1、 UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549 FORM 10-QQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the Quarterly Period Ended September 30,2023OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 19

2、34For the Transition Period From toCommission File Number 001-37845 MICROSOFT CORPORATION WASHINGTON91-1144442(STATE OF INCORPORATION)(I.R.S.ID)ONE MICROSOFT WAY,REDMOND,WASHINGTON 98052-6399(425)882- Securities registered pursuant to Section 12(b)of the Act:Title of each classTrading SymbolName of

3、exchange on which registered Common stock,$0.00000625 par value per shareMSFTNASDAQ3.125%Notes due 2028MSFTNASDAQ2.625%Notes due 2033MSFTNASDAQIndicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 durin

4、g the preceding 12 months(or for such shorter period that the registrant was required to file such reports),and(2)has been subject to such filing requirements for the past 90 days.Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required t

5、o be submitted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter period that the registrant was required to submit such files).Yes No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-

6、accelerated filer,a smaller reporting company,or an emerging growth company.See the definitions of“large accelerated filer,”“accelerated filer,”“smaller reporting company,”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large Accelerated Filer Accelerated Filer Non-accelerated Filer Sm

7、aller Reporting Company Emerging Growth Company If an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.Indi

8、cate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).Yes No Indicate the number of shares outstanding of each of the issuers classes of common stock,as of the latest practicable date.Class Outstanding as of October 19,2023 Common Stock,$0.0000062

9、5par value per share 7,432,262,329shares MICROSOFT CORPORATION FORM 10-Q For the Quarter Ended September 30,2023INDEX PagePART I.FINANCIAL INFORMATION Item 1.Financial Statements a)Income Statements for the Three Months Ended September 30,2023 and 20223 b)Comprehensive Income Statements for the Thre

10、e Months Ended September 30,2023 and 20224 c)Balance Sheets as of September 30,2023 and June 30,20235 d)Cash Flows Statements for the Three Months Ended September 30,2023 and 20226 e)Stockholders Equity Statements for the Three Months Ended September 30,2023 and 20227 f)Notes to Financial Statements

11、8 g)Report of Independent Registered Public Accounting Firm29 Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations30 Item 3.Quantitative and Qualitative Disclosures About Market Risk43 Item 4.Controls and Procedures43 PART II.OTHER INFORMATION Item 1.Legal Proc

12、eedings44 Item 1A.Risk Factors44 Item 2.Unregistered Sales of Equity Securities and Use of Proceeds58 Item 5.Other Information59 Item 6.Exhibits60 SIGNATURE612PART IItem 1PART I.FINANCIAL INFORMATIONITEM 1.FINANCIAL STATEMENTSINCOME STATEMENTS(In millions,except per share amounts)(Unaudited)Three Mo

13、nths Ended September 30,2023 2022 Revenue:Product$15,535$15,741Service and other 40,982 34,381 Total revenue 56,517 50,122 Cost of revenue:Product 3,531 4,302Service and other 12,771 11,150 Total cost of revenue 16,302 15,452 Gross margin 40,215 34,670Research and development 6,659 6,628Sales and ma

14、rketing 5,187 5,126General and administrative 1,474 1,398 Operating income 26,895 21,518Other income,net 389 54 Income before income taxes 27,284 21,572Provision for income taxes 4,993 4,016 Net income$22,291$17,556 Earnings per share:Basic$3.00$2.35Diluted$2.99$2.35 Weighted average shares outstand

15、ing:Basic 7,429 7,457Diluted 7,462 7,485 Refer to accompanying notes.3PART IItem 1COMPREHENSIVE INCOME STATEMENTS(In millions)(Unaudited)Three Months Ended September 30,2023 2022 Net income$22,291$17,556 Other comprehensive income(loss),net of tax:Net change related to derivatives 21 7Net change rel

16、ated to investments (260)(1,897)Translation adjustments and other (355)(775)Other comprehensive loss (594)(2,665)Comprehensive income$21,697$14,891 Refer to accompanying notes.4PART IItem 1BALANCE SHEETS(In millions)(Unaudited)September 30,2023 June 30,2023 Assets Current assets:Cash and cash equiva

17、lents$80,452$34,704 Short-term investments 63,499 76,558 Total cash,cash equivalents,and short-term investments 143,951 111,262 Accounts receivable,net of allowance for doubtful accounts of$512and$650 36,953 48,688 Inventories 3,000 2,500 Other current assets 23,682 21,807 Total current assets 207,5

18、86 184,257 Property and equipment,net of accumulated depreciation of$69,486and$68,251 102,502 95,641 Operating lease right-of-use assets 15,435 14,346Equity investments 11,423 9,879 Goodwill 67,790 67,886 Intangible assets,net 8,895 9,366 Other long-term assets 32,154 30,601 Total assets$445,785$411

19、,976 Liabilities and stockholders equity Current liabilities:Accounts payable$19,307$18,095 Short-term debt 25,808 0Current portion of long-term debt 3,748 5,247Accrued compensation 6,990 11,009 Short-term income taxes 8,035 4,152 Short-term unearned revenue 46,429 50,901 Other current liabilities 1

20、4,475 14,745 Total current liabilities 124,792 104,149 Long-term debt 41,946 41,990 Long-term income taxes 22,983 25,560Long-term unearned revenue 2,759 2,912 Deferred income taxes 470 433 Operating lease liabilities 13,487 12,728Other long-term liabilities 18,634 17,981 Total liabilities 225,071 20

21、5,753 Commitments and contingencies Stockholders equity:Common stock and paid-in capital shares authorized 24,000;outstanding 7,431and 7,432 95,508 93,718 Retained earnings 132,143 118,848 Accumulated other comprehensive loss (6,937)(6,343)Total stockholders equity 220,714 206,223 Total liabilities

22、and stockholders equity$445,785$411,976 Refer to accompanying notes.5PART IItem 1CASH FLOWS STATEMENTS(In millions)(Unaudited)Three Months Ended September 30,2023 2022 Operations Net income$22,291$17,556Adjustments to reconcile net income to net cash from operations:Depreciation,amortization,and oth

23、er 3,921 2,790Stock-based compensation expense 2,507 2,192Net recognized losses(gains)on investments and derivatives 14 (22)Deferred income taxes (568)(1,191)Changes in operating assets and liabilities:Accounts receivable 11,034 11,729Inventories (505)(543)Other current assets (796)(332)Other long-t

24、erm assets (2,013)(666)Accounts payable 1,214 (1,567)Unearned revenue(4,126)(3,322)Income taxes1,425410Other current liabilities (4,106)(4,024)Other long-term liabilities 291 188 Net cash from operations 30,583 23,198 Financing Proceeds from issuance of debt,maturities of 90 days or less,net18,6920P

25、roceeds from issuance of debt7,0730Repayments of debt (1,500)(1,000)Common stock issued 685 575Common stock repurchased (4,831)(5,573)Common stock cash dividends paid (5,051)(4,621)Other,net (307)(264)Net cash from(used in)financing 14,761 (10,883)Investing Additions to property and equipment (9,917

26、)(6,283)Acquisition of companies,net of cash acquired,and purchases of intangible and other assets (1,186)(349)Purchases of investments (8,460)(5,013)Maturities of investments 15,718 6,662Sales of investments 5,330 2,711Other,net(982)(860)Net cash from(used in)investing 503 (3,132)Effect of foreign

27、exchange rates on cash and cash equivalents (99)(230)Net change in cash and cash equivalents 45,748 8,953Cash and cash equivalents,beginning of period 34,704 13,931 Cash and cash equivalents,end of period$80,452$22,884 Refer to accompanying notes.6PART IItem 1STOCKHOLDERS EQUITY STATEMENTS(In millio

28、ns,except per share amounts)(Unaudited)Three Months Ended September 30,2023 2022 Common stock and paid-in capital Balance,beginning of period$93,718$86,939 Common stock issued 685 575Common stock repurchased (1,401)(1,171)Stock-based compensation expense 2,507 2,192Other,net (1)0 Balance,end of peri

29、od 95,508 88,535 Retained earnings Balance,beginning of period 118,848 84,281Net income 22,291 17,556Common stock cash dividends (5,571)(5,064)Common stock repurchased (3,425)(4,399)Balance,end of period 132,143 92,374 Accumulated other comprehensive loss Balance,beginning of period (6,343)(4,678)Ot

30、her comprehensive loss (594)(2,665)Balance,end of period (6,937)(7,343)Total stockholders equity$220,714$173,566 Cash dividends declared per common share$0.75$0.68 Refer to accompanying notes.7PART IItem 1NOTES TO FINANCIAL STATEMENTS(Unaudited)NOTE 1 ACCOUNTING POLICIESAccounting Principles Our una

31、udited interim consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America(“GAAP”).In the opinion of management,the unaudited interim consolidated financial statements reflect all adjustments of a n

32、ormal recurring nature that are necessary for a fair presentation of the results for the interim periods presented.Interim results are not necessarily indicative of results for a full year.The information included in this Form 10-Q should be read in conjunction with information included in the Micro

33、soft Corporation fiscal year 2023 Form 10-K filed with the U.S.Securities and Exchange Commission on July 27,2023.We have recast certain prior period amounts to conform to the current period presentation.The recast of these prior period amounts had no impact on our consolidated balance sheets,consol

34、idated income statements,or consolidated cash flows statements.Principles of Consolidation The consolidated financial statements include the accounts of Microsoft Corporation and its subsidiaries.Intercompany transactions and balances have been eliminated.Estimates and Assumptions Preparing financia

35、l statements requires management to make estimates and assumptions that affect the reported amounts of assets,liabilities,revenue,and expenses.Examples of estimates and assumptions include:for revenue recognition,determining the nature and timing of satisfaction of performance obligations,and determ

36、ining the standalone selling price of performance obligations,variable consideration,and other obligations such as product returns and refunds;loss contingencies;product warranties;the fair value of and/or potential impairment of goodwill and intangible assets for our reporting units;product life cy

