1、1Dear shareholders,colleagues,customers,and partners,We are living through a time of historic challenge and opportunity.As I write this,the world faces ongoing economic,social,and geopolitical volatility.At the same time,we have entered a new age of AI that will fundamentally transformproductivity f

2、or every individual,organization,and industry on earth,and help us address some of our most pressingchallenges.This next generation of AI will reshape every software category and every business,including our own.Forty-eight yearsafter its founding,Microsoft remains a consequential company because ti

3、me and time againfrom PC/Server,toWeb/Internet,to Cloud/Mobilewe have adapted to technological paradigm shifts.Today,we are doing so once again,aswe lead this new era.Amid this transformation,our mission to empower every person and every organization on the planet to achievemore remains constant.As

4、a company,we believe we can be the democratizing force for this new generation oftechnology and the opportunity it will help unlock for every country,community,and individual,while mitigating its risks.Here are just a few examples of how we are already doing this:Leading electronic health records ve

5、ndor Epic is addressing some of the biggest challenges facing thehealthcare industry todayincluding physician burnoutby deploying a wide range of copilot solutions builton Azure OpenAI Service and Dragon Ambient eXperience Copilot.Mercado Libre is reducing the time its developers spend writing code

6、by more than 50 percent with GitHubCopilot,as the company works to democratize e-commerce across Latin America.Mercedes-Benz is making its in-car voice assistant more intuitive for hundreds of thousands of drivers usingChatGPT via the Azure OpenAI Service.Lumen Technologies is helping its employees

7、be more productive,enabling them to focus on higher value-added activities,by deploying Microsoft 365 Copilot.Nonprofit The Contingent is matching foster families with children in need using Dynamics 365,Power BI,andAzure,with an eye on using AI to amplify its work across the US.And,Taiwans Ministry

8、 of Education has built an online platform to help elementary and high school studentslearn English using Azure AI.To build on this progress,we remain convicted on three things:First,we will maintain our lead as the top commercialcloud while innovating in consumer categories,from gaming to professio

9、nal social networks.Second,because we knowthat maximum enterprise value gets created during platform shifts like this one,we will invest to accelerate our lead in AIby infusing this technology across every layer of the tech stack.And,finally,we will continue to drive operating leverage,aligning our

10、cost structure with our revenue growth.As we make progress on these priorities,we delivered strong results in fiscal year 2023,including a record$211 billion inrevenue and over$88 billion in operating income.A NEW ERA OF AIThere are two breakthroughs coming together to define this new era of AI.The

11、first is the most universal interface:naturallanguage.The long arc of computing has,in many ways,been shaped by the pursuit of increasingly intuitive human-computer interfaceskeyboards,mice,touch screens.We believe we have now arrived at the next big step forwardnatural languageand will quickly go b

12、eyond,to see,hear,interpret,and make sense of our intent and the world aroundus.The second is the emergence of a powerful new reasoning engine.For years,weve digitized daily life,places,and thingsand organized them into databases.But in a world rich with data,what has been most scarce is our ability

13、 to reason overit.This generation of AI helps us interact with data in powerful new waysfrom completing or summarizing text,todetecting anomalies and recognizing imagesto help us identify patterns and surface insights faster than ever.Together,these two breakthroughs will unlock massive new opportun

14、ity.And,in fact,just last month we announced ourvision for Copilot,an everyday AI companion.We are building Copilot into all our most used products and experiencesand allowing people to summon its power as a standalone app as well.Just like you boot up an OS to access applicationsor use a browser to

15、 visit websites today,our belief is that you will invoke a Copilot to do all those activities and more:toshop,to code,to analyze,to learn,to create.2As a company,any time we approach a transition like this,we do so responsibly.We believe AI should be as empoweringacross communities as it is powerful

16、,and were committed to ensuring it is responsibly built and designed,with safety inmind from the outset.OUR OPPORTUNITYEvery customer solution area and every layer of our tech stack will be reimagined for the AI era.And thats exactly whatweve already begun to do:InfrastructureFour years ago,we first

17、 invested in our AI supercomputer,with a goal of building the best cloud for training and inference.Today,its being used by our partner OpenAI to power its best-in-class foundation models and services,including one ofthe fastest-growing consumer apps everChatGPT.NVIDIA,as well as leading AI startups

18、 like Adept and Inflection,isalso using our infrastructure to build its own breakthrough models.More broadly,organizations continue to choose our ubiquitous computing fabricfrom cloud to edgeto run theirmission-critical applications.We continued to see more cloud migrations to Azure this past fiscal

19、 year,as it remains earlywhen it comes to the long-term cloud opportunity.And we also continue to lead in hybrid computing with Azure Arc,whichnow has 18,000 customers.Data and AIEvery AI app starts with data,and having a comprehensive data and analytics platform is more important than ever.OurIntel

20、ligent Data Platform brings together operational databases,analytics,and governance so organizations can spendmore time creating value and less time integrating their data estate.We also introduced Microsoft Fabric this year,whichunifies compute,storage,and governance with a disruptive business mode

21、l.With Azure AI,we are making foundation models available as platforms to our customers.We offer the best selection ofindustry-leading frontier and open models.In January,we made the Azure OpenAI Service broadly available,bringingtogether advanced models,including ChatGPT and GPT-4,with the enterpri

22、se capabilities of Azure.More than 11,000organizations across industries are already using it for advanced scenarios like content and code generation.Meta choseus this summer as its preferred cloud to commercialize its Llama family of models.And,with Azure AI Studio,we providea full lifecycle toolch

23、ain customers can use to ground these models on their own data,create prompt workflows,and helpensure they are deployed and used safely.Digital and app innovationGitHub Copilot is fundamentally transforming developer productivity,helping developers complete coding tasks 55 percentfaster.More than 27

24、,000 organizations have chosen GitHub Copilot for Business,and to date more than 1 million peoplehave used GitHub Copilot to code faster.We also announced our vision for the future of software development withGitHub Copilot X,which will bring the power of AI throughout the entire software developmen

25、t lifecycle.All up,GitHubsurpassed$1 billion in annual recurring revenue for the first time this fiscal year.Were also applying AI across our low-code/no-code toolchain to help domain experts across an organization automateworkflows,create apps and webpages,build virtual agents,or analyze data,using

26、 just natural language with copilots inPower Platform.More than 63,000 organizations have used AI-powered capabilities in Power Platform to date.Business applicationsWe are bringing the next generation of AI to employees across every job function and every line of business withDynamics 365 Copilot,w

27、hich works across CRM and ERP systems to reduce burdensome tasks like manual data entry,content generation,and notetaking.In fact,our own support agents are using Copilot in Dynamics 365 Customer Serviceto resolve more cases faster and without having to call on peers to help.With our Supply Chain Pl

28、atform,were helpingcustomers apply AI to predict and mitigate disruptions.And,with our new Microsoft Sales Copilot,sellers can infuse theircustomer interactions with data from CRM systemsincluding both Salesforce and Dynamicsto close more deals.3All up,Dynamics surpassed$5 billion in revenue over th

29、e past fiscal year,with our customer experience,service,andfinance and supply chain businesses each surpassing$1 billion in annual sales.IndustryAcross industries,we are rapidly becoming the partner of choice for any organization looking to generate real value fromAI.In healthcare,for example,we int

30、roduced the worlds first fully automated clinical documentation application,DAXCopilot.The application helps physicians reduce documentation time by half,freeing them to spend more time face toface with patients.And Epic will integrate it directly into its electronic health records system.And,in ret

31、ail,we introduced new tools to help companies manage their day-to-day operations and digitize their physicalstores.Modern workWe are rapidly evolving Microsoft 365 into an AI-first platform that enables every individual to amplify their creativity andproductivity,with both our established applicatio

32、ns like Office and Teams,as well as new apps like Designer,Stream,andLoop.Microsoft 365 is designed for todays digitally connected,distributed workforce.This year,we also introduced a new pillar of customer value with Microsoft 365 Copilot,which combines next-generationAI with business data in the M

33、icrosoft Graph and Microsoft 365 applications to help people be more productive andunleash their creativity at work.Just last month,I was excited to announce that we will make Microsoft 365 Copilotgenerally available to our commercial customers later this year.We continue to build momentum in Micros

34、oft Teams across collaboration,chat,meetings,and calls.We introduced a newversion of Teams that delivers up to two times faster performance,while using 50 percent less memory.We alsointroduced Teams Premium to meet enterprise demand for AI-powered features like intelligent meeting recaps.All up,Team

35、s usage surpassed 300 million monthly active users this year.With Microsoft Viva,we have created a new category for employee experience.Copilot in Viva offers leaders a new wayto build high-performance teams by prioritizing both productivity and employee engagement.This year,Viva surpassed35 million

36、 monthly active users.SecurityAs the rate and pace of cyberthreats continue to accelerate,security is a top priority for every organization.Ourcomprehensive,AI-powered solutions give defenders the advantage.With Security Copilot,were combining largelanguage models with a domain-specific model inform

37、ed by our threat intelligence and 65 trillion daily security signals,totransform every aspect of security operations center productivity.All up,more than 1 million organizations now count on our comprehensive,AI-powered solutions to protect their digitalestates,and our security business surpassed$20

38、 billion in annual revenue,as we help protect customers across cloudsand endpoint platforms.Search,advertising,and newsWe are reshaping daily search and web habits with our new Bing and Microsoft Edge browser,which brings togethersearch,browsing,chat,and AI into one unified experience to deliver bet

39、ter search,more complete answers,a new chatexperience,and the ability to generate content.We think of these tools as an AI copilot for the web.We are also bringing these breakthrough capabilities to businesses,with Bing Chat Enterprise,which offers commercialdata protection,providing an easy on-ramp

40、 for any organization looking to get the benefit of next-generation AI today.Although its early in our journey,Bing users engaged in more than 1 billion chats and created more than 750 millionimages over the past year as they apply these new tools to get things done.And Edge has taken share for nine

41、consecutive quarters.4More broadly,we continue to expand our opportunity in advertising.This year,Netflix chose us as its exclusive technologyand sales partner for its first ad-supported subscription offering,a validation of the differentiated value we provide to anypublisher looking for a flexible

