluded recognized.


cash flow hedges gains losses income recognized hedged item. Gains losses hedge components excluded recognized income.


derivative instruments not hedges gains losses recognized.


account assets liabilities fair value. hierarchy lists three levels fair value inputs. categorize measurements. 1 inputs unadjusted prices markets. investments. government securities stock mutual funds. assets traded exchanges. 2 inputs quoted prices model-based valuation techniques. inputs. models project future cash flows discount amounts present value interest rate curves credit spreads foreign exchange rates. investments commercial paper certificates deposit. securities foreign government bonds mortgage securities corporate notes bonds municipal securities. cleared swap contracts over-the-counter forward contracts. 3 inputs unobservable estimates. determined model-based techniques option pricing models discounted cash flow models. assets liabilities corporate notes bonds municipal securities goodwill intangible assets impairment charge.Unobservable inputs assets liabilities.


measure equity investments nonrecurring. values techniques prices comparables discounted cash flow projections.


assets liabilities values carrying values.


Inventories average cost net realizable value. materials labor overhead. Net value selling price less completion disposal transportation. review inventory quantities purchase commitments estimated utility. reduction utility new cost.


Property equipment cost depreciation estimated. software three equipment two six buildings improvements five 15 leasehold improvements three 20 years furniture one 10 years. Land not depreciated.


determine lease inception. Operating leases assets current consolidated balance sheets. Finance leases property equipment long liabilities.


ROU assets right use lease liabilities obligation payments. assets liabilities recognized commencement present value lease payments. incremental borrowing rate estimated interest collateralized borrowing. operating lease asset includes lease payments excludes incentives. lease terms options extend terminate. Lease expense recognized straight-line term.


lease agreements non-lease components accounted separately. equipment leases lease single. portfolio approach operating lease assets liabilities.


Goodwill tested impairment reporting unit level 1) event reduce fair value reporting unit below carrying value.


intangible assets subject to amortization straight-line method estimated benefit one to 20 years. evaluate recoverability revised estimates.