37、cles;useful lives of our tangible and intangible assets;allowances for doubtful accounts;the market value of,and demand for,our inventory;stock-based compensation forfeiture rates;when technological feasibility is achieved for our products;the potential outcome of uncertain tax positions that have b

38、een recognized in our consolidated financial statements or tax returns;and determining the timing and amount of impairments for investments.Actual results and outcomes may differ from managements estimates and assumptions due to risks and uncertainties.Financial InstrumentsInvestmentsWe consider all

39、 highly liquid interest-earning investments with a maturity of three months or less at the date of purchase to be cash equivalents.The fair values of these investments approximate their carrying values.In general,investments with original maturities of greater than three months and remaining maturit

40、ies of less than one year are classified as short-term investments.Investments with maturities beyond one year may be classified as short-term based on their highly liquid nature and because such marketable securities represent the investment of cash that is available for current operations.Debt inv

41、estments are classified as available-for-sale and realized gains and losses are recorded using the specific identification method.Changes in fair value,excluding credit losses and impairments,are recorded in other comprehensive income.Fair value is calculated based on publicly available market infor

42、mation or other estimates determined by management.If the cost of an investment exceeds its fair value,we evaluate,among other factors,general market conditions,credit quality of debt instrument issuers,and the extent to which the fair value is less than cost.To determine credit losses,we employ a s

43、ystematic methodology that considers available quantitative and qualitative evidence.In addition,we consider specific adverse conditions related to the financial health of,and business outlook for,the investee.If we have plans to sell the security or it is more likely than not that we will be requir

44、ed to sell the security before recovery,then a decline in fair value below cost is recorded as an impairment charge in other income(expense),net and a new cost basis in the investment is established.If market,industry,and/or investee conditions deteriorate,we may incur future impairments.8PART IItem

45、 1Equity investments with readily determinable fair values are measured at fair value.Equity investments without readily determinable fair values are measured using the equity method or measured at cost with adjustments for observable changes in price or impairments(referred to as the measurement al

46、ternative).We perform a qualitative assessment on a periodic basis and recognize an impairment if there are sufficient indicators that the fair value of the investment is less than carrying value.Changes in value are recorded in other income(expense),net.DerivativesDerivative instruments are recogni

47、zed as either assets or liabilities and measured at fair value.The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation.For derivative instruments designated as fair value hedges,gains and losses are recognized in other

48、income(expense),net with offsetting gains and losses on the hedged items.Gains and losses representing hedge components excluded from the assessment of effectiveness are recognized in other income(expense),net.For derivative instruments designated as cash flow hedges,gains and losses are initially r

49、eported as a component of other comprehensive income and subsequently recognized in other income(expense),net with the corresponding hedged item.Gains and losses representing hedge components excluded from the assessment of effectiveness are recognized in other income(expense),net.For derivative ins

50、truments that are not designated as hedges,gains and losses from changes in fair values are primarily recognized in other income(expense),net.Fair Value MeasurementsWe account for certain assets and liabilities at fair value.The hierarchy below lists three levels of fair value based on the extent to

51、 which inputs used in measuring fair value are observable in the market.We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety.These levels are:Level 1 inputs are based upon unad

52、justed quoted prices for identical instruments in active markets.Our Level 1 investments include U.S.government securities,common and preferred stock,and mutual funds.Our Level 1 derivative assets and liabilities include those actively traded on exchanges.Level 2 inputs are based upon quoted prices

53、for similar instruments in active markets,quoted prices for identical or similar instruments in markets that are not active,and model-based valuation techniques(e.g.the Black-Scholes model)for which all significant inputs are observable in the market or can be corroborated by observable market data

54、for substantially the full term of the assets or liabilities.Where applicable,these models project future cash flows and discount the future amounts to a presentvalue using market-based observable inputs including interest rate curves,credit spreads,foreign exchange rates,and forward and spot prices

55、 for currencies.Our Level 2 investments include commercial paper,certificates of deposit,U.S.agency securities,foreign government bonds,mortgage-and asset-backed securities,corporate notes and bonds,and municipal securities.Our Level 2 derivative assets and liabilities include certain cleared swap c

56、ontracts and over-the-counter forward,option,and swap contracts.Level 3 inputs are generally unobservable and typically reflect managements estimates of assumptions that market participantswould use in pricing the asset or liability.The fair values are therefore determined using model-based techniqu

57、es,including option pricing models and discounted cash flow models.Our Level 3 assets and liabilities include investments in corporate notes and bonds,municipal securities,and goodwill and intangible assets,when they are recorded at fair value due to an impairment charge.Unobservable inputs used in

58、the models are significant to the fair values of the assets and liabilities.We measure equity investments without readily determinable fair values on a nonrecurring basis.The fair values of these investments are determined based on valuation techniques using the best information available,and may in

59、clude quoted market prices,market comparables,and discounted cash flow projections.Our other current financial assets and current financial liabilities have fair values that approximate their carrying values.9PART IItem 1Contract Balances and Other Receivables As of both September 30,2023 and June 3

60、0,2023,long-term accounts receivable,net of allowance for doubtful accounts,was$4.5 billion and is included in other long-term assets in our consolidated balance sheets.As of September 30,2023 and June 30,2023,other receivables related to activities to facilitate the purchase of server components we

61、re$10.2 billion and$9.2 billion,respectively,and are included in other current assets in our consolidated balance sheets.We record financing receivables when we offer certain of our customers the option to acquire our software products and services offerings through a financing program in a limited

62、number of countries.As of September 30,2023 and June 30,2023,our financing receivables,net were$4.8 billion and$5.3 billion,respectively,for short-term and long-term financing receivables,which are included in other current assets and other long-term assets in our consolidated balance sheets.We reco

63、rd an allowance to cover expected losses based on troubled accounts,historical experience,and other currently available evidence.NOTE 2 EARNINGS PER SHAREBasic earnings per share(“EPS”)is computed based on the weighted average number of shares of common stock outstanding during the period.Diluted EP

64、S is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method.Dilutive potential common shares include outstanding stock options and stock awards.The components of basic a

65、nd diluted EPS were as follows:(In millions,except earnings per share)Three Months Ended September 30,2023 2022 Net income available for common shareholders(A)$22,291$17,556 Weighted average outstanding shares of common stock(B)7,429 7,457 Dilutive effect of stock-based awards 33 28 Common stock and

66、 common stock equivalents(C)7,462 7,485 Earnings Per Share Basic(A/B)$3.00$2.35 Diluted(A/C)$2.99$2.35 Anti-dilutive stock-based awards excluded from the calculations of diluted EPS were immaterial during the periods presented.10PART IItem 1NOTE 3 OTHER INCOME(EXPENSE),NET The components of other in

67、come(expense),net were as follows:(In millions)Three Months Ended September 30,20232022 Interest and dividends income$1,166$641Interest expense (525)(500)Net recognized gains(losses)on investments (107)13Net gains on derivatives 93 9Net losses on foreign currency remeasurements (101)(78)Other,net (1

68、37)(31)Total$389$54 Net Recognized Gains(Losses)on Investments Net recognized gains(losses)on debt investments were as follows:(In millions)Three Months Ended September 30,20232022 Realized gains from sales of available-for-sale securities$2$3Realized losses from sales of available-for-sale securiti

69、es (25)(20)Impairments and allowance for credit losses (6)(18)Total$(29)$(35)Net recognized gains(losses)on equity investments were as follows:(In millions)Three Months Ended September 30,20232022 Net realized gains on investments sold$45$83Net unrealized losses on investments still held (123)(28)Im

70、pairments of investments 0 (7)Total$(78)$48 11PART IItem 1NOTE 4 INVESTMENTSInvestment ComponentsThe components of investments were as follows:(In millions)FairValueLevelAdjustedCostBasisUnrealizedGains UnrealizedLosses RecordedBasis Cashand CashEquivalentsShort-termInvestmentsEquityInvestments Sept

71、ember 30,2023 Changes in Fair Value Recorded in Other Comprehensive Income Commercial paperLevel 2$3,008$0$0$3,008$3,005$3$0 Certificates of depositLevel 2 1,694 0 0 1,694 1,650 44 0 U.S.government securities Level 1 56,210 2(4,147)52,065 255 51,810 0 U.S.agency securitiesLevel 2 29 0 0 29 0 29 0 Fo

72、reign government bonds Level 2 516 1(24)493 5 488 0Mortgage-and asset-backed securitiesLevel 2 8631(52)812 08120Corporate notes and bonds Level 2 10,443 3(612)9,834 0 9,834 0Corporate notes and bonds Level 3 122 0 0 122 0 122 0Municipal securitiesLevel 2 283 1(21)263 0 263 0Municipal securitiesLevel

73、 3 104 0(16)88 0 88 0 Total debt investments$73,272$8$(4,872)$68,408$4,915$63,493$0 Changes in Fair Value Recorded in Net Income Equity investmentsLevel 1$70,729$68,159$0$2,570Equity investmentsOther 8,853 0 0 8,853 Total equity investments$79,582$68,159$0$11,423 Cash$7,378$7,378$0$0Derivatives,net

74、6 0 6 0 Total$155,374$80,452$63,499$11,423 12(a)PART IItem 1(In millions)FairValueLevelAdjustedCostBasisUnrealizedGainsUnrealizedLosses RecordedBasisCashand CashEquivalentsShort-termInvestmentsEquityInvestments June 30,2023 Changes in Fair Value Recorded in Other Comprehensive Income Commercial pape

75、r Level 2$16,589$0$0$16,589$12,231$4,358$0Certificates of deposit Level 2 2,701 0 0 2,701 2,657 44 0U.S.government securities Level 1 65,237 2(3,870)61,369 2,991 58,378 0U.S.agency securities Level 2 2,703 0 0 2,703 894 1,809 0Foreign government bonds Level 2 498 1(24)475 0 475 0Mortgage-and asset-b