42、partner to build and innovate with them.LinkedInThe excitement around AI is creating new opportunities across every functionfrom marketing,sales,service,andfinance,to software development and security.And LinkedIn is increasingly where people are going to learn,discuss,anduplevel their skills.We are

43、 using AI to help our members and customers connect to opportunities and tap into theexperiences of experts on the platform.In fact,our AI-powered articles are already the fastest-growing traffic driver to thenetwork.All up,LinkedIns revenue surpassed$15 billion for the first time this fiscal year,a

44、 testament to how mission critical theplatform has become to help more than 950 million members connect,learn,sell,and get hired.GamingIn gaming,we are rapidly executing on our ambition to be the first choice for people to play great games whenever,wherever,and however they want.With Xbox Game Pass,

45、we are redefining how games are distributed,played,andviewed.Content is the flywheel behind the services growth,and our pipeline has never been stronger.It was especiallyenergizing to release Starfield this fall to broad acclaim,with more than 10 million players in the first month post-launchalone.E

46、arlier this month,we were thrilled to close our acquisition of Activision Blizzard,and we look forward to sharing more inthe coming months about how,together,we will bring the joy of gaming to more people around the world.Devices and creativityFinally,were turning Windows into a powerful new AI canv

47、as with Copilot,which rolled out as part of a Windows 11update last month.It uniquely incorporates the context and intelligence of the web,your work data,and what you aredoing in the moment on your PC to provide better assistance,while keeping your privacy and security at the forefront.Overall,the n

48、umber of devices running Windows 11 more than doubled in the past year.And we are also transforminghow Windows is experienced and managed with Azure Virtual Desktop and Windows 365,which together surpassed$1 billion in annual revenue for the first time.OUR RESPONSIBILITYAs we pursue our opportunity,

49、we are also working to ensure technology helps us solve problemsnot create new ones.To do this,we focus on four enduring commitments that are central to our mission and that take on even greaterimportance in this new era.For us,these commitments are more than just words.Theyre a guide to help us mak

50、edecisions across everything we doas we design and develop products,shape business processes and policies,help ourcustomers thrive,build partnerships,and morealways asking ourselves critical questions to ensure our actions arealigned with them.How can we expand opportunity?First,we believe access to

51、 economic growth and opportunity should reach every person,organization,community,andcountry.And although AI can serve as a catalyst for opportunity and growth,we must first ensure everyone has access tothe technologies,data,and skills they need to benefit.To achieve this,we are focused on getting t

52、echnology into the hands of nonprofits,social entrepreneurs,and other civilsociety organizations to help them digitally transform,so they can help address some of societys biggest challenges.Thisyear,we provided nonprofits with over$3.8 billion in discounted and donated technology.Nearly 325,000 non

53、profits usedour cloud.And to help them tap the potential of AI,were building new AI capabilities for fundraising,marketing,andprogram delivery.AI will displace some jobs,but it will also create new ones.Thats why we aim to train and certify 10 million people by2025 with the skills for jobs and livel

54、ihoods in an increasingly digital economy.Since July 2020,weve helped 8.5 millionpeople,including 2.7 million this year.Weve also focused on skilling women and underrepresented communities incybersecurity,working across 28 countries and with nearly 400 US community colleges to scale our efforts.5Fin

55、ally,to help people learn more about AI,we launched the first online Professional Certificate on Generative AI inpartnership with LinkedIn Learning,created AI tools for educators,and held our first AI Community Learning event in theUS.These events will be replicated around the world and localized in

56、 10 languages over the next year.We also partneredto launch a Generative AI Skills Grant Challenge to explore how nonprofit,social enterprise,and research or academicinstitutions can empower the workforce to use this new generation of AI.How can we earn trust?To create positive impact with technolog

57、y,people need to be able to trust the technologies they use and the companiesbehind them.For us,earning trust spans the responsible use of AI,protecting privacy,and advancing digital safety andcybersecurity.Our commitment to responsible AI is not new.Since 2017,weve worked to develop our responsible

58、 AI practice,recognizing that trust is never given but earned through action.We have translated our AI principles into a core set of implementation processes,as well as tools,training,and practicesto support compliance.But internal programs arent enough.We also enable our customers and partners to d

59、evelop anddeploy AI safely,including through our AI customer commitments and services like Azure AI Studio,with its content safetytooling and access to our Responsible AI dashboard.Building AI responsibly requires that we work with other industry leaders,civil society,and governments to advocate for

60、 AIregulations and governance globally.This year,we released our Governing AI Blueprint,which outlines concrete legal andpolicy recommendations for AI guardrails.We are signatories to the eight voluntary commitments developed with the USWhite House,and proud of the six additional commitments weve ma

61、de to further strengthen and operationalize theprinciples of safety,security,and trust.The era of AI heightens the importance of cybersecurity,and we deepened our work across the private and public sectorsto improve cyber-resilience.Weve continued to support Ukraine in defending critical infrastruct

62、ure,detecting anddisrupting cyberattacks and cyberinfluence operations,and providing intelligence related to these attacks.Our MicrosoftThreat Analysis Center team produced more than 500 intelligence reports to help keep customers and the public informed.And we published our third annual Microsoft D

63、igital Defense Report,sharing our learnings and security recommendations.We also remain committed to creating safe experiences online and protecting customers from illegal and harmful contentand conduct,while respecting human rights.We supported the Christchurch Call Initiative on Algorithmic Outcom

64、es toaddress terrorist and violent and extremist content online.And through the World Economic Forums Global Coalition forDigital Safety,we co-led the development of new global principles for digital safety.Protecting customers privacy and giving them control of their data is more important than eve

65、r.Weve begun our phasedrollout of the EU Data Boundary,supporting our commercial and public sector customers need for data sovereignty.Andeach month,more than 3 million people exercise their data protection rights through our privacy dashboard,makingmeaningful choices about how their data is used.Ho

66、w can we protect fundamental rights?In an increasingly digital world,we have a responsibility to promote and protect peoples fundamental rights and addressthe challenges technology creates.For us,this means upholding responsible business practices,expanding connectivityand accessibility,advancing fa

67、ir and inclusive societies,and empowering communities.In 2023,we worked diligently to anticipate harmful uses of our technology and put guardrails on the use of technologiesthat are consequential to peoples lives or legal status,create risk of harm,or threaten human rights.We will continue toassess

68、the impact of our technologies,engage our stakeholders,and model and adopt responsible practices and respectfor human rightsincluding across our global supply chain.Today,our lives are more connected than ever.Access to education,employment,healthcare,and other critical servicesis increasingly depen

69、dent on technology.Thats why weve expanded our commitment to bring access to affordable high-speed internet to a quarter of a billion people around the world,including 100 million people in Africa,by the end of 2025.Since 2017,weve helped bring internet access to 63 million people,a key first step t

70、o ensuring communities will haveaccess to AI and other digital technologies.6This year,we also continued working toward our five-year commitment to bridge the disability divide with a focus onhelping close the accessibility knowledge gap.Seven hundred and fifty-thousand learners enriched their under

71、standing ofdisability and accessibility in partnership with LinkedIn Learning,Teach Access,and the Microsoft disability community.In addition,were stepping up efforts to combat online disinformation through new media content provenancetechnologiesenabling users to verify if an image or video was gen

72、erated by AI.We continued our efforts to promoteracial equity across Microsoft,our ecosystem,and our communities,including our work to advance justice reform throughdata-driven insights.And we provided support in response to eight humanitarian disasters,including committing$540 million of support to

73、 those who have been impacted by the War in Ukraine.Finally,recognizing AIs potential to advance human rights and humanitarian action,we worked on several AI forHumanitarian Action projects.Together with our partners,were building the capabilities to identify at-risk communities,estimate seasonal hu

74、nger,predict malnutrition,and assist in disease identification.How can we advance sustainability?Climate change is the defining issue of our generation,and addressing it requires swift,collective action and technologicalinnovation.We are committed to meeting our own goals while enabling others to do

75、 the same.That means takingresponsibility for our operational footprint and accelerating progress through technology.We continue to see extreme weather impacting communities globally.To meet the urgent need,this must be a decade ofinnovation and decisive actionfor Microsoft,our customers,and the wor

76、ld.In our latest Environmental Sustainability Report,we shared our progress toward our 2030 sustainability targets acrosscarbon,water,waste,and ecosystems.In 2022,our overall carbon emissions declined by 0.5 percent while our businessgrew.Addressing scope 3 emissions,which account for the vast major

77、ity of our emissions,is arguably our ultimatechallengeone well continue to tackle through our supply chain,policy advances,and industry-wide knowledge-sharing.Weve provided just under 1 million people with access to clean water and sanitation,one of five pillars on our path tobecoming water positive

78、.And in our pursuit to be zero waste,we achieved a reuse and recycle rate of 82 percent for allour cloud hardware and diverted over 12,000 metric tons of solid operational waste from landfills and incinerators.We also continue to take responsibility for the impacts of our direct operations on Earths

79、 ecosystems.Weve contractedto protect 17,268 acres of land,over 50 percent more than the land we use to operate.Of that,12,270 acrestheequivalent of approximately 7,000 soccer fieldswere designated as permanently protected.Technology is a powerful lever to help us avoid the most severe impacts of cl

80、imate change.Thats why were acceleratingour investment in more efficient datacenters,clean energy,enhancements to the Microsoft Cloud for Sustainability andPlanetary Computer,and green software practices.To date,through our Climate Innovation Fund,weve allocated morethan$700 million to a global port

81、folio of 50+investments spanning sustainable solutions in energy,industrial,and naturalsystems.Finally,we believe AI can be a powerful accelerant in addressing the climate crisis.We expanded our AI for Good Lab inEgypt and Kenya to improve climate resilience for the continent.And,together with our p

82、artners,we launched GlobalRenewables Watch,a first-of-its-kind living atlas that aims to map and measure utility-scale solar and wind installations,allowing users to evaluate progress toward a clean energy transition.Although this new era promises great opportunity,it demands even greater responsibi

83、lity from companies like ours.As wepursue our four commitments,we focus on transparencyproviding clear reporting on how we run our business and howwe work with customers and partners.Our annual Impact Summary shares more about our progress and learnings thisyear,and our Reports Hub provides detailed