76、acked securities Level 28241(39)7860 7860Corporate notes and bonds Level 2 10,809 8(583)10,234 0 10,234 0Corporate notes and bonds Level 3 120 0 0 120 0 120 0Municipal securities Level 2 285 1(18)268 7 261 0Municipal securities Level 3 103 0(16)87 0 87 0 Total debt investments$99,869$13$(4,550)$95,3

77、32$18,780$76,552$0 Changes in Fair Value Recorded in Net Income Equity investments Level 1$10,138$7,446$0$2,692Equity investments Other 7,187 0 0 7,187 Total equity investments$17,325$7,446$0$9,879 Cash$8,478$8,478$0$0Derivatives,net 6 0 6 0 Total$121,141$34,704$76,558$9,879 (a)Refer to Note 5 Deriv

78、atives for further information on the fair value of our derivative instruments.Equity investments presented as“Other”in the tables above include investments without readily determinable fair values measured using the equity method or measured at cost with adjustments for observable changes in price

79、or impairments,and investments measured at fair value using net asset value as a practical expedient which are not categorized in the fair value hierarchy.As of both September 30,2023 and June 30,2023,equity investments without readily determinable fair values measured at cost with adjustments for o

80、bservable changes in price or impairments were$4.2 billion.13(a)PART IItem 1Unrealized Losses on Debt Investments Debt investments with continuous unrealized losses for less than 12 months and 12 months or greater and their related fair values were as follows:Less than 12 Months 12 Months or Greater

81、 TotalUnrealizedLosses (In millions)Fair Value UnrealizedLosses Fair Value UnrealizedLosses TotalFair Value September 30,2023 U.S.government and agency securities$526$(23)$51,241$(4,124)$51,767$(4,147)Foreign government bonds 72 (4)411 (20)483 (24)Mortgage-and asset-backed securities 309 (12)417 (40

82、)726 (52)Corporate notes and bonds 2,044 (49)7,568 (563)9,612 (612)Municipal securities 67 (1)235 (36)302 (37)Total$3,018$(89)$59,872$(4,783)$62,890$(4,872)Less than 12 Months 12 Months or Greater TotalUnrealizedLosses (In millions)Fair Value UnrealizedLosses Fair Value UnrealizedLosses TotalFair Va

83、lue June 30,2023 U.S.government and agency securities$7,950$(336)$45,273$(3,534)$53,223$(3,870)Foreign government bonds 77 (5)391 (19)468 (24)Mortgage-and asset-backed securities 257 (5)412 (34)669 (39)Corporate notes and bonds 2,326 (49)7,336 (534)9,662 (583)Municipal securities 111 (3)186 (31)297

84、(34)Total$10,721$(398)$53,598$(4,152)$64,319$(4,550)Unrealized losses from fixed-income securities are primarily attributable to changes in interest rates.Management does not believe any remaining unrealized losses represent impairments based on our evaluation of available evidence.Debt Investment M

85、aturities The following table outlines maturities of our debt investments as of September 30,2023:(In millions)AdjustedCost Basis EstimatedFair Value September 30,2023 Due in one year or less$13,575$13,451 Due after one year through five years 46,882 44,003 Due after five years through 10 years 11,4

86、89 9,801Due after 10 years 1,326 1,153 Total$73,272$68,408 NOTE 5 DERIVATIVESWe use derivative instruments to manage risks related to foreign currencies,interest rates,equity prices,and credit;to enhance investment returns;and to facilitate portfolio diversification.Our objectives for holding deriva

87、tives include reducing,eliminating,and efficiently managing the economic impact of these exposures as effectively as possible.Our derivative programs include strategies that both qualify and do not qualify for hedge accounting treatment.Foreign Currencies Certain forecasted transactions,assets,and l

88、iabilities are exposed to foreign currency risk.We monitor our foreign currency exposures daily to maximize the economic effectiveness of our foreign currency hedge positions.14PART IItem 1Foreign currency risks related to certain non-U.S.dollar-denominated investments are hedged using foreign excha

89、nge forward contracts that are designated as fair value hedging instruments.Foreign currency risks related to certain Euro-denominated debt are hedged using foreign exchange forward contracts that are designated as cash flow hedging instruments.Certain options and forwards not designated as hedging

90、instruments are also used to manage the variability in foreign exchange rates on certain balance sheet amounts and to manage other foreign currency exposures.Interest Rate Interest rate risks related to certain fixed-rate debt are hedged using interest rate swaps that are designated as fair value he

91、dging instruments to effectively convert the fixed interest rates to floating interest rates.Securities held in our fixed-income portfolio are subject to different interest rate risks based on their maturities.We manage the average maturity of our fixed-income portfolio to achieve economic returns t

92、hat correlate to certain broad-based fixed-income indices using option,futures,and swap contracts.These contracts are not designated as hedging instruments and are included in“Other contracts”in the tables below.Equity Securities held in our equity investments portfolio are subject to market price r

93、isk.At times,we may hold options,futures,and swap contracts.These contracts are not designated as hedging instruments.Credit Our fixed-income portfolio is diversified and consists primarily of investment-grade securities.We use credit default swap contracts to manage credit exposures relative to bro

94、ad-based indices and to facilitate portfolio diversification.These contracts are not designated as hedging instruments and are included in“Other contracts”in the tables below.Credit-Risk-Related Contingent Features Certain counterparty agreements for derivative instruments contain provisions that re

95、quire our issued and outstanding long-term unsecured debt to maintain an investment grade credit rating and require us to maintain minimum liquidity of$1.0 billion.To the extent we fail to meet these requirements,we will be required to post collateral,similar to the standard convention related to ov

96、er-the-counter derivatives.As of September 30,2023,our long-term unsecured debt rating was AAA,and cash investments were in excess of$1.0 billion.As a result,no collateral was required to be posted.The following table presents the notional amounts of our outstanding derivative instruments measured i

97、n U.S.dollar equivalents:(In millions)September 30,2023 June 30,2023 Designated as Hedging Instruments Foreign exchange contracts purchased$1,492$1,492Interest rate contracts purchased 1,084 1,078 Not Designated as Hedging Instruments Foreign exchange contracts purchased 6,957 7,874Foreign exchange

98、contracts sold 17,026 25,159Equity contracts purchased 3,548 3,867Equity contracts sold 2,154 2,154Other contracts purchased 1,698 1,224 Other contracts sold 678 581 15PART IItem 1Fair Values of Derivative InstrumentsThe following table presents our derivative instruments:(In millions)DerivativeAsse

99、ts DerivativeLiabilities DerivativeAssets DerivativeLiabilities September 30,2023 June 30,2023 Designated as Hedging Instruments Foreign exchange contracts$21$(75)$34$(67)Interest rate contracts 9 0 16 0 Not Designated as Hedging Instruments Foreign exchange contracts 503 (331)249 (332)Equity contra

100、cts 95 (342)165 (400)Other contracts 8 (24)5 (6)Gross amounts of derivatives 636 (772)469 (805)Gross amounts of derivatives offset in the balance sheet(294)296 (202)206Cash collateral received 0 (103)0 (125)Net amounts of derivatives$342$(579)$267$(724)Reported as Short-term investments$6$0$6$0Other

101、 current assets 327 0 245 0Other long-term assets 9 0 16 0Other current liabilities 0 (259)0 (341)Other long-term liabilities 0 (320)0 (383)Total$342$(579)$267$(724)Gross derivative assets and liabilities subject to legally enforceable master netting agreements for which we have elected to offset we

102、re$627 million and$772 million,respectively,as of September 30,2023,and$442 million and$804 million,respectively,as of June 30,2023.The following table presents the fair value of our derivatives instruments on a gross basis:(In millions)Level 1 Level 2 Level 3 Total September 30,2023 Derivative asse

103、ts$2$629$5$636Derivative liabilities 0 (772)0 (772)June 30,2023 Derivative assets 0 462 7 469Derivative liabilities 0 (805)0 (805)16PART IItem 1Gains(losses)on derivative instruments recognized in other income(expense),net were as follows:(In millions)Three Months Ended September 30,20232022 Designa

104、ted as Fair Value Hedging Instruments Interest rate contracts Derivatives$(16)$(43)Hedged items 3 43 Designated as Cash Flow Hedging Instruments Foreign exchange contracts Amount reclassified from accumulated other comprehensive loss(46)(59)Not Designated as Hedging Instruments Foreign exchange cont

105、racts 206 240Equity contracts 113 12Other contracts(33)(10)Gains(losses),net of tax,on derivative instruments recognized in our consolidated comprehensive income statements were as follows:(In millions)Three Months Ended September 30,2023 2022 Designated as Cash Flow Hedging Instruments Foreign exch

106、ange contracts Included in effectiveness assessment$(15)$(40)NOTE 6 INVENTORIESThe components of inventories were as follows:(In millions)September 30,2023 June 30,2023 Raw materials$520$709 Work in process 15 23 Finished goods 2,465 1,768 Total$3,000$2,500 NOTE 7 GOODWILLChanges in the carrying amo

107、unt of goodwill were as follows:(In millions)June 30,2023 Acquisitions Other September 30,2023 Productivity and Business Processes$24,775$0$(16)$24,759 Intelligent Cloud 30,469 0 (49)30,420 More Personal Computing 12,642 0 (31)12,611 Total$67,886$0$(96)$67,790 The measurement periods for the valuati

108、on of assets acquired and liabilities assumed end as soon as information on the facts and circumstances that existed as of the acquisition dates becomes available,but do not exceed 12 months.Adjustments in purchase price allocations may require a change in the amounts allocated to goodwill during th

109、e periods in which the adjustments are determined.17PART IItem 1Any change in the goodwill amounts resulting from foreign currency translations and purchase accounting adjustments are presented as“Other”in the table above.Also included in“Other”are business dispositions and transfers between segment

110、s due to reorganizations,as applicable.NOTE 8 INTANGIBLE ASSETS The components of intangible assets,all of which are finite-lived,were as follows:(In millions)GrossCarryingAmount AccumulatedAmortization NetCarryingAmount GrossCarryingAmount AccumulatedAmortization NetCarryingAmount September 30,2023

111、 June 30,2023 Technology-based$11,409$(7,904)$3,505$11,245$(7,589)$3,656 Customer-related 7,281 (4,284)2,997 7,281 (4,047)3,234 Marketing-related 4,935 (2,555)2,380 4,935 (2,473)2,462 Contract-based 30 (17)13 29 (15)14 Total$23,655$(14,760)$8,895$23,490$(14,124)$9,366 Intangible assets amortization

112、expense was$636 million and$633 million for the three months ended September 30,2023 and 2022,respectively.The following table outlines the estimated future amortization expense related to intangible assets held as of September 30,2023:(In millions)Year Ending June 30,2024(excluding the three months

113、 ended September 30,2023)$1,7482025 1,905 2026 1,407 2027 952 2028 675 Thereafter 2,208 Total$8,895 18 PART IItem 1NOTE 9 DEBT Short-term DebtAs of September 30,2023,we had$25.8 billion of commercial paper issued and outstanding,with a weighted average interest rate of 5.4%and maturities ranging fro

114、m 7 days to 190 days.The estimated fair value of this commercial paper approximates its carrying value.As of June 30,2023,we had no commercial paper issued or outstanding.Long-term DebtThe components of long-term debt were as follows:(In millions,issuance by calendar year)Maturities(calendar year)St

115、ated InterestRate Effective InterestRate September 30,2023 June 30,2023 2009issuance of$3.8billion 2039 5.20%5.24%$520$520 2010issuance of$4.8billion 2040 4.50%4.57%486 486 2011issuance of$2.3billion 2041 5.30%5.36%718 718 2012issuance of$2.3billion 2042 3.50%3.57%454 4542013issuance of$5.2billion 2

116、0232043 3.63%4.88%3.73%4.92%1,814 1,814 2013issuance of 4.1billion 20282033 2.63%3.13%2.69%3.22%2,435 2,5092015issuance of$23.8billion 20252055 2.70%4.75%2.77%4.78%9,805 9,805 2016issuance of$19.8billion 20262056 2.40%3.95%2.46%4.03%7,930 9,430 2017issuance of$17.0billion 20242057 2.88%4.50%3.04%4.5

117、3%8,945 8,945 2020issuance of$10.0billion 20502060 2.53%2.68%2.53%2.68%10,000 10,000 2021issuance of$8.2billion 20522062 2.92%3.04%2.92%3.04%8,185 8,185 Total face value 51,292 52,866 Unamortized discount and issuance costs (431)(438)Hedge fair value adjustments (109)(106)Premium on debt exchange (5

118、,058)(5,085)Total debt 45,694 47,237 Current portion of long-term debt (3,748)(5,247)Long-term debt$41,946$41,990 (a)Refer to Note 5 Derivatives for further information on the interest rate swaps related to fixed-rate debt.As of September 30,2023 and June 30,2023,the estimated fair value of long-ter

119、m debt,including the current portion,was$41.8 billion and$46.2 billion,respectively.The estimated fair values are based on Level 2 inputs.Debt in the table above is comprised of senior unsecured obligations and ranks equally with our other outstanding obligations.Interest is paid semi-annually,excep

120、t for the Euro-denominated debt,which is paid annually.The following table outlines maturities of our long-term debt,including the current portion,as of September 30,2023:(In millions)Year Ending June 30,2024(excluding the three months ended September 30,2023)$3,7502025 2,2502026 3,0002027 8,0002028

121、 0Thereafter 34,292 Total$51,292 19(a)PART IItem 1NOTE 10 INCOME TAXESEffective Tax RateOur effective tax rate was 18%and 19%for the three months ended September 30,2023 and 2022,respectively.The decrease in our effective tax rate for the current quarter compared to the prior year was primarily due

122、to tax benefits from tax law changes in the first quarter of fiscal year 2024,including the impact from the issuance of Notice 2023-55 by the Internal Revenue Service(“IRS”)and U.S.Treasury Department,which delayed the effective date of final foreign tax credit regulations to fiscal year 2024 for Mi

123、crosoft.Our effective tax rate was lower than the U.S.federal statutory rate for the three months ended September 30,2023,primarily due to earnings taxed at lower rates in foreign jurisdictions resulting from producing and distributing our products and services through our foreign regional operation

124、s center in Ireland.Uncertain Tax PositionsAs of September 30,2023 and June 30,2023,unrecognized tax benefits and other income tax liabilities were$19.8 billion and$18.7 billion,respectively,and are included in long-term income taxes in our consolidated balance sheets.We remain under audit by the IR

125、S for tax years 2014 to 2017.With respect to the audit for tax years 2004 to 2013,on September 26,2023,we received Notices of Proposed Adjustment(“NOPAs”)from the IRS.The primary issues in the NOPAs relate to intercompany transfer pricing.In the NOPAs,the IRS is seeking an additional tax payment of$

126、28.9 billion plus penalties and interest.As of September 30,2023,we believe our allowances for income tax contingencies are adequate.We disagree with the proposed adjustments and will vigorously contest the NOPAs through the IRSs administrative appeals office and,if necessary,judicial proceedings.We

127、 do not expect a final resolution of these issues in the next 12 months.Based on the information currently available,we do not anticipate a significant increase or decrease to our income tax contingencies for these issues within the next 12 months.We are subject to income tax in many jurisdictions o

128、utside the U.S.Our operations in certain jurisdictions remain subject to examination for tax years 1996 to 2023,some of which are currently under audit by local tax authorities.The resolution of each of these audits is not expected to be material to our consolidated financial statements.NOTE 11 UNEA

129、RNED REVENUE Unearned revenue by segment was as follows:(In millions)September 30,2023 June 30,2023 Productivity and Business Processes$25,316$27,572 Intelligent Cloud 19,471 21,563 More Personal Computing 4,401 4,678 Total$49,188$53,813 Changes in unearned revenue were as follows:(In millions)Three

130、 Months Ended September 30,2023 Balance,beginning of period$53,813Deferral of revenue 27,646Recognition of unearned revenue (32,271)Balance,end of period$49,188 20PART IItem 1Revenue allocated to remaining performance obligations,which includes unearned revenue and amounts that will be invoiced and

131、recognized as revenue in future periods,was$216 billion as of September 30,2023,of which$212 billion is related to the commercial portion of revenue.We expect to recognize approximately 45%of this revenue over the next 12 months and the remainder thereafter.NOTE 12 LEASESWe have operating and financ

132、e leases for datacenters,corporate offices,research and development facilities,Microsoft Experience Centers,and certain equipment.Our leases have remaining lease terms of less than 1 year to 18 years,some of which include options to extend the leases for up to 5 years,and some of which include optio

133、ns to terminate the leases within 1 year.The components of lease expense were as follows:(In millions)Three Months Ended September 30,2023 2022 Operating lease cost$775$662 Finance lease cost:Amortization of right-of-use assets$380$189 Interest on lease liabilities 149 113 Total finance lease cost$5

134、29$302 Supplemental cash flow information related to leases was as follows:(In millions)Three Months Ended September 30,2023 2022 Cash paid for amounts included in the measurement of lease liabilities:Operating cash flows from operating leases$795$654 Operating cash flows from finance leases 149 113

135、 Financing cash flows from finance leases 285 256 Right-of-use assets obtained in exchange for lease obligations:Operating leases 1,804 1,189 Finance leases 1,704 611 21PART IItem 1Supplemental balance sheet information related to leases was as follows:(In millions,except lease term and discount rat

136、e)September 30,2023 June 30,2023 Operating Leases Operating lease right-of-use assets$15,435$14,346 Other current liabilities$2,538$2,409 Operating lease liabilities 13,487 12,728 Total operating lease liabilities$16,025$15,137 Finance Leases Property and equipment,at cost$21,892$20,538Accumulated d

137、epreciation (4,949)(4,647)Property and equipment,net$16,943$15,891 Other current liabilities$1,577$1,197 Other long-term liabilities 16,577 15,870 Total finance lease liabilities$18,154$17,067 Weighted Average Remaining Lease Term Operating leases 8years 8years Finance leases 11years 11years Weighte

138、d Average Discount Rate Operating leases 3.1%2.9%Finance leases 3.6%3.4%The following table outlines maturities of our lease liabilities as of September 30,2023:(In millions)Year Ending June 30,Operating Leases Finance Leases 2024(excluding the three months ended September 30,2023)$2,287$1,378 2025

139、2,834 2,196 2026 2,365 1,883 2027 1,961 1,890 2028 1,767 1,900 Thereafter 6,803 12,934 Total lease payments 18,017 22,181 Less imputed interest (1,992)(4,027)Total$16,025$18,154 As of September 30,2023,we had additional operating and finance leases,primarily for datacenters,that had not yet commence

140、d of$7.5 billion and$75.1 billion,respectively.These operating and finance leases will commence between fiscal year 2024 and fiscal year 2030 with lease terms of 1 year to 18 years.22PART IItem 1NOTE 13 CONTINGENCIESU.S.Cell Phone LitigationMicrosoft Mobile Oy,a subsidiary of Microsoft,along with ot

141、her handset manufacturers and network operators,is a defendant in 46 lawsuits,including 45 lawsuits filed in the Superior Court for the District of Columbia by individual plaintiffs who allege that radio emissions from cellular handsets caused their brain tumors and other adverse health effects.We a

142、ssumed responsibility for these claims in our agreement to acquire Nokias Devices and Services business and have been substituted for the Nokia defendants.Nine of these cases were filed in 2002 and are consolidated for certain pre-trial proceedings;the remaining cases are stayed.In a separate 2009 d

143、ecision,the Court of Appeals for the District of Columbia held that adverse health effect claims arising from the use of cellular handsets that operate within the U.S.Federal Communications Commission radio frequency emission guidelines(“FCC Guidelines”)are pre-empted by federal law.The plaintiffs a

144、llege that their handsets either operated outside the FCC Guidelines or were manufactured before the FCC Guidelines went into effect.The lawsuits also allege an industry-wide conspiracy to manipulate the science and testing around emission guidelines.In 2013,the defendants in the consolidated cases

145、moved to exclude the plaintiffs expert evidence of general causation on the basis of flawed scientific methodologies.In 2014,the trial court granted in part and denied in part the defendants motion to exclude the plaintiffs general causation experts.The defendants filed an interlocutory appeal to th

146、e District of Columbia Court of Appeals challenging the standard for evaluating expert scientific evidence.In October 2016,the Court of Appeals issued its decision adopting the standard advocated by thedefendants and remanding the cases to the trial court for further proceedings under that standard.