84、 reports on our environmental data,political activities,workforcedemographics,human rights work,and more.OUR CULTURETheres never been a more important time to live our culture.The way we work and the speed at which we work arechanging.7In an economy where yesterdays exceptional is todays expected,al

85、l of us at Microsoft will need to embrace a growthmindset and,more importantly,confront our fixed mindsets as our culture evolves.It will take everyday courage toreformulate what innovation,business models,and sales motions look like in this new era.As a high-performanceorganization,we aspire to hel

86、p our employees maximize their economic opportunity,while simultaneously helping themlearn and grow professionally and connect their own passion and purpose with their everyday work and the companysmission.To be successful,we need to be grounded in what our customers and the world need.We need to in

87、novate andcollaborate as One Microsoft.And we need to actively seek diversity and embrace inclusion to best serve our customersand create a culture where everyone can do their best work.To empower the world,we need to represent the world.Tothat end,we remain focused on increasing representation and

88、strengthening our culture of inclusion.Even as wenavigated challenges this year,our company continued to be the most globally diverse its ever been.Giving also remains core to our culture.This year,more than 105,000 employees gave$242 million(including companymatch)to over 35,000 nonprofits in 116 c

89、ountries.And our employees volunteered over 930,000 hours to causes theycare about.I am deeply grateful to our employees for their commitment to the company and their communities,and how they areliving our mission and culture every day in a changing company and world.*In closing,this is Microsofts m

90、oment.We have an incredible opportunity to use this new era of AI to deliver meaningfulbenefits for every person and every organization on the planet.On New Years Day,I saw a tweet from Andrej Karpathy,Teslas former director of AI who now works at OpenAI,abouthow GitHub Copilot was writing about 80

91、percent of his code,with 80 percent accuracy.Two days later,I saw a stunningexample of work weve done with the government of Indias Ministry of Electronics and IT,which is applying an AI modelso farmers in rural areas can interact with government resources in their native languages.Think about that:

92、A foundation model that was developed on the West Coast of the United States is already transformingthe lives of both elite developers and rural farmers on the other side of the globe.Weve not seen this speed of diffusionand breadth of impact in the tech industry before.As a company,this is our mome

93、nt to show up and responsibly build solutions that drive economic growth and benefitevery community,country,industry,and person.If we do it well,the world will do well,and Microsoft will do well too.Ivenever been more confident that we will deliver on this promise together in the days,months,and yea

94、rs to come.Satya NadellaChairman and Chief Executive OfficerOctober 16,20238ISSUER PURCHASES OF EQUITY SECURITIES,DIVIDENDS,AND STOCK PERFORMANCEMARKET AND STOCKHOLDERSOur common stock is traded on the NASDAQ Stock Market under the symbol MSFT.On July 24,2023,there were 83,883registered holders of r

95、ecord of our common stock.SHARE REPURCHASES AND DIVIDENDSShare RepurchasesOn September 18,2019,our Board of Directors approved a share repurchase program authorizing up to$40.0 billion inshare repurchases.This share repurchase program commenced in February 2020 and was completed in November 2021.On

96、September 14,2021,our Board of Directors approved a share repurchase program authorizing up to$60.0 billion inshare repurchases.This share repurchase program commenced in November 2021,following completion of the programapproved on September 18,2019,has no expiration date,and may be terminated at an

97、y time.As of June 30,2023,$22.3 billion remained of this$60.0 billion share repurchase program.We repurchased the following shares of common stock under the share repurchase programs:(In millions)SharesAmountSharesAmountSharesAmountYear Ended June 30,202320222021First Quarter17$4,60021$6,20025$5,270

98、Second Quarter204,600206,233275,750Third Quarter184,600267,800255,750Fourth Quarter144,600287,800246,200Total69$18,40095$28,033101$22,970All repurchases were made using cash resources.Shares repurchased during fiscal year 2023 and the fourth and thirdquarters of fiscal year 2022 were under the share

99、 repurchase program approved on September 14,2021.Sharesrepurchased during the second quarter of fiscal year 2022 were under the share repurchase programs approved on bothSeptember 14,2021 and September 18,2019.All other shares repurchased were under the share repurchase programapproved on September

100、 18,2019.The above table excludes shares repurchased to settle employee tax withholdingrelated to the vesting of stock awards of$3.8 billion,$4.7 billion,and$4.4 billion for fiscal years 2023,2022,and 2021,respectively.DividendsOur Board of Directors declared the following dividends:Declaration Date

101、Record DatePayment DateDividendPer ShareAmountFiscal Year 2023(In millions)September 20,2022November 17,2022December 8,2022$0.68$5,066November 29,2022February 16,2023March 9,20230.685,059March 14,2023May 18,2023June 8,20230.685,054June 13,2023August 17,2023September 14,20230.685,054Total$2.72$20,233

102、Fiscal Year 2022September 14,2021November 18,2021December 9,2021$0.62$4,652December 7,2021February 17,2022March 10,20220.624,645March 14,2022May 19,2022June 9,20220.624,632June 14,2022August 18,2022September 8,20220.624,621Total$2.48$18,550The dividend declared on June 13,2023 was included in other

103、current liabilities as of June 30,2023.9STOCK PERFORMANCECOMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*Among Microsoft Corporation,the S&P 500 Indexand the NASDAQ Computer Index6/186/196/206/216/226/23Microsoft Corporation$100.00$138.07$212.34$285.40$272.82$365.24S&P 500100.00110.42118.70167.13149.39

104、178.66NASDAQ Computer100.00106.10156.93236.08184.53242.82*$100 invested on 6/30/18 in stock or index,including reinvestment of dividends.Fiscal year ending June 30.10Note About Forward-Looking StatementsThis report includes estimates,projections,statements relating to our business plans,objectives,a

105、nd expected operatingresults that are“forward-looking statements”within the meaning of the Private Securities Litigation Reform Act of 1995,Section 27A of the Securities Act of 1933,and Section 21E of the Securities Exchange Act of 1934.Forward-lookingstatements may appear throughout this report,inc

106、luding the following sections:“Business”and“ManagementsDiscussion and Analysis of Financial Condition and Results of Operations”.These forward-looking statements generallyare identified by the words“believe,”“project,”“expect,”“anticipate,”“estimate,”“intend,”“strategy,”“future,”“opportunity,”“plan,

107、”“may,”“should,”“will,”“would,”“will be,”“will continue,”“will likely result,”and similar expressions.Forward-lookingstatements are based on current expectations and assumptions that are subject to risks and uncertainties that may causeactual results to differ materially.We describe risks and uncert

108、ainties that could cause actual results and events to differmaterially in“Risk Factors,”“Managements Discussion and Analysis of Financial Condition and Results of Operations,”and“Quantitative and Qualitative Disclosures about Market Risk”in our fiscal year 2023 Form 10-K.Readers arecautioned not to

109、place undue reliance on forward-looking statements,which speak only as of the date they are made.Weundertake no obligation to update or revise publicly any forward-looking statements,whether because of new information,future events,or otherwise.BUSINESSGENERALEmbracing Our FutureMicrosoft is a techn

110、ology company whose mission is to empower every person and every organization on the planet toachieve more.We strive to create local opportunity,growth,and impact in every country around the world.We arecreating the platforms and tools,powered by artificial intelligence(“AI”),that deliver better,fas

111、ter,and more effectivesolutions to support small and large business competitiveness,improve educational and health outcomes,grow public-sector efficiency,and empower human ingenuity.From infrastructure and data,to business applications and collaboration,we provide unique,differentiated value to cust

112、omers.In a world of increasing economic complexity,AI has the power to revolutionize many types of work.Microsoft is nowinnovating and expanding our portfolio with AI capabilities to help people and organizations overcome todays challengesand emerge stronger.Customers are looking to unlock value fro

113、m their digital spend and innovate for this next generationof AI,while simplifying security and management.Those leveraging the Microsoft Cloud are best positioned to takeadvantage of technological advancements and drive innovation.Our investment in AI spans the entire company,fromMicrosoft Teams an

114、d Outlook,to Bing and Xbox,and we are infusing generative AI capability into our consumer andcommercial offerings to deliver copilot capability for all services across the Microsoft Cloud.Were committed to making the promise of AI real and doing it responsibly.Our work is guided by a core set ofprin

115、ciples:fairness,reliability and safety,privacy and security,inclusiveness,transparency,and accountability.What We OfferFounded in 1975,we develop and support software,services,devices,and solutions that deliver new value for customersand help people and businesses realize their full potential.We off

116、er an array of services,including cloud-based solutions that provide customers with software,services,platforms,and content,and we provide solution support and consulting services.We also deliver relevant online advertising to aglobal audience.Our products include operating systems,cross-device prod

117、uctivity and collaboration applications,server applications,business solution applications,desktop and server management tools,software development tools,and video games.Wealso design and sell devices,including PCs,tablets,gaming and entertainment consoles,other intelligent devices,andrelated access

118、ories.11The Ambitions That Drive UsTo achieve our vision,our research and development efforts focus on three interconnected ambitions:Reinvent productivity and business processes.Build the intelligent cloud and intelligent edge platform.Create more personal computing.Reinvent Productivity and Busine

119、ss ProcessesAt Microsoft,we provide technology and resources to help our customers create a secure,productive work environment.Our family of products plays a key role in the ways the world works,learns,and connects.Our growth depends on securely delivering continuous innovation and advancing our lea

120、ding productivity andcollaboration tools and services,including Office 365,Dynamics 365,and LinkedIn.Microsoft 365 brings together Office365,Windows,and Enterprise Mobility+Security to help organizations empower their employees with AI-backed toolsthat unlock creativity,increase collaboration,and fu

121、el innovation,all the while enabling compliance coverage and dataprotection.Microsoft Teams is a comprehensive platform for work,with meetings,calls,chat,collaboration,and businessprocess automation.Microsoft Viva is an employee experience platform that brings together communications,knowledge,learn

122、ing,resources,and insights.Microsoft 365 Copilot combines next-generation AI with business data in the MicrosoftGraph and Microsoft 365 applications.Together with the Microsoft Cloud,Dynamics 365,Microsoft Teams,and our AI offerings bring a new era of collaborativeapplications that optimize business