147、The plaintiffs have filed supplemental expert evidence,portions of which were stricken by the court.A hearing on general causation took place in September of 2022.In April of 2023,the court granted defendants motion to strike the testimony of plaintiffs experts that cell phones cause brain cancer an

148、d entered an order excluding all of plaintiffs experts from testifying.The plaintiffs appealed the courts order in August of 2023.Irish Data Protection Commission MatterIn 2018,the Irish Data Protection Commission(“IDPC”)began investigating a complaint against LinkedIn as to whether LinkedIns target

149、ed advertising practices violated the recently implemented European Union General Data Protection Regulation(“GDPR”).Microsoft cooperated throughout the period of inquiry.In April 2023,the IDPC provided LinkedIn with a non-public preliminary draft decision alleging GDPR violations and proposing a fi

150、ne.Microsoft intends to challenge the preliminary draft decision.There is no set timeline for the IDPC to issue a final decision.Other ContingenciesWe also are subject to a variety of other claims and suits that arise from time to time in the ordinary course of our business.Although management curre

151、ntly believes that resolving claims against us,individually or in aggregate,will not have a material adverse impact in our consolidated financial statements,these matters are subject to inherent uncertainties and managements view of these matters may change in the future.As of September 30,2023,we a

152、ccrued aggregate legal liabilities of$597 million.While we intend to defend these matters vigorously,adverse outcomes that we estimate could reach approximately$600 million in aggregate beyond recorded amounts are reasonably possible.Were unfavorable final outcomes to occur,there exists the possibil

153、ity of a material adverse impact in our consolidated financial statements for the period in which the effects become reasonably estimable.NOTE 14 STOCKHOLDERS EQUITYShare RepurchasesOn September 14,2021,our Board of Directors approved a share repurchase program authorizing up to$60.0 billion in shar

154、e repurchases.This share repurchase program commenced in November 2021,has no expiration date,and may be terminated at any time.As of September 30,2023,$18.7 billion remained of this$60.0 billion share repurchase program.23PART IItem 1We repurchased the following shares of common stock under the sha

155、re repurchase program:(In millions)Shares Amount Shares Amount Fiscal Year 2024 2023 First Quarter 11$3,560 17$4,600 All repurchases were made using cash resources.All shares repurchased were under the share repurchase program approved on September 14,2021.The above table excludes shares repurchased

156、 to settle employee tax withholding related to the vesting of stock awards of$1.3 billion and$973 million for the first quarter of fiscal years 2024 and 2023,respectively.DividendsOur Board of Directors declared the following dividends:Declaration Date Record Date Payment Date DividendPer Share Amou

157、nt Fiscal Year 2024 (In millions)September 19,2023 November 16,2023 December 14,2023$0.75$5,573 Fiscal Year 2023 September 20,2022 November 17,2022 December 8,2022$0.68$5,066 The dividend declared on September 19,2023 was included in other current liabilities as of September 30,2023.24PART IItem 1NO

158、TE 15 ACCUMULATED OTHER COMPREHENSIVE INCOME(LOSS)The following table summarizes the changes in accumulated other comprehensive income(loss)by component:(In millions)Three Months Ended September 30,2023 2022 Derivatives Balance,beginning of period$(27)$(13)Unrealized losses,net of tax of$(4)and$(11)

159、(15)(40)Reclassification adjustments for losses included in other income(expense),net 46 59Tax benefit included in provision for income taxes (10)(12)Amounts reclassified from accumulated other comprehensive loss 36 47 Net change related to derivatives,net of tax of$6and$1 21 7 Balance,end of period

160、$(6)$(6)Investments Balance,beginning of period$(3,582)$(2,138)Unrealized losses,net of tax of$(75)and$(510)(283)(1,925)Reclassification adjustments for losses included in other income(expense),net 29 35Tax benefit included in provision for income taxes (6)(7)Amounts reclassified from accumulated ot

161、her comprehensive loss 23 28 Net change related to investments,net of tax of$(69)and$(503)(260)(1,897)Balance,end of period$(3,842)$(4,035)Translation Adjustments and Other Balance,beginning of period$(2,734)$(2,527)Translation adjustments and other,net of tax of$0and$0 (355)(775)Balance,end of peri

162、od$(3,089)$(3,302)Accumulated other comprehensive loss,end of period$(6,937)$(7,343)NOTE 16 SEGMENT INFORMATION AND GEOGRAPHIC DATAIn its operation of the business,management,including our chief operating decision maker,who is also our Chief Executive Officer,reviews certain financial information,in

163、cluding segmented internal profit and loss statements prepared on a basis not consistent with GAAP.During the periods presented,we reported our financial performance based on the following segments:Productivity and Business Processes,Intelligent Cloud,and More Personal Computing.Our reportable segme

164、nts are described below.Productivity 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 platforms.This segment primarily comprises:Office Com

165、mercial(Office 365 subscriptions,the Office 365 portion of Microsoft 365 Commercial subscriptions,and Office licensed on-premises),comprising Office,Exchange,SharePoint,Microsoft Teams,Office 365 Security and Compliance,Microsoft Viva,and Microsoft 365 Copilot.Office Consumer,including Microsoft 365

166、 Consumer subscriptions,Office licensed on-premises,and other Office services.25PART IItem 1LinkedIn,including Talent Solutions,Marketing Solutions,Premium Subscriptions,and Sales Solutions.Dynamics business solutions,including Dynamics 365,comprising a set of intelligent,cloud-based applications ac

167、ross ERP,CRM(including Customer Insights),Power Apps,and Power Automate;and on-premises ERP and CRM applications.Intelligent CloudOur Intelligent Cloud segment consists of our public,private,and hybrid server products and cloud services that can power modern business and developers.This segment prim

168、arily comprises:Server products 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 and partner services,including Enterprise Support Services,Industry Solutions,

169、Nuance professional services,Microsoft Partner Network,and Learning Experience.More Personal ComputingOur More Personal Computing segment consists of products and services that put customers at the center of the experience with our technology.This segment primarily comprises:Windows,including Window

170、s original equipment manufacturer(“OEM”)licensing and other non-volume licensing of the Windows operating system;Windows Commercial,comprising volume licensing of the Windows operating system,Windows cloud services,and other Windows commercial offerings;patent licensing;and Windows Internet of Thing

171、s.Devices,including Surface,HoloLens,and PC accessories.Gaming,including Xbox hardware and Xbox content and 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

172、 cloud services.Search and news advertising,comprising Bing(including Bing Chat),Microsoft News,Microsoft Edge,and third-party affiliates.Revenue and costs are generally directly attributed to our segments.However,due to the integrated structure of our business,certain revenue recognized and costs i

173、ncurred by one segment may benefit other segments.Revenue from certain contracts is allocated among the segments based on the relative value of the underlying products and services,which can include allocation based on actual prices charged,prices when sold separately,or estimated costs plus a profi

174、t margin.Cost of revenue is allocated in certain cases based on a relative revenue methodology.Operating expenses that are allocated primarily include those relating to marketing of products and services from which multiple segments benefit and are generally allocated based on relative gross margin.

175、In addition,certain costs are incurred at a corporate level and allocated to our segments.These allocated costs generally include legal,including settlements and fines,information technology,human resources,finance,excise taxes,field selling,shared facilities services,customer service and support,an

176、d severance incurred as part of a corporate program.Each allocation is measured differently based on the specific facts and circumstances of the costs being allocated and is generally based on relative gross margin or relative headcount.26PART IItem 1Segment revenue and operating income were as foll

177、ows during the periods presented:(In millions)Three Months Ended September 30,2023 2022 Revenue Productivity and Business Processes$18,592$16,465 Intelligent Cloud 24,259 20,325 More Personal Computing 13,666 13,332 Total$56,517$50,122 Operating Income Productivity and Business Processes$9,970$8,323

178、 Intelligent Cloud 11,751 8,978 More Personal Computing 5,174 4,217 Total$26,895$21,518 No sales to an individual customer or country other than the United States accounted for more than 10%of revenue for the three months ended September 30,2023 or 2022.Revenue,classified by the major geographic are

179、as in which our customers were located,was as follows:(In millions)Three Months Ended September 30,2023 2022 United States$28,812$25,867Other countries 27,705 24,255 Total$56,517$50,122 (a)Includes billings to OEMs and certain multinational organizations because of the nature of these businesses and

180、 the impracticability of determining the geographic source of the revenue.Revenue,classified by significant product and service offerings,was as follows:(In millions)Three Months Ended September 30,2023 2022 Server products and cloud services$22,308$18,388 Office products and cloud services 13,140 1

181、1,577Windows 5,567 5,313 Gaming 3,919 3,610LinkedIn 3,913 3,628Search and news advertising3,053 2,913Enterprise and partner services1,944 1,929Dynamics1,540 1,260Devices 1,125 1,448Other 8 56 Total$56,517$50,122 We have recast certain prior period amounts to conform to the way we internally manage a

182、nd monitor our business.Our Microsoft Cloud revenue,which includes Azure and other cloud services,Office 365 Commercial,the commercial portion of LinkedIn,Dynamics 365,and other commercial cloud properties,was$31.8 billion and$25.7 billion for the three months ended September 30,2023 and 2022,respec

183、tively.These amounts are primarily included in Server products and cloud services,Office products and cloud services,LinkedIn,and Dynamics in the table above.27(a)PART IItem 1Assets are not allocated to segments for internal reporting presentations.A portion of amortization and depreciation is inclu

184、ded with various other costs in an overhead allocation to each segment.It is impracticable for us to separately identify the amount of amortization and depreciation by segment that is included in the measure of segment profit or loss.NOTE 17 SUBSEQUENT EVENTOn October 13,2023,we completed our acquis

185、ition of Activision Blizzard,Inc.(“Activision Blizzard”)for a cash payment of$61.8 billion,net of cash acquired.Activision Blizzard is a leader in game development and an interactive entertainment content publisher.The acquisition will accelerate the growth in our gaming business across mobile,PC,co

186、nsole,and cloud gaming.Due to the limited amount of time since closing the transaction,the preliminary allocation of the purchase price is not yet complete.The initial purchase price allocation will be provided within our Form 10-Q for the second quarter of fiscal year 2024,and we expect most of the

187、 purchase price will be allocated to goodwill and other identifiable intangible assets.Activision Blizzard will be included in our consolidated financial statements beginning on the date of acquisition and reported as part of our More Personal Computing segment.28PART IItem 1REPORT OF INDEPENDENT RE

188、GISTERED PUBLIC ACCOUNTING FIRMTo the Stockholders and the Board of Directors of Microsoft CorporationResults of Review of Interim Financial InformationWe have reviewed the accompanying consolidated balance sheet of Microsoft Corporation and subsidiaries(the Company)as of September 30,2023,the relat

189、ed consolidated statements of income,comprehensive income,cash flows,and stockholders equity for the three-month periods ended September 30,2023 and 2022,and the related notes(collectively referred to as the“interim financial information”).Based on our reviews,we are not aware of any material modifi

190、cations that should be made to the accompanying interimfinancial information for it to be in conformity with accounting principles generally accepted in the United States of America.We have previously audited,in accordance with the standards of the Public Company Accounting Oversight Board(United St

191、ates)(PCAOB),the consolidated balance sheet of the Company as of June 30,2023,and the related consolidated statements of income,comprehensive income,cash flows,and stockholders equity for the year then ended(not presented herein);and in our report dated July 27,2023,we expressed an unqualified opini

192、on on those consolidated financial statements.In our opinion,the information set forth in the accompanying consolidated balance sheet as of June 30,2023,is fairly stated,in all material respects,in relation to the consolidated balance sheet from which it has been derived.Basis for Review ResultsThis

193、 interim financial information is the responsibility of the Companys management.We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.federal securities laws and the applicable rules and regulations of the

194、Securities and Exchange Commission and the PCAOB.We conducted our reviews in accordance with standards of the PCAOB.A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters.It is

195、substantially less in scope than an audit conducted in accordance with the standards of the PCAOB,the objective of which is the expression of anopinion regarding the financial statements taken as a whole.Accordingly,we do not express such an opinion./S/DELOITTE&TOUCHE LLPSeattle,WashingtonOctober 24

196、,202329PART IItem 2ITEM 2.MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSNote About Forward-Looking StatementsThis report includes estimates,projections,statements relating to our business plans,objectives,and expected operating results that are“forward-looking s

197、tatements”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-looking statements may appear throughout this report,including the following sections:“Managements Discussion

198、and Analysis of Financial Condition and Results of Operations”and“Risk Factors”(Part II,Item 1A of this Form 10-Q).These forward-looking statements generally are identified by the words“believe,”“project,”“expect,”“anticipate,”“estimate,”“intend,”“strategy,”“future,”“opportunity,”“plan,”“may,”“shoul

199、d,”“will,”“would,”“will be,”“will continue,”“will likely result,”and similar expressions.Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties that may cause actual results to differ materially.We describe risks and uncertainties tha

200、t could cause actual results and events to differ materially in“Managements Discussion and Analysis of Financial Condition and Results of Operations,”“Quantitative and Qualitative Disclosures about Market Risk”(Part I,Item 3 of this Form 10-Q),and“Risk Factors”.We undertake no obligation to update o

201、r revise publicly any forward-looking statements,whether because of new information,future events,or otherwise.The following Managements Discussion and Analysis of Financial Condition and Results of Operations(“MD&A”)is intended to help the reader understand the results of operations and financial c

202、ondition of Microsoft Corporation.MD&A is provided as a supplement to,and should be read in conjunction with,our Annual Report on Form 10-K for the year ended June 30,2023,and our financial statements and the accompanying Notes to Financial Statements(Part I,Item 1 of this Form 10-Q).OVERVIEWMicroso

203、ft is a technology company whose mission is to empower every person and every organization on the planet to achieve more.We strive to create local opportunity,growth,and impact in every country around the world.We are creating the platforms and tools,powered by artificial intelligence(“AI”),that del

204、iver better,faster,and more effective solutions to support small and large business competitiveness,improve educational and health outcomes,grow public-sector efficiency,and empower human ingenuity.We generate revenue by offering a wide range of cloud-based solutions,content,and other services to pe

205、ople and businesses;licensing and supporting an array of software products;delivering relevant online advertising to a global audience;and designing and selling devices.Our most significant expenses are related to compensating employees;supporting and investing in our cloud-based services,including

206、datacenter operations;designing,manufacturing,marketing,and selling our other products and services;and income taxes.Highlights from the first quarter of fiscal year 2024 compared with the first quarter of fiscal year 2023 included:Microsoft Cloud revenue increased 24%to$31.8 billion.Office Commerci

207、al products and cloud services revenue increased 15%driven by Office 365 Commercial growth of 18%.Office Consumer products and cloud services revenue increased 3%and Microsoft 365 Consumer subscribers grew to 76.7 million.LinkedIn revenue increased 8%.Dynamics products and cloud services revenue inc

208、reased 22%driven by Dynamics 365 growth of 28%.Server products and cloud services revenue increased 21%driven by Azure and other cloud services growth of 29%.Windows revenue increased 5%with Windows original equipment manufacturer licensing(“Windows OEM”)revenue growth of 4%and Windows Commercial pr

209、oducts and cloud services revenue growth of 8%.Devices revenue decreased 22%.Xbox content and services revenue increased 13%.Search and news advertising revenue excluding traffic acquisition costs increased 10%.30PART IItem 2Industry TrendsOur industry is dynamic and highly competitive,with frequent

210、 changes in both technologies and business models.Each industry shift is an opportunity to conceive new products,new technologies,or new ideas that can further transform the industry and our business.At Microsoft,we push the boundaries of what is possible through a broad range of research and develo

211、pment activities that seek to identify and address the changing demands of customers and users,industry trends,and competitive forces.Economic Conditions,Challenges,and RisksThe markets for software,devices,and cloud-based services are dynamic and highly competitive.Our competitors are developing ne

212、w software and devices,while also deploying competing cloud-based services for consumers and businesses.The devices and form factors customers prefer evolve rapidly,influencing how users access services in the cloud and,in some cases,the users choice of which suite of cloud-based services to use.Agg

213、regate demand for our software,services,and devices is also correlated to global macroeconomic and geopolitical factors,which remain dynamic.We must continue to evolve and adapt over an extended time in pace with this changing environment.The investments we are making in cloud and AI infrastructure

214、and devices will continue to increase our operating costs and may decrease our operating margins.We continue to identify and evaluate opportunities to expand our datacenter locations and increase our server capacity to meet the evolving needs of our customers,particularly given the growing demand fo

215、r AI services.Our datacenters depend on the availability of permitted and buildable land,predictable energy,networking supplies,and servers,including graphics processing units(“GPUs”)and other components.Our devices are primarily manufactured by third-party contract manufacturers.For the majority of

216、 our products,we have the ability to use other manufacturers if a 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.Extended disruptions at these suppliers could impact our ab

217、ility to manufacture devices on time to meet consumer demand.Our success is highly dependent on our ability to attract and retain qualified employees.We hire a mix of university and industry talentworldwide.We compete for talented individuals globally by offering an exceptional working environment,b

218、road customer reach,scale in resources,the ability to grow ones career across many different products and businesses,and competitive compensation and benefits.Our international operations provide a significant portion of our total revenue and expenses.Many of these revenue and expenses are denominat

219、ed in currencies other than the U.S.dollar.As a result,changes in foreign exchange rates may significantly affect revenue and expenses.Fluctuations in the U.S.dollar relative to certain foreign currencies did not have a material impact on reported revenue and expenses from our international operatio

220、ns in the first quarter of fiscal year 2024.Refer to Risk Factors(Part II,Item 1A of this Form 10-Q)for a discussion of these factors and other risks.SeasonalityOur revenue fluctuates quarterly and is generally higher in the second and fourth quarters of our fiscal year.Second quarter revenue is dri

221、venby corporate year-end spending trends in our major markets and holiday season spending by consumers,and fourth quarter revenue is driven by the volume of multi-year on-premises contracts executed during the period.Reportable SegmentsWe report our financial performance based on the following segme

222、nts:Productivity and Business Processes,Intelligent Cloud,and More Personal Computing.The segment amounts included in MD&A are presented on a basis consistent with our internal management reporting.Additional information on our reportable segments is contained in Note 16 Segment Information and Geog

223、raphic Data of the Notes to Financial Statements(Part I,Item 1 of this Form 10-Q).31PART IItem 2MetricsWe use metrics in assessing the performance of our business and to make informed decisions regarding the allocation of resources.We disclose metrics to enable investors to evaluate progress against

224、 our ambitions,provide transparency into performance trends,and reflect the continued evolution of our products and services.Our commercial and other business metrics are fundamentally connected based on how customers use our products and services.The metrics are disclosed in the MD&A or the Notes t