123、 functions,processes,and applications to better serve customers and employees whilecreating more business value.Microsoft Power Platform is helping domain experts drive productivity gains with low-code/no-code tools,robotic process automation,virtual agents,and business intelligence.In a dynamic lab

124、or market,LinkedIn is helping professionals use the platform to connect,learn,grow,and get hired.Build the Intelligent Cloud and Intelligent Edge PlatformAs digital transformation and adoption of AI accelerates and revolutionizes more business workstreams,organizations inevery sector across the glob

125、e can address challenges that will have a fundamental impact on their success.Forenterprises,digital technology empowers employees,optimizes operations,engages customers,and in some cases,changes the very core of products and services.We continue to invest in high performance and sustainable computi

126、ng tomeet the growing demand for fast access to Microsoft services provided by our network of cloud computing infrastructureand datacenters.Our cloud business benefits from three economies of scale:datacenters that deploy computational resources atsignificantly lower cost per unit than smaller ones;

127、datacenters that coordinate and aggregate diverse customer,geographic,and application demand patterns,improving the utilization of computing,storage,and network resources;andmulti-tenancy locations that lower application maintenance labor costs.The Microsoft Cloud provides the best integration acros

128、s the technology stack while offering openness,improving time tovalue,reducing costs,and increasing agility.Being a global-scale cloud,Azure uniquely offers hybrid consistency,developer productivity,AI capabilities,and trusted security and compliance.We see more emerging use cases and needsfor compu

129、te and security at the edge and are accelerating our innovation across the spectrum of intelligent edge devices,from Internet of Things(“IoT”)sensors to gateway devices and edge hardware to build,manage,and secure edgeworkloads.Our AI platform,Azure AI,is helping organizations transform,bringing int

130、elligence and insights to the hands of theiremployees and customers to solve their most pressing challenges.Organizations large and small are deploying Azure AIsolutions to achieve more at scale,more easily,with the proper enterprise-level and responsible AI protections.We have a long-term partnersh

131、ip with OpenAI,a leading AI research and deployment company.We deploy OpenAIsmodels across our consumer and enterprise products.As OpenAIs exclusive cloud provider,Azure powers all ofOpenAIs workloads.We have also increased our investments in the development and deployment of specializedsupercomputi

132、ng systems to accelerate OpenAIs research.12Our hybrid infrastructure offers integrated,end-to-end security,compliance,identity,and management capabilities tosupport the real-world needs and evolving regulatory requirements of commercial customers and enterprises.Our industryclouds bring together ca

133、pabilities across the entire Microsoft Cloud,along with industry-specific customizations.Azure Arcsimplifies governance and management by delivering a consistent multi-cloud and on-premises management platform.Nuance,a leader in conversational AI and ambient intelligence across industries including

134、healthcare,financial services,retail,and telecommunications,joined Microsoft in 2022.Microsoft and Nuance enable organizations to accelerate theirbusiness goals with security-focused,cloud-based solutions infused with AI.We are accelerating our development of mixed reality solutions with new Azure s

135、ervices and devices.Microsoft Meshenables organizations to create custom,immersive experiences for the workplace to help bring remote and hybrid workersand teams together.The ability to convert data into AI drives our competitive advantage.The Microsoft Intelligent Data Platform is a leadingcloud da

136、ta platform that fully integrates databases,analytics,and governance.The platform empowers organizations toinvest more time creating value rather than integrating and managing their data.Microsoft Fabric is an end-to-end,unifiedanalytics platform that brings together all the data and analytics tools

137、 that organizations need.GitHub Copilot is at the forefront of AI-powered software development,giving developers a new tool to write code easierand faster so they can focus on more creative problem-solving.From GitHub to Visual Studio,we provide a developer toolchain for everyone,no matter the techn

138、ical experience,across all platforms,whether Azure,Windows,or any other cloudor client platform.Windows also plays a critical role in fueling our cloud business with Windows 365,a desktop operating system thats alsoa cloud service.From another internet-connected device,including Android or macOS dev

139、ices,users can run Windows365,just like a virtual machine.Additionally,we are extending our infrastructure beyond the planet,bringing cloud computing to space.Azure Orbital is afully managed ground station as a service for fast downlinking of data.Create More Personal ComputingWe strive to make comp

140、uting more personal,enabling users to interact with technology in more intuitive,engaging,anddynamic ways.Windows 11 offers innovations focused on enhancing productivity,including Windows Copilot with centralized AIassistance and Dev Home to help developers become more productive.Windows 11 security

141、 and privacy features includeoperating system security,application security,and user and identity security.Through our Search,News,Mapping,and Browser services,Microsoft delivers unique trust,privacy,and safety features.In February 2023,we launched an all new,AI-powered Microsoft Edge browser and Bi

142、ng search engine with Bing Chat todeliver better search,more complete answers,and the ability to generate content.Microsoft Edge is our fast and securebrowser that helps protect users data.Quick access to AI-powered tools,apps,and more within Microsoft Edges sidebarenhance browsing capabilities.We a

143、re committed to designing and marketing first-party devices to help drive innovation,create new device categories,and stimulate demand in the Windows ecosystem.The Surface family includes Surface Pro,Surface Laptop,and otherSurface products.Microsoft continues to invest in gaming content,community,a

144、nd cloud services.We have broadened our approach to howwe think about gaming end-to-end,from the way games are created and distributed to how they are played,includingsubscription services like Xbox Game Pass and new devices from third-party manufacturers so players can engageacross PC,console,and m

145、obile.In January 2022,we announced plans to acquire Activision Blizzard,Inc.,a leader ingame development and an interactive entertainment content publisher.Our Future OpportunityWe are focused on helping customers use the breadth and depth of the Microsoft Cloud to get the most value out of theirdig

146、ital spend while leading the new AI wave across our solution areas.We continue to develop complete,intelligent13solutions for our customers that empower people to be productive and collaborate,while safeguarding businesses andsimplifying IT management.Our goal is to lead the industry in several dist

147、inct areas of technology over the long term,which we expect will translate to sustained growth.We are investing significant resources in:Transforming the workplace to deliver new modern,modular business applications,drive deeper insights,andimprove how people communicate,collaborate,learn,work,and i

148、nteract with one another.Building and running cloud-based services in ways that utilize ubiquitous computing to unleash newexperiences and opportunities for businesses and individuals.Applying AI and ambient intelligence to drive insights,revolutionize many types of work,and providesubstantive produ

149、ctivity gains using natural methods of communication.Tackling security from all angles with our integrated,end-to-end solutions spanning security,compliance,identity,and management,across all clouds and platforms.Inventing new gaming experiences that bring people together around their shared love fo

150、r games on anydevices and pushing the boundaries of innovation with console and PC gaming.Using Windows to fuel our cloud business,grow our share of the PC market,and drive increasedengagement with our services like Microsoft 365 Consumer,Microsoft Teams,Microsoft Edge,Bing,XboxGame Pass,and more.Ou

151、r future growth depends on our ability to transcend current product category definitions,business models,and salesmotions.Corporate Social ResponsibilityCommitment to SustainabilityMicrosofts approach to addressing climate change starts with the sustainability of our own business.In 2020,wecommitted

152、 to being a carbon negative,water positive,and zero waste company by 2030.In May 2023,we released our Environmental Sustainability Report which looked back at our progress during fiscal year2022.We continued to make progress on our goals,with our overall emissions declining by 0.5 percent.While our

153、Scope1 and Scope 2 emissions continued to decline,Scope 3 emissions increased by 0.5 percent.Scope 3 represented96 percent of our total emissions,resulting primarily from the operations of our suppliers and the use of our productsacross our customers.A few examples of our continued progress include:

154、Signed new power purchase agreements,bringing our total portfolio of carbon-free energy to over 13.5gigawatts.Contracted for water replenishment projects that are estimated to provide more than 15.6 million cubic metersin volumetric water benefit over the lifetime of these projects.Diverted 12,159 m

155、etric tons of solid waste from landfills and incinerators across our direct operationalfootprint.Protected 12,270 acres of land in Belize more than the 11,206 acres of land that we use around the world.Microsoft has a role to play in developing and advancing new climate solutions,but we recognize th

156、at no solution can beoffered by any single company,organization,or government.Our approach helps to support the sustainability needs ofour customers and the global community.Our Microsoft Cloud for Sustainability,an environmental sustainabilitymanagement platform that includes Microsoft Sustainabili

157、ty Manager,enables organizations to record,report,and reducetheir Scope 1,2,and 3 emissions.These digital tools can interoperate with business systems and unify data intelligencefor organizations.Addressing Racial Injustice and InequityWe are committed to addressing racial injustice and inequity in

158、the United States for Black and African Americancommunities and helping improve lived experiences at Microsoft,in employees communities,and beyond.Our RacialEquity Initiative focuses on three multi-year pillars,each containing actions and progress we expect to make or exceed by2025.Strengthening our

159、 communities:using data,technology,and partnerships to help improve the lives of Blackand African American people in the United States,including our employees and their communities.14Engaging our ecosystem:using our balance sheet and relationships with suppliers and partners to fostersocietal change

160、 and create new opportunities.Increasing representation and strengthening inclusion:building on our momentum by adding a$150 millioninvestment to strengthen inclusion and double the number of Black,African American,Hispanic,and Latinxleaders in the United States by 2025.In fiscal year 2023,we collab

161、orated with partners and worked within neighborhoods and communities to launch and scalea number of projects and programs,including:Working with 103 unique organizations in 165 cities and counties on our Justice Reform Initiative to empowercommunities and advance racial equity and fairness in the ju

162、stice system.Increasing access to affordable broadband,devices,and digital literacy training across 14 geographies,including 11 cities and three states in the Black Rural south.Growing our Nonprofit Tech Acceleration for Black and African American Communities program,which usesdata,technology,and pa

163、rtnerships to help more than 2,000 local organizations to modernize and streamlineoperations.Expanding our Technology Education and Learning Support(“TEALS”)program to reach nearly 400 highschools in 21 communities to increase computer science opportunities for Black and African Americanstudents.We