225、o Financial Statements(Part I,Item 1 of this Form 10-Q).Financial metrics are calculated based on financial results prepared in accordance with accounting principles generally accepted in the United States of America(“GAAP”),and growth comparisons relate to the corresponding period of last fiscal ye

226、ar.In the first quarter of fiscal year 2024,we made updates to the presentation and method of calculation for certain metrics,revising our Microsoft Cloud revenue metric to include revenue growth and expanding our Microsoft 365 Consumer subscribers metric to include Microsoft 365 Basic subscribers,a

227、ligning with how we manage our business.CommercialOur commercial business primarily consists of Server products and cloud services,Office Commercial,Windows Commercial,the commercial portion of LinkedIn,Enterprise and partner services,and Dynamics.Our commercial metrics allow management and investor

228、s to assess theoverall health of our commercial business and include leading indicators of future performance.Commercial remaining performance obligation Commercial portion of revenue allocated to remaining performance obligations,which includes unearned revenue and amounts that will be invoiced and

229、 recognized as revenue in future periods Microsoft Cloud revenue and revenue growth Revenue from Azure and other cloud services,Office 365 Commercial,the commercial portion of LinkedIn,Dynamics 365,and other commercial cloud properties Microsoft Cloud gross margin percentage Gross margin percentage

230、for our Microsoft Cloud businessProductivity and Business Processes and Intelligent CloudMetrics related to our Productivity and Business Processes and Intelligent Cloud segments assess the health of our core businesses within these segments.The metrics reflect our cloud and on-premises product stra

231、tegies and trends.Office Commercial products and cloud services revenue growth Revenue from Office Commercial products and cloud services(Office 365 subscriptions,the Office 365 portion of Microsoft 365 Commercial subscriptions,and Office licensed on-premises),comprising Office,Exchange,SharePoint,M

232、icrosoft Teams,Office 365 Security and Compliance,Microsoft Viva,and Microsoft 365 Copilot Office Consumer products and cloud services revenue growth Revenue from Office Consumer products and cloud services,including Microsoft 365 Consumer subscriptions,Office licensed on-premises,and other Office s

233、ervices Office 365 Commercial seat growth The number of Office 365 Commercial seats at end of period where seats are paid users covered by an Office 365 Commercial subscription Microsoft 365 Consumer subscribers The number of Microsoft 365 Consumer subscribers at end of period Dynamics products and

234、cloud services revenue growth Revenue from Dynamics products and cloud services,including Dynamics 365,comprising a set of intelligent,cloud-based applications across ERP,CRM(including Customer Insights),Power Apps,and Power Automate;and on-premises ERP and CRM applications LinkedIn revenue growth R

235、evenue from LinkedIn,including Talent Solutions,Marketing Solutions,Premium Subscriptions,and Sales Solutions Server products and cloud services revenue growth Revenue from Server products and cloud services,including Azure and other cloud services;SQL Server,Windows Server,Visual Studio,System Cent

236、er,and related Client Access Licenses(“CALs”);and Nuance and GitHub32PART IItem 2More Personal ComputingMetrics related to our More Personal Computing segment assess the performance of key lines of business within this segment.These metrics provide strategic product insights which allow us to assess

237、 the performance across our commercial and consumer businesses.As we have diversity of target audiences and sales motions within the Windows business,we monitor metrics that are reflective of those varying motions.Windows OEM revenue growth Revenue from sales of Windows Pro and non-Pro licenses sold

238、 through the OEM channel Windows Commercial products and cloud services revenue growth Revenue from Windows Commercial products and cloud services,comprising volume licensing of the Windows operating system,Windows cloud services,and other Windows commercial offerings Devices revenue growth Revenue

239、from Devices,including Surface,HoloLens,and PC accessories Xbox content and services revenue growth Revenue from Xbox content and 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 di

240、sc royalties,and other cloud servicesSearch and news advertising revenue(ex TAC)growth Revenue from search and news advertising excluding traffic acquisition costs(“TAC”)paid to Bing Ads network publishers and news partnersSUMMARY RESULTS OF OPERATIONS(In millions,except percentages and per share am

241、ounts)Three Months EndedSeptember 30,PercentageChange 2023 2022 Revenue$56,517$50,122 13%Gross margin 40,215 34,670 16%Operating income 26,895 21,518 25%Net income 22,291 17,556 27%Diluted earnings per share2.99 2.35 27%Three Months Ended September 30,2023 Compared with Three Months Ended September

242、30,2022Revenue increased$6.4 billion or 13%driven by growth in Intelligent Cloud and Productivity and Business Processes.Intelligent Cloud revenue increased driven by Azure and other cloud services.Productivity and Business Processes revenue increased driven by Office 365 Commercial.More Personal Co

243、mputing revenue increased driven by growth in Gaming and Windows,offset in part by a decline in Devices.Cost of revenue increased$850 million or 6%driven by growth in Microsoft Cloud,offset in part by a decline in Devices.Gross margin increased$5.5 billion or 16%driven by growth across each of our s

244、egments.Gross margin percentage increased.Excluding the impact of the prior year change in accounting estimate for the useful lives of our server and network equipment,gross margin percentage increased 3 points driven by improvements across each of our segments.Microsoft Cloud gross margin percentag

245、e increased slightly to 73%.Excluding the impact of the change in accounting estimate,Microsoft Cloud gross margin percentage increased 2 points driven by improvement in Azure and other cloud services and Office 365 Commercial.Operating expenses increased$168 million or 1%driven by marketing,LinkedI

246、n,and cloud engineering,offset in part by a decline in Devices.Operating income increased$5.4 billion or 25%driven by growth across each of our segments.33PART IItem 2SEGMENT RESULTS OF OPERATIONS(In millions,except percentages)Three Months EndedSeptember 30,PercentageChange 2023 2022 Revenue Produc

247、tivity and Business Processes$18,592$16,465 13%Intelligent Cloud 24,259 20,325 19%More Personal Computing 13,666 13,332 3%Total$56,517$50,122 13%Operating Income Productivity and Business Processes$9,970$8,323 20%Intelligent Cloud 11,751 8,978 31%More Personal Computing 5,174 4,217 23%Total$26,895$2

248、1,518 25%Reportable SegmentsThree Months Ended September 30,2023 Compared with Three Months Ended September 30,2022Productivity and Business ProcessesRevenue increased$2.1 billion or 13%.Office Commercial products and cloud services revenue increased$1.5 billion or 15%.Office 365 Commercial revenue

249、grew 18%with seat growth of 10%,driven by small and medium business and frontline worker offerings,as well as growth in revenue per user.Office Commercial products revenue declined 17%driven by continued customer shift to cloud offerings.Office Consumer products and cloud services revenue increased$

250、44 million or 3%.Microsoft 365 Consumer subscribers grew 18%to 76.7 million.LinkedIn revenue increased$285 million or 8%primarily driven by Talent Solutions.Dynamics products and cloud services revenue increased$280 million or 22%driven by Dynamics 365 growth of 28%.Operating income increased$1.6 bi

251、llion or 20%.Gross margin increased$1.8 billion or 13%driven by growth in Office 365 Commercial.Gross margin percentage increased slightly.Excluding the impact of the change in accounting estimate,gross margin percentage increased 1 point driven by improvement in Office 365 Commercial.Operating expe

252、nses increased$119 million or 2%primarily driven by LinkedIn.Intelligent CloudRevenue increased$3.9 billion or 19%.Server products and cloud services revenue increased$3.9 billion or 21%driven by Azure and other cloud services.Azure and other cloud services revenue grew 29%driven by growth in our co

253、nsumption-based services.Server products revenue increased 2%driven by demand for Windows Server and SQL Server running in multi-cloud environments,offset in part by continued customer shift to cloud offerings.Enterprise and partner services revenue increased$15 million or 1%driven by growth in Ente

254、rprise Support Services,offset in part by a decline in Industry Solutions.34PART IItem 2Operating income increased$2.8 billion or 31%.Gross margin increased$2.9 billion or 20%driven by growth in Azure and other cloud services.Gross margin percentage increased slightly.Excluding the impact of the cha

255、nge in accounting estimate,gross margin percentage increased 2 points driven by improvement in Azure and other cloud services.Operating expenses increased$86 million or 2%driven by investments in Azure and other cloud services.More Personal ComputingRevenue increased$334 million or 3%.Windows revenu

256、e increased$254 million or 5%driven by growth in Windows Commercial and Windows OEM.Windows Commercial products and cloud services revenue increased 8%driven by demand for Microsoft 365.Windows OEM revenue increased 4%.Gaming revenue increased$309 million or 9%driven by growth in Xbox content and se

257、rvices.Xbox content and services revenue increased 13%driven by growth in first-party content and Xbox Game Pass.Xbox hardware revenue decreased 7%driven by lower volume of consoles sold,offset in part by higher price of consoles sold.Search and news advertising revenue increased$140 million or 5%.S

258、earch and news advertising revenue excluding traffic acquisition costs increased 10%driven by higher search volume.Devices revenue decreased$323 million or 22%.Operating income increased$957 million or 23%.Gross margin increased$920 million or 13%driven by growth in Gaming and Windows.Gross margin p

259、ercentage increased primarily driven by sales mix shift.Operating expenses decreased$37 million or 1%driven by a decline in Devices,offset in part by investments in Gaming.OPERATING EXPENSESResearch and Development(In millions,except percentages)Three Months EndedSeptember 30,PercentageChange 2023 2

260、022 Research and development$6,659$6,628 0%As a percent of revenue 12%13%(1)ppt Research and development expenses include payroll,employee benefits,stock-based compensation expense,and other headcount-related expenses associated with product development.Research and development expenses also include

261、 third-party development and programming costs and the amortization of purchased software code and services content.Three Months Ended September 30,2023 Compared with Three Months Ended September 30,2022Research and development expenses increased slightly driven by cloud engineering,LinkedIn,and Win