164、exceeded our 2020 goal to double the percentage of our transaction volumes with Black-and African American-owned financial institutions by 2023.We are also increasing investment activity with Black-and African American-ownedasset managers,which now represent 45 percent of our external manager group,

165、enabling increased funds into localcommunities.We also met our goal of creating a$100 million program focused on mission-driven banks.We enriched oursupplier pipeline,achieving our goal to spend$500 million with double the number of Black-and African American-ownedsuppliers.We also increased the num

166、ber of identified partners in the Black Partner Growth Initiative by more than250 percent,surpassing our initial goal.We have made meaningful progress on representation and inclusion at Microsoft.As of June 2023,we are 93 percent ofthe way to our 2025 commitment to double the number of Black and Afr

167、ican American people managers in the U.S.(below director level),and 107 percent of the way for Black and African American directors(people managers andindividual contributors).We are 28 percent of the way for Hispanic and Latinx people managers(below director level)and74 percent of the way for Hispa

168、nic and Latinx directors.Investing in Digital SkillsAfter helping over 80 million jobseekers around the world access digital skilling resources,we introduced a new Skills forJobs initiative to support a more skills-based labor market,with greater flexibility and accessible learning paths to developt

169、he right skills needed for the most in-demand jobs.Our Skills for Jobs initiative brings together learning resources,certification opportunities,and job-seeker tools from LinkedIn,GitHub,and Microsoft Learn,and is built on data insightsdrawn from LinkedIns Economic Graph.We also launched a national

170、campaign to help skill and recruit 250,000 people into the cybersecurity workforce by 2025,representing half of the countrys workforce shortage.To that end,we are making curriculum available free of charge to allof the nations higher education institutions,providing training for new and existing fac

171、ulty,and providing scholarships andsupplemental resources to 25,000 students.We have expanded the cyber skills initiative to 27 additional countries thatshow elevated cyberthreat risks coupled with significant gaps in their cybersecurity workforces,partnering with nonprofitsand other educational ins

172、titutions to train the next generation of cybersecurity workers.Generative AI is creating unparalleled opportunities to empower workers globally,but only if everyone has the skills to useit.To address this,in June 2023 we launched a new AI Skills Initiative to help everyone learn how to harness the

173、power ofAI.This includes a new LinkedIn learning pathway offering new coursework on learning the foundations of generative AI.We also launched a new global grant challenge to uncover new ways of training workers on generative AI and areproviding greater access to digital learning events and resource

174、s for everyone to improve their AI fluency.15HUMAN CAPITAL RESOURCESOverviewMicrosoft aims to recruit,develop,and retain world-changing talent from a diversity of backgrounds.To foster their andour success,we seek to create an environment where people can thrive and do their best work.We strive to m

175、aximize thepotential of our human capital resources by creating a respectful,rewarding,and inclusive work environment that enablesour global employees to create products and services that further our mission.As of June 30,2023,we employed approximately 221,000 people on a full-time basis,120,000 in

176、the U.S.and 101,000internationally.Of the total employed people,89,000 were in operations,including manufacturing,distribution,productsupport,and consulting services;72,000 were in product research and development;45,000 were in sales and marketing;and 15,000 were in general and administration.Certa

177、in employees are subject to collective bargaining agreements.Our CultureMicrosofts culture is grounded in growth mindset.This means everyone is on a continuous journey to learn and grow,operating as one company instead of multiple siloed businesses.Our employee listening systems enable us to gather

178、feedback directly from our workforce to inform our programs andemployee needs globally.Employees participate in our Employee Signals surveys,which cover a variety of topics such asthriving,inclusion,team culture,wellbeing,and learning and development.We also collect Daily Signals employee surveyresp

179、onses,giving us real-time insights into ways we can support our employees.In addition to Employee Signals andDaily Signals surveys,we gain insights through onboarding,exit surveys,internal Viva Engage channels,employee Q&Asessions,and our internal AskHR Service support.Diversity and inclusion are co

180、re to our business model,and we hold ourselves accountable for driving global systemicchange in our workforce and creating an inclusive work environment.We support multiple highly active EmployeeResource Groups for women,families,racial and ethnic minorities,military,people with disabilities,and emp

181、loyees whoidentify as LGBTQIA+,where employees can go for support,networking,and community-building.As described in our2022 Proxy Statement,annual performance and compensation reviews of our senior leadership team include anevaluation of their contributions to employee culture and diversity.To ensur

182、e accountability over time,we publicly discloseour progress on a multitude of workforce metrics including:Detailed breakdowns of gender,racial,and ethnic minority representation in our employee population,withdata by job types,levels,and segments of our business.Our EEO-1 report(equal employment opp

183、ortunity).Disability representation.Pay equity(see details below).Total Rewards and Pay EquityWe develop dynamic,sustainable,market-driven,and strategic programs with the goal of providing a highly differentiatedportfolio to attract,reward,and retain top talent and enable our employees to thrive.The

184、se programs reinforce our cultureand values such as collaboration and growth mindset.Managers evaluate and recommend rewards based on,forexample,how well we leverage the work of others and contribute to the success of our colleagues.We monitor pay equityand career progress across multiple dimensions

185、.Our total compensation opportunity is highly differentiated and is marketcompetitive.In order to manage our costs in a dynamic,competitive environment,in fiscal year 2023 we announced that base salariesof salaried employees would remain at fiscal year 2022 levels.Pay increases continue to be availa

186、ble for rewards-eligiblehourly and equivalent employees.We will continue our practice of investing in stock for all rewards-eligible employees,salaried and hourly,and investing in bonuses for all eligible employees.Since 2016,we have reported on pay equity as part of our annual Diversity and Inclusi

187、on report.In 2022,we reported thatall racial and ethnic minority employees in the U.S.combined earn$1.008 for every$1.000 earned by their whitecounterparts,that women in the U.S.earn$1.007 for every$1.000 earned by their counterparts who are men,and thatwomen outside the U.S.earn$1.002 for every$1.0

188、00 earned by their counterparts outside the U.S.who are men.In thisyears report,we again expanded our pay equity data beyond the U.S.to report on 61 additional countries(up from 12 lastyear),representing 99.8%of our global Microsoft workforce.16In addition,we began reporting on unadjusted median pay

189、 in our annual report,comparing total pay amounts for allemployees regardless of factors such as job title,level,or tenure.For employees who are eligible for rewards,theanalysis showed that total pay for women is 89.6%of total pay for men in the U.S.and 86.2%outside of the U.S.,andtotal pay for raci

190、al and ethnic minorities in the U.S.is 89.9%of total pay for white employees.As we continue to increaserepresentation for women and racial and ethnic minorities at more senior levels,and continue to ensure pay equity for all,the gap between the medians will reduce.Our intended result is a global per

191、formance and development approach that fosters our culture,and competitivecompensation that ensures equitable pay by role while supporting pay for performance.Wellbeing and Hybrid WorkMicrosoft is committed to supporting our employees wellbeing while they are at work and in their personal lives.We h

192、aveinvested significantly in wellbeing,and offer a differentiated benefits package which includes many physical,emotional,and financial wellness programs including counseling through the Microsoft CARES Employee Assistance Program,mental wellbeing support,flexible fitness benefits,disability accommo

193、dations,savings and investment tools,adoptionassistance,and back-up care for children and elders.Finally,our Occupational Health and Safety program helps ensureemployees can stay safe while they are working.We introduced Hybrid Workplace Flexibility Guidance to better support leaders,managers,and em

194、ployees in hybrid workscenarios.Our ongoing survey data shows that 93%of employees value the flexibility related to work location,work site,and work hours,and 78%are satisfied with the quality of connection with co-workers.There is no one-size-fits-allapproach to flexible work at Microsoft.As a comp

195、any,we will continue to leverage data and research to inform decisionmaking,balancing the needs of business,team,and individual.Learning and DevelopmentWe offer a range of learning opportunities,including personalized opportunities on our internal and external learningportals,in-classroom learning,r

196、equired learning on compliance and company culture,on-the-job advancementopportunities,and manager coaching.We also provide customized manager learning,new employee orientation,andtools for operating in a flexible hybrid work environment.All Microsoft employees globally access our single Viva Learni

197、ng tool for both required and personal choice learning.Thisincludes courses focused on our core principles and compliance matters,such as Business Conduct,Privacy,SecurityFoundations,and Harassment Prevention.We also deliver skills training for employees based on their profession and rolediscipline.

198、We have over 27,000 people managers,all of whom must complete between 20-33 hours of compulsory training onleadership and management and are assigned additional targeted training on an ongoing basis related to peoplemanagement,compliance,and culture.OPERATING SEGMENTSWe operate our business and repo

199、rt our financial performance using three segments:Productivity and BusinessProcesses,Intelligent Cloud,and More Personal Computing.Our segments provide management with a comprehensivefinancial view of our key businesses.The segments enable the alignment of strategies and objectives across thedevelop

200、ment,sales,marketing,and services organizations,and they provide a framework for timely and rationalallocation of resources within businesses.Additional information on our operating segments and geographic and product information is contained in Note 19 Segment Information and Geographic Data of the

201、 Notes to Financial Statements.Our reportable segments are described below.17Productivity and Business ProcessesOur Productivity and Business Processes segment consists of products and services in our portfolio of productivity,communication,and information services,spanning a variety of devices and

202、platforms.This segment primarily comprises:Office Commercial(Office 365 subscriptions,the Office 365 portion of Microsoft 365 Commercialsubscriptions,and Office licensed on-premises),comprising Office,Exchange,SharePoint,Microsoft Teams,Office 365 Security and Compliance,Microsoft Viva,and Microsoft

203、 365 Copilot.Office Consumer,including Microsoft 365 Consumer subscriptions,Office licensed on-premises,and otherOffice services.LinkedIn,including Talent Solutions,Marketing Solutions,Premium Subscriptions,and Sales Solutions.Dynamics business solutions,including Dynamics 365,comprising a set of in

204、telligent,cloud-basedapplications across ERP,CRM(including Customer Insights),Power Apps,and Power Automate;and on-premises ERP and CRM applications.Office CommercialOffice Commercial is designed to increase personal,team,and organizational productivity through a range of productsand services.Growth

205、 depends on our ability to reach new users in new markets such as frontline workers,small andmedium businesses,and growth markets,as well as add value to our core product and service offerings to spanproductivity categories such as communication,collaboration,analytics,security,and compliance.Office

206、 Commercialrevenue is mainly affected by a combination of continued installed base growth and average revenue per user expansion,as well as the continued shift from Office licensed on-premises to Office 365.Office ConsumerOffice Consumer is designed to increase personal productivity and creativity t

207、hrough a range of products and services.Growth depends on our ability to reach new users,add value to our core product set,and continue to expand our productand service offerings into new markets.Office Consumer revenue is mainly affected by the percentage of customers thatbuy Office with their new

208、devices and the continued shift from Office licensed on-premises to Microsoft 365 Consumersubscriptions.Office Consumer Services revenue is mainly affected by the demand for communication and storagethrough Skype,O,and OneDrive,which is largely driven by subscriptions,advertising,and the sale of min

209、utes.LinkedInLinkedIn connects the worlds professionals to make them more productive and successful and transforms the waycompanies hire,market,sell,and learn.Our vision is to create economic opportunity for every member of the globalworkforce through the ongoing development of the worlds first Econ

210、omic Graph,a digital representation of the globaleconomy.In addition to LinkedIns free services,LinkedIn offers monetized solutions:Talent Solutions,MarketingSolutions,Premium Subscriptions,and Sales Solutions.Talent Solutions provide insights for workforce planning and toolsto hire,nurture,and deve

211、lop talent.Talent Solutions also includes Learning Solutions,which help businesses close criticalskills gaps in times where companies are having to do more with existing talent.Marketing Solutions help companiesreach,engage,and convert their audiences at scale.Premium Subscriptions enable profession

212、als to manage theirprofessional identity,grow their network,find jobs,and connect with talent through additional services like premiumsearch.Sales Solutions help companies strengthen customer relationships,empower teams with digital selling tools,andacquire new opportunities.LinkedIn has over 950 mi

213、llion members and has offices around the globe.Growth will dependon our ability to increase the number of LinkedIn members and our ability to continue offering services that provide valuefor our members and increase their engagement.LinkedIn revenue is mainly affected by demand from enterprises andp

214、rofessional organizations for subscriptions to Talent Solutions,Sales Solutions,and Premium Subscriptions offerings,aswell as member engagement and the quality of the sponsored content delivered to those members to drive MarketingSolutions.DynamicsDynamics provides cloud-based and on-premises busine

215、ss solutions for financial management,enterprise resourceplanning(“ERP”),customer relationship management(“CRM”),supply chain management,and other applicationdevelopment platforms for small and medium businesses,large organizations,and divisions of global enterprises.18Dynamics revenue is driven by

216、the number of users licensed and applications consumed,expansion of average revenueper user,and the continued shift to Dynamics 365,a unified set of cloud-based intelligent business applications,includingPower Apps and Power Automate.CompetitionCompetitors to Office include software and global appli

217、cation vendors,such as Apple,Cisco Systems,Meta,Google,Okta,Proofpoint,Slack,Symantec,Zoom,and numerous web-based and mobile application competitors as well as localapplication developers.Apple distributes versions of its pre-installed application software,such as email and calendarproducts,through

218、its PCs,tablets,and phones.Cisco Systems is using its position in enterprise communicationsequipment to grow its unified communications business.Meta offers communication tools to enable productivity andengagement within organizations.Google provides a hosted messaging and productivity suite.Slack p

219、rovides teamworkand collaboration software.Zoom offers videoconferencing and cloud phone solutions.Okta,Proofpoint,and Symantecprovide security solutions across email security,information protection,identity,and governance.Web-based offeringscompeting with individual applications have also positione

220、d themselves as alternatives to our products and services.Wecompetebyprovidingpowerful,flexible,secure,integratedindustry-specific,andeasy-to-useproductivityandcollaboration tools and services that create comprehensive solutions and work well with technologies our customersalready have both on-premi

221、ses or in the cloud.LinkedIn faces competition from online professional networks,recruiting companies,talent management companies,andlarger companies that are focusing on talent management and human resource services;job boards;traditional recruitingfirms;and companies that provide learning and deve

222、lopment products and services.Marketing Solutions competes withonline and offline outlets that generate revenue from advertisers and marketers,and Sales Solutions competes with onlineand offline outlets for companies with lead generation and customer intelligence and insights.Dynamics competes with

223、cloud-based and on-premises business solution providers such as Oracle,Salesforce,and SAP.Intelligent CloudOur Intelligent Cloud segment consists of our public,private,and hybrid server products and cloud services that canpower modern business and developers.This segment primarily comprises:Server p

224、roducts and cloud services,including Azure and other cloud services;SQL Server,Windows Server,Visual Studio,System Center,and related Client Access Licenses(“CALs”);and Nuance and GitHub.Enterprise Services,including Enterprise Support Services,Industry Solutions(formerly Microsoft ConsultingService

225、s),and Nuance professional services.Server Products and Cloud ServicesAzure is a comprehensive set of cloud services that offer developers,IT professionals,and enterprises freedom to build,deploy,and manage applications on any platform or device.Customers can use Azure through our global network ofd

226、atacenters for computing,networking,storage,mobile and web application services,AI,IoT,cognitive services,andmachine learning.Azure enables customers to devote more resources to development and use of applications that benefittheir organizations,rather than managing on-premises hardware and software

227、.Azure revenue is mainly affected byinfrastructure-as-a-service and platform-as-a-service consumption-based services,and per user-based services such asEnterprise Mobility+Security.Azure AI offerings provide a competitive advantage as companies seek ways to optimize and scale their business withmach

228、ine learning.Azures purpose-built,AI-optimized infrastructure allows advanced models,including GPT-4 servicesdesigned for developers and data scientists,to do more with less.Customers can integrate large language models anddevelop the next generation of AI apps and services.Our server products are d

229、esigned to make IT professionals,developers,and their systems more productive and efficient.Server software is integrated server infrastructure and middleware designed to support software applications built on theWindows Server operating system.This includes the server platform,database,business int

230、elligence,storage,management and operations,virtualization,service-oriented architecture platform,security,and identity software.We alsolicense standalone and software development lifecycle tools for software architects,developers,testers,and projectmanagers.Server products revenue is mainly affecte

231、d by purchases through volume licensing programs,licenses sold tooriginal equipment manufacturers(“OEM”),and retail packaged products.CALs provide access rights to certain serverproducts,including SQL Server and Windows Server,and revenue is reported along with the associated server product.19Nuance

232、 and GitHub include both cloud and on-premises offerings.Nuance provides healthcare and enterprise AIsolutions.GitHub provides a collaboration platform and code hosting service for developers.Enterprise ServicesEnterprise Services,including Enterprise Support Services,Industry Solutions,and Nuance P

233、rofessional Services,assistcustomers in developing,deploying,and managing Microsoft server solutions,Microsoft desktop solutions,and Nuanceconversational AI and ambient intelligent solutions,along with providing training and certification to developers and ITprofessionals on various Microsoft produc

234、ts.CompetitionAzure faces diverse competition from companies such as Amazon,Google,IBM,Oracle,VMware,and open sourceofferings.Azures competitive advantage includes enabling a hybrid cloud,allowing deployment of existing datacenterswith our public cloud into a single,cohesive infrastructure,and the a

235、bility to run at a scale that meets the needs ofbusinesses of all sizes and complexities.Our AI offerings compete with AI products from hyperscalers such as AmazonBedrock,Amazon CodeWhisperer,and Google AI,as well as products from other emerging competitors,many of whichare also current or potential

236、 partners,including Metas LLaMA2 and other open source solutions.Our Enterprise Mobility+Security offerings also compete with products from a range of competitors including identity vendors,security solutionvendors,and numerous other security point solution vendors.We believe our clouds global scale

237、,coupled with our broadportfolio of identity and security solutions,allows us to effectively solve complex cybersecurity challenges for ourcustomers and differentiates us from the competition.Our server products face competition from a wide variety of server operating systems and applications offere

238、d bycompanies with a range of market approaches.Vertically integrated computer manufacturers such as Hewlett-Packard,IBM,and Oracle offer their own versions of the Unix operating system preinstalled on server hardware.Nearly allcomputer manufacturers offer server hardware for the Linux operating sys

239、tem,and many contribute to Linux operatingsystem development.The competitive position of Linux has also benefited from the large number of compatibleapplications now produced by many commercial and non-commercial software developers.A number of companies,suchas Red Hat,supply versions of Linux.We co

240、mpete to provide enterprise-wide computing solutions and point solutions with numerous commercial softwarevendors that offer solutions and middleware technology platforms,software applications for connectivity(both Internet andintranet),security,hosting,database,and e-business servers.IBM and Oracle

241、 lead a group of companies focused on theJava Platform Enterprise Edition that competes with our enterprise-wide computing solutions.Commercial competitors forour server applications for PC-based distributed client-server environments include CA Technologies,IBM,and Oracle.Our web application platfo

242、rm software competes with open source software such as Apache,Linux,MySQL,and PHP.Inmiddleware,we compete against Java vendors.Our database,business intelligence,and data warehousing solutions offerings compete with products from IBM,Oracle,SAP,Snowflake,and other companies.Our system management sol

243、utions compete with server management and servervirtualization platform providers,such as BMC,CA Technologies,Hewlett-Packard,IBM,and VMware.Our products forsoftware developers compete against offerings from Adobe,IBM,Oracle,and other companies,and also against opensource projects,including Eclipse(

244、sponsored by CA Technologies,IBM,Oracle,and SAP),PHP,and Ruby on Rails.We believe our server products provide customers with advantages in performance,total costs of ownership,andproductivity by delivering superior applications,development tools,compatibility with a broad base of hardware andsoftwar

245、e applications,security,and manageability.Our Enterprise Services business competes with a wide range of companies that provide strategy and business planning,application development,and infrastructure services,including multinational consulting firms and small niche businessesfocused on specific te

246、chnologies.More Personal ComputingOur More Personal Computing segment consists of products and services that put customers at the center of theexperience with our technology.This segment primarily comprises:Windows,including Windows OEM licensing(“Windows OEM”)and other non-volume licensing of theWi

247、ndows operating system;Windows Commercial,comprising volume licensing of the Windows operatingsystem,Windows cloud services,and other Windows commercial offerings;patent licensing;and WindowsIoT.20Devices,including Surface,HoloLens,and PC accessories.Gaming,including Xbox hardware and Xbox content a

248、nd services,comprising first-and third-party content(including games and in-game content),Xbox Game Pass and other subscriptions,Xbox Cloud Gaming,advertising,third-party disc royalties,and other cloud services.Search and news advertising,comprising Bing(including Bing Chat),Microsoft News,Microsoft

249、 Edge,andthird-party affiliates.WindowsThe Windows operating system is designed to deliver a more personal computing experience for users by enablingconsistency of experience,applications,and information across their devices.Windows OEM revenue is impactedsignificantly by the number of Windows opera

250、ting system licenses purchased by OEMs,which they pre-install on thedevices they sell.In addition to computing device market volume,Windows OEM revenue is impacted by:The mix of computing devices based on form factor and screen size.Differences in device market demand between developed markets and g

251、rowth markets.Attachment of Windows to devices shipped.Customer mix between consumer,small and medium businesses,and large enterprises.Changes in inventory levels in the OEM channel.Pricing changes and promotions,pricing variation that occurs when the mix of devices manufactured shiftsfrom local and

252、 regional system builders to large multinational OEMs,and different pricing of Windowsversions licensed.Constraints in the supply chain of device components.Piracy.Windows Commercial revenue,which includes volume licensing of the Windows operating system and Windows cloudservices such as Microsoft D

253、efender for Endpoint,is affected mainly by the demand from commercial customers forvolume licensing and Software Assurance(“SA”),as well as advanced security offerings.Windows Commercial revenueoften reflects the number of information workers in a licensed enterprise and is relatively independent of

254、 the number ofPCs sold in a given year.Patent licensing includes our programs to license patents we own for use across a broad array of technology areas,including mobile devices and cloud offerings.Windows IoT extends the power of Windows and the cloud to intelligent systems by delivering specialize

255、d operatingsystems,tools,and services for use in embedded devices.DevicesWe design and sell devices,including Surface,HoloLens,and PC accessories.Our devices are designed to enablepeople and organizations to connect to the people and content that matter most using Windows and integrated Microsoftpro

256、ducts and services.Surface is designed to help organizations,students,and consumers be more productive.Growth inDevices is dependent on total PC shipments,the ability to attract new customers,our product roadmap,and expandinginto new categories.GamingOur gaming platform is designed to provide a vari

257、ety of entertainment through a unique combination of content,community,and cloud services.Our exclusive game content is created through Xbox Game Studios,a collection of first-party studios creating iconic and differentiated gaming experiences.We continue to invest in new gaming studios andcontent t

258、o expand our intellectual property roadmap and leverage new content creators.These unique gamingexperiences are the cornerstone of Xbox Game Pass,a subscription service and gaming community with access to acurated library of over 400 first-and third-party console and PC titles.21The gamer remains at

259、 the heart of the Xbox ecosystem.We are identifying new opportunities to attract gamers across avariety of different end points through our first-and third-party content and business diversification across subscriptions,ads,and digital stores.Weve seen new devices from third-party manufacturers alon

260、g with key PC and mobile end pointsthat help us empower gamers to play in a way that is most convenient to them.We are focused on growing the platformand expanding to new ecosystems to engage as many gamers as possible.Xbox enables people to connect and share online gaming experiences that are acces

261、sible on Xbox consoles,Windows-enabled devices,and other devices.Xbox is designed to benefit users by providing access to a network of certifiedapplications and services and to benefit our developer and partner ecosystems by providing access to a large customerbase.Xbox revenue is mainly affected by

262、 subscriptions and sales of first-and third-party content,as well as advertising.Growth of our Gaming business is determined by the overall active user base through Xbox enabled content,availabilityof games,providing exclusive game content that gamers seek,the computational power and reliability of

263、the devices usedto access our content and services,and the ability to create new experiences through first-party content creators.Search and News AdvertisingOur Search and news advertising business is designed to deliver relevant search,native,and display advertising to aglobal audience.Our Microsof

264、t Edge browser and Bing Chat capabilities are key tools to enable user acquisition andengagement,while our technology platform enables accelerated delivery of digital advertising solutions.In addition to first-party tools,we have several partnerships with companies,such as Yahoo,through which we pro

265、vide and monetize searchofferings.Growth depends on our ability to attract new users,understand intent,and match intent with relevant content onadvertising offerings.CompetitionWindows faces competition from various software products and from alternative platforms and devices,mainly from Appleand Go

266、ogle.We believe Windows competes effectively by giving customers choice,value,flexibility,security,an easy-to-use interface,and compatibility with a broad range of hardware and software applications,including those that enableproductivity.Devices face competition from various computer,tablet,and har

267、dware manufacturers who offer a unique combination ofhigh-quality industrial design and innovative technologies across various price points.These manufacturers,many ofwhich are also current or potential partners and customers,include Apple and our Windows OEMs.Xbox and our cloud gaming services face

268、 competition from various online gaming ecosystems and game streamingservices,including those operated by Amazon,Apple,Meta,and Tencent.We also compete with other providers ofentertainment services such as video streaming platforms.Our gaming platform competes with console platforms fromNintendo and

269、 Sony,both of which have a large,established base of customers.We believe our gaming platform iseffectively positioned against,and uniquely differentiated from,competitive products and services based on significantinnovation in hardware architecture,user interface,developer tools,online gaming and e

270、ntertainment services,andcontinued strong exclusive content from our own first-party game franchises as well as other digital content offerings.Our Search and news advertising business competes with Google and a wide array of websites,social platforms like Meta,and portals that provide content and o

271、nline offerings to end users.OPERATIONSWe have regional operations service centers that support our operations,including customer contract and orderprocessing,billing,credit and collections,information processing,and vendor management and logistics.The center inIreland supports the African,Asia-Paci

272、fic,European,and Middle East regions;and the centers in Arlington,Virginia,Atlanta,Georgia,Charlotte,North Carolina,Fargo,North Dakota,Fort Lauderdale,Florida,Redmond,Washington,Reno,Nevada,and Puerto Rico support the American regions.In addition to our operations centers,we also operate datacenters

273、 throughout each of these regions.We continue toidentify and evaluate opportunities to expand our datacenter locations and increase our server capacity to meet theevolving needs of our customers,particularly given the growing demand for AI services.Our datacenters depend on theavailability of permit

274、ted and buildable land,predictable energy,networking supplies,and servers,including graphicsprocessing units(“GPUs”)and other components.22Our devices are primarily manufactured by third-party contract manufacturers.For the majority of our products,we havethe ability to use other manufacturers if a

275、current vendor becomes unavailable or unable to meet our requirements.However,some of our products contain certain components for which there are very few qualified suppliers.Extendeddisruptions at these suppliers could impact our ability to manufacture devices on time to meet consumer demand.RESEAR

276、CH AND DEVELOPMENTProduct and Service Development,and Intellectual PropertyWe develop most of our products and services internally through the following engineering groups.Cloud and AI focuses on making IT professionals,developers,partners,independent software vendors,andtheir systems more productiv

277、e and efficient through development of Azure AI platform and cloudinfrastructure,server,database,CRM,ERP,software development tools and services(including GitHub),AIcognitive services,and other business process applications and services for enterprises.Strategic Missions and Technologies focuses on

278、incubating technical products and support solutions withtransformative potential for the future of cloud computing and continued company growth across quantumcomputing,Azure Space&Missions Engineering,telecommunications,and Microsoft Federal Sales andDelivery.Experiences and Devices focuses on deliv

279、ering high value end-user experiences across our products,services,and devices,including Microsoft 365,Windows,Microsoft Teams,Search(including Microsoft Edgeand Bing Chat)and other advertising-based services,and the Surface line of devices.Microsoft Security focuses on delivering a comprehensive po

280、rtfolio of services that protect our customersdigital infrastructure through cloud platform and application security,data protection and governance,identityand network access,and device management.Technology and Research focuses on fundamental research,product and business incubations,andforward-loo

281、king AI innovations that span infrastructure,services,and applications.LinkedIn focuses on our services that transform the way professionals grow their network and find jobs andthe way businesses hire,market,sell,and learn.Gaming focuses on developing hardware,content,and services across a large ran

282、ge of platforms to helpgrow our user base through game experiences and social interaction.Internal development allows us to maintain competitive advantages that come from product differentiation and closertechnical control over our products and services.It also gives us the freedom to decide which m

283、odifications andenhancements are most important and when they should be implemented.We strive to obtain information as early aspossible about changing usage patterns and hardware advances that may affect software and hardware design.Beforereleasing new software platforms,and as we make significant m

284、odifications to existing platforms,we provide applicationvendors with a range of resources and guidelines for development,training,and testing.Generally,we also create productdocumentation internally.We protect our intellectual property investments in a variety of ways.We work actively in the U.S.an

285、d internationally toensure the enforcement of copyright,trademark,trade secret,and other protections that apply to our software andhardware products,services,business plans,and branding.We are a leader among technology companies in pursuingpatents and currently have a portfolio of over 70,000 U.S.an

286、d international patents issued and over 19,000 pendingworldwide.While we employ much of our internally-developed intellectual property in our products and services,we alsoengage in outbound licensing of specific patented technologies that are incorporated into licensees products.From timeto time,we

287、enter into broader cross-license agreements with other technology companies covering entire groups ofpatents.We may also purchase or license technology that we incorporate into our products and services.At times,wemake select intellectual property broadly available at no or low cost to achieve a str

288、ategic objective,such as promotingindustry standards,advancing interoperability,supporting societal and/or environmental efforts,or attracting and enablingour external development community.Our increasing engagement with open source software will also cause us to licenseour intellectual property rig

289、hts broadly in certain situations.While it may be necessary in the future to seek or renew licenses relating to various aspects of our products and services,we believe,based upon past experience and industry practice,such licenses generally can be obtained on commerciallyreasonable terms.We believe

290、our continuing research and product development are not materially dependent on anysingle license or other agreement with a third party relating to the development of our products.23Investing in the FutureOur success is based on our ability to create new and compelling products,services,and experien

291、ces for our users,toinitiate and embrace disruptive technology trends,to enter new geographic and product markets,and to drive broadadoption of our products and services.We invest in a range of emerging technology trends and breakthroughs that webelieve offer significant opportunities to deliver val

292、ue to our customers and growth for the company.Based on ourassessment of key technology trends,we maintain our long-term commitment to research and development across a widespectrum of technologies,tools,and platforms spanning digital work and life experiences,cloud computing,AI,devices,and operatin

293、g systems.While our main product research and development facilities are located in Redmond,Washington,we also operateresearch and development facilities in other parts of the U.S.and around the world.This global approach helps us remaincompetitive in local markets and enables us to continue to attr

294、act top talent from across the world.We plan to continue to make significant investments in a broad range of product research and development activities,andas appropriate we will coordinate our research and development across operating segments and leverage the resultsacross the company.In addition

295、to our main research and development operations,we also operate Microsoft Research.Microsoft Research isone of the worlds largest corporate research organizations,often working in close collaboration with top universitiesaround the world,and is focused on advancing the state-of-the-art in computer s

296、cience and a broad range of otherdisciplines.Our investment in fundamental research provides us a unique perspective on future trends and contributes toour innovation.DISTRIBUTION,SALES,AND MARKETINGWe market and distribute our products and services through the following channels:OEMs,direct,and dis

297、tributors andresellers.Our sales organization performs a variety of functions,including working directly with commercial enterprisesand public-sector organizations worldwide to identify and meet their technology and digital transformation requirements;managing OEM relationships;and supporting system

298、 integrators,independent software vendors,and other partners whoengage directly with our customers to perform sales,consulting,and fulfillment functions for our products and services.OEMsWe distribute our products and services through OEMs that pre-install our software on new devices and servers the

299、y sell.The largest component of the OEM business is the Windows operating system pre-installed on devices.OEMs also selldevices pre-installed with other Microsoft products and services,including applications such as Office and the capability tosubscribe to Office 365.There are two broad categories o

300、f OEMs.The largest category of OEMs are direct OEMs as our relationship with them ismanaged through a direct agreement between Microsoft and the OEM.We have distribution agreements covering one ormore of our products with virtually all the multinational OEMs,including Dell,Hewlett-Packard,Lenovo,and

301、 with manyregional and local OEMs.The second broad category of OEMs are system builders consisting of lower-volume PCmanufacturers,which source Microsoft software for pre-installation and local redistribution primarily through the Microsoftdistributor channel rather than through a direct agreement o

302、r relationship with Microsoft.DirectMany organizations that license our products and services transact directly with us through Enterprise Agreements andEnterprise Services contracts,with sales support from system integrators,independent software vendors,web agencies,and partners that advise organiz

303、ations on licensing our products and services(“Enterprise Agreement Software Advisors”or“ESA”).Microsoft offers direct sales programs targeted to reach small,medium,and corporate customers,in addition tothose offered through the reseller channel.A large network of partner advisors support many of th

304、ese sales.We also sell commercial and consumer products and services directly to customers,such as cloud services,search,andgaming,through our digital marketplaces and online stores.Additionally,our Microsoft Experience Centers are designedto facilitate deeper engagement with our partners and custom

305、ers across industries.24Distributors and ResellersOrganizations also license our products and services indirectly,primarily through licensing solution partners(“LSP”),distributors,value-added resellers(“VAR”),and retailers.Although each type of reselling partner may reach organizationsof all sizes,L

306、SPs are primarily engaged with large organizations,distributors resell primarily to VARs,and VARs typicallyreach small and medium organizations.ESAs are also typically authorized as LSPs and operate as resellers for our othervolume licensing programs.Microsoft Cloud Solution Provider is our main par

307、tner program for reselling cloud services.We distribute our retail packaged products primarily through independent non-exclusive distributors,authorized replicators,resellers,and retail outlets.Individual consumers obtain these products primarily through retail outlets.We distribute ourdevices throu

308、gh third-party retailers.We have a network of field sales representatives and field support personnel thatsolicit orders from distributors and resellers and provide product training and sales support.Our Dynamics business solutions are also licensed to enterprises through a global network of channel

309、 partners providingvertical solutions and specialized services.LICENSING OPTIONSWe offer options for organizations that want to purchase our cloud services,on-premises software,and SA.We licensesoftware to organizations under volume licensing agreements to allow the customer to acquire multiple lice

310、nses ofproducts and services instead of having to acquire separate licenses through retail channels.We use different programsdesigned to provide flexibility for organizations of various sizes.While these programs may differ in various parts of theworld,generally they include those discussed below.SA

311、 conveys rights to new software and upgrades for perpetual licenses released over the contract period.It also providessupport,tools,training,and other licensing benefits to help customers deploy and use software efficiently.SA is includedwith certain volume licensing agreements and is an optional pu

312、rchase with others.Volume Licensing ProgramsEnterprise AgreementEnterprise Agreements offer large organizations a manageable volume licensing program that gives them the flexibility tobuy cloud services and software licenses under one agreement.Enterprise Agreements are designed for medium or largeo

313、rganizations that want to license cloud services and on-premises software organization-wide over a three-year period.Organizations can elect to purchase perpetual licenses or subscribe to licenses.SA is included.Microsoft Customer AgreementA Microsoft Customer Agreement is a simplified purchase agre

314、ement presented,accepted,and stored through a digitalexperience.A Microsoft Customer Agreement is a non-expiring agreement that is designed to support all customers overtime,whether purchasing through a partner or directly from Microsoft.Microsoft Online Subscription AgreementA Microsoft Online Subs

315、cription Agreement is designed for small and medium organizations that want to subscribe to,activate,provision,and maintain cloud services seamlessly and directly via the web.The agreement allows customers toacquire monthly or annual subscriptions for cloud-based services.Microsoft Products and Serv

316、ices AgreementMicrosoft Products and Services Agreements are designed for medium and large organizations that want to license cloudservices and on-premises software as needed,with no organization-wide commitment,under a single,non-expiringagreement.Organizations purchase perpetual licenses or subscr

317、ibe to licenses.SA is optional for customers thatpurchase perpetual licenses.25Open ValueOpen Value agreements are a simple,cost-effective way to acquire the latest Microsoft technology.These agreementsare designed for small and medium organizations that want to license cloud services and on-premise

318、s software over athree-year period.Under Open Value agreements,organizations can elect to purchase perpetual licenses or subscribe tolicenses and SA is included.Select PlusA Select Plus agreement is designed for government and academic organizations to acquire on-premises licenses at anyaffiliate or

319、 department level,while realizing advantages as one organization.Organizations purchase perpetual licensesand SA is optional.Partner ProgramsThe Microsoft Cloud Solution Provider Program offers customers an easy way to license the cloud services they need incombination with the value-added services

320、offered by their systems integrator,managed services provider,or cloudreseller partner.Partners in this program can easily package their own products and services to directly provision,manage,and support their customer subscriptions.The Microsoft Services Provider License Agreement allows hosting se

321、rvice providers and independent software vendorswho want to license eligible Microsoft software products to provide software services and hosted applications to their endcustomers.Partners license software over a three-year period and are billed monthly based on consumption.The Independent Software

322、Vendor Royalty Program enables partners to integrate Microsoft products into otherapplications and then license the unified business solution to their end users.CUSTOMERSOur customers include individual consumers,small and medium organizations,large global enterprises,public-sectorinstitutions,Inter

323、net service providers,application developers,and OEMs.Our practice is to ship our products promptlyupon receipt of purchase orders from customers;consequently,backlog is not significant.AVAILABLE INFORMATIONOur Internet address is .At our Investor Relations website, makeavailable free of charge a va

324、riety of information for investors.Our goal is to maintain the Investor Relations website as aportal through which investors can easily find or navigate to pertinent information about us,including:Our annual report on Form 10-K,quarterly reports on Form 10-Q,current reports on Form 8-K,and anyamendm

325、ents to those reports,as soon as reasonably practicable after we electronically file that material withor furnish it to the Securities and Exchange Commission(“SEC”)at www.sec.gov.Information on our business strategies,financial results,and metrics for investors.Announcements of investor conferences

326、,speeches,and events at which our executives talk about ourproduct,service,and competitive strategies.Archives of these events are also available.Press releases on quarterly earnings,product and service announcements,legal developments,andinternational news.Corporate governance information including

327、 our articles of incorporation,bylaws,governance guidelines,committee charters,codes of conduct and ethics,global corporate social responsibility initiatives,and othergovernance-related policies.Other news and announcements that we may post from time to time that investors might find useful orintere

328、sting.Opportunities to sign up for email alerts to have information pushed in real time.26We publish a variety of reports and resources related to our Corporate Social Responsibility programs and progress onour Reports Hub website, reports on sustainability,responsible sourcing,accessibility,digital

329、 trust,and public policy engagement.The information found on these websites is not part of,or incorporated by reference into,this or any other report we filewith,or furnish to,the SEC.In addition to these channels,we use social media to communicate to the public.It is possiblethat the information we

330、 post on social media could be deemed to be material to investors.We encourage investors,themedia,and others interested in Microsoft to review the information we post on the social media channels listed on ourInvestor Relations website.27MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

331、 RESULTS OFOPERATIONSThe following Managements Discussion and Analysis of Financial Condition and Results of Operations(“MD&A”)isintended to help the reader understand the results of operations and financial condition of Microsoft Corporation.MD&A isprovided as a supplement to,and should be read in

332、conjunction with,our consolidated financial statements and theaccompanying Notes to Financial Statements.This section generally discusses the results of our operations for the yearended June 30,2023 compared to the year ended June 30,2022.For a discussion of the year ended June 30,2022compared to th

333、e year ended June 30,2021,please refer to,“Managements Discussion and Analysis of FinancialCondition and Results of Operations”in our Annual Report on Form 10-K for the year ended June 30,2022.OVERVIEWMicrosoft is a technology company whose mission is to empower every person and every organization on the planet toachieve more.We strive to create local opportunity,growth,and impact in every country