262、dows,offset in part by a decline in Devices.Sales and Marketing(In millions,except percentages)Three Months EndedSeptember 30,PercentageChange 2023 2022 Sales and marketing$5,187$5,126 1%As a percent of revenue 9%10%(1)ppt 35PART IItem 2Sales and marketing expenses include payroll,employee benefits,

263、stock-based compensation expense,and other headcount-related expenses associated with sales and marketing personnel,and the costs of advertising,promotions,trade shows,seminars,and other programs.Three Months Ended September 30,2023 Compared with Three Months Ended September 30,2022Sales and marketi

264、ng expenses increased$61 million or 1%driven by investments in Gaming.General and Administrative(In millions,except percentages)Three Months EndedSeptember 30,PercentageChange 2023 2022 General and administrative$1,474$1,398 5%As a percent of revenue 3%3%0ppt General and administrative expenses incl

265、ude payroll,employee benefits,stock-based compensation expense,employee severance expense incurred as part of a corporate program,and other headcount-related expenses associated with finance,legal,facilities,certain human resources and other administrative personnel,certain taxes,and legal and other

266、 administrative fees.Three Months Ended September 30,2023 Compared with Three Months Ended September 30,2022General and administrative expenses increased$76 million or 5%driven by legal expenses.OTHER INCOME(EXPENSE),NETThe components of other income(expense),net were as follows:(In millions)Three M

267、onths Ended September 30,2023 2022 Interest and dividends income$1,166$641 Interest expense (525)(500)Net recognized gains(losses)on investments (107)13Net gains on derivatives 93 9Net losses on foreign currency remeasurements (101)(78)Other,net (137)(31)Total$389$54 We use derivative instruments to

268、 manage risks related to foreign currencies,equity prices,interest rates,and credit;enhance investment returns;and facilitate portfolio diversification.Gains and losses from changes in fair values of derivatives that are not designated as hedging instruments are primarily recognized in other income(

269、expense),net.Three Months Ended September 30,2023 Compared with Three Months Ended September 30,2022Interest and dividends income increased due to higher yields and higher portfolio balances.Interest expense increased due to the issuance of commercial paper.Net recognized losses on investments incre

270、ased due to losses on equity securities in the current period as opposed to gains in the prior period.Net gains on derivatives increased due to higher gains on equity derivatives.36PART IItem 2INCOME TAXESEffective Tax RateOur effective tax rate was 18%and 19%for the three months ended September 30,

271、2023 and 2022,respectively.The decrease in our effective tax rate for the current quarter compared to the prior year was primarily due to tax benefits from tax law changes in the first quarter of fiscal year 2024,including the impact from the issuance of Notice 2023-55 by the Internal Revenue Servic

272、e(“IRS”)and U.S.Treasury Department,which delayed the effective date of final foreign tax credit regulations to fiscal year 2024 for Microsoft.Our effective tax rate was lower than the U.S.federal statutory rate for the three months ended September 30,2023,primarily due to earnings taxed at lower ra

273、tes in foreign jurisdictions resulting from producing and distributing our products and services through our foreign regional operations center in Ireland.Uncertain Tax PositionsWe remain under audit by the IRS for tax years 2014 to 2017.With respect to the audit for tax years 2004 to 2013,on Septem

274、ber 26,2023,we received Notices of Proposed Adjustment(“NOPAs”)from the IRS.The primary issues in the NOPAs relate to intercompany transfer pricing.In the NOPAs,the IRS is seeking an additional tax payment of$28.9 billion plus penalties and interest.As of September 30,2023,we believe our allowances

275、for income tax contingencies are adequate.We disagree with the proposed adjustments and will vigorously contest the NOPAs through the IRSs administrative appeals office and,if necessary,judicial proceedings.We do not expect a final resolution of these issues in the next 12 months.Based on the inform

276、ation currently available,we do not anticipate a significant increase or decrease to our income tax contingencies for these issues within the next 12 months.We are subject to income tax in many jurisdictions outside the U.S.Our operations in certain jurisdictions remain subject to examination for ta

277、x years 1996 to 2023,some of which are currently under audit by local tax authorities.The resolution of each of these audits is not expected to be material to our consolidated financial statements.LIQUIDITY AND CAPITAL RESOURCESWe expect existing cash,cash equivalents,short-term investments,cash flo

278、ws from operations,and access to capital markets to continue to be sufficient to fund our operating activities and cash commitments for investing and financing activities,such as dividends,share repurchases,debt maturities,material capital expenditures,and the transition tax related to the Tax Cuts

279、and Jobs Act(“TCJA”),for at least the next 12 months and thereafter for the foreseeable future.Cash,Cash Equivalents,and InvestmentsCash,cash equivalents,and short-term investments totaled$144.0 billion and$111.3 billion as of September 30,2023 and June 30,2023,respectively.Equity investments were$1

280、1.4 billion and$9.9 billion as of September 30,2023 and June 30,2023,respectively.Our short-term investments are primarily intended to facilitate liquidity and capital preservation.They consist predominantly of highly liquid investment-grade fixed-income securities,diversified among industries and i

281、ndividual issuers.The investments are predominantly U.S.dollar-denominated securities,but also include foreign currency-denominated securities to diversify risk.Our fixed-income investments are exposed to interest rate risk and credit risk.The credit risk and average maturity of our fixed-income por

282、tfolio are managed to achieve economic returns that correlate to certain fixed-income indices.The settlement risk related to these investments is insignificant given that the short-term investments held are primarily highly liquid investment-grade fixed-income securities.37PART IItem 2ValuationIn ge

283、neral,and where applicable,we use quoted prices in active markets for identical assets or liabilities to determine the fair value of ourfinancial instruments.This pricing methodology applies to our Level 1 investments,such as U.S.government securities,common and preferred stock,and mutual funds.If q

284、uoted prices in active markets for identical assets or liabilities are not available to determine fair value,then we use quoted prices for similar assets and liabilities or inputs other than the quoted prices that are observable either directly or indirectly.This pricing methodology applies to our L

285、evel 2 investments,such as commercial paper,certificates of deposit,U.S.agency securities,foreign government bonds,mortgage-and asset-backed securities,corporate notes and bonds,and municipal securities.Level 3 investments are valued using internally-developed models with unobservable inputs.Assets

286、and liabilities measured at fair value on a recurring basis using unobservable inputs are an immaterial portion of our portfolio.A majority of our investments are priced by pricing vendors and are generally Level 1 or Level 2 investments as these vendors either provide a quoted market price in an ac

287、tive market or use observable inputs for their pricing without applying significant adjustments.Broker pricing is used mainly when a quoted price is not available,the investment is not priced by our pricing vendors,or when a broker price is more reflective of fair values in the market in which the i

288、nvestment trades.Our broker-priced investments are generally classified as Level 2 investments because the broker prices these investments based on similar assets without applying significant adjustments.In addition,all our broker-priced investments have a sufficient level of trading volume to demon

289、strate that the fair values used are appropriate for these investments.Our fair value processes include controls that are designed to ensure appropriate fair values are recorded.These controls include model validation,review of key model inputs,analysis of period-over-period fluctuations,and indepen

290、dent recalculation of prices where appropriate.Cash FlowsCash from operations increased$7.4 billion to$30.6 billion for the three months ended September 30,2023,mainly due to an increase in cash received from customers and a decrease in cash paid to suppliers.Cash from financing increased$25.6 billi

291、on to$14.8 billion for the three months ended September 30,2023,mainly due to a$25.3 billion increase in proceeds from issuance of debt,net of repayments.Cash from investing increased$3.6 billion to$503 million for the three months ended September 30,2023,mainly due to an$8.2 billion increase in cas

292、h from net investment purchases,sales,and maturities,offset in part by a$3.6 billion increase in cash used for additions to property and equipment.Debt ProceedsWe issue debt to take advantage of favorable pricing and liquidity in the debt markets,reflecting our credit rating.The proceeds of these is

293、suances were or will be used for general corporate purposes,which may include,among other things,funding for working capital,capital expenditures,repurchases of capital stock,acquisitions,and repayment of existing debt.Refer to Note 9 Debt of the Notes to Financial Statements(Part I,Item 1 of this F

294、orm 10-Q)for further discussion.Unearned RevenueUnearned revenue comprises mainly unearned revenue related to volume licensing programs,which may include Software Assurance(“SA”)and cloud services.Unearned revenue is generally invoiced annually at the beginning of each contract period for multi-year

295、 agreements and recognized ratably over the coverage period.Unearned revenue also includes payments for other offerings for which we have been paid in advance and earn the revenue when we transfer control of the product or service.38PART IItem 2The following table outlines the expected future recogn

296、ition of unearned revenue as of September 30,2023:(In millions)Three Months Ending December 31,2023$21,006 March 31,2024 14,860 June 30,20248,551 September 30,20242,012Thereafter 2,759 Total$49,188 If our customers choose to license cloud-based versions of our products and services rather than licen

297、sing transaction-based products and services,the associated revenue will shift from being recognized at the time of the transaction to being recognized over the subscription period or upon consumption,as applicable.Refer to Note 11 Unearned Revenue of the Notes to Financial Statements(Part I,Item 1

298、of this Form 10-Q)for further discussion.Material Cash Requirements and Other ObligationsIncome TaxesAs a result of the TCJA,we are required to pay a one-time transition tax on deferred foreign income not previously subject to U.S.income tax.Under the TCJA,the transition tax is payable in interest-f

299、ree installments over eight years,with 8%due in each of the first five years,15%in year six,20%in year seven,and 25%in year eight.As of September 30,2023,we had a remaining transition tax liability of$7.7 billion,of which$3.7 billion is short-term and payable in the first quarter of fiscal year 2025

300、.Share RepurchasesFor the three months ended September 30,2023 and 2022,we repurchased 11 million shares and 17 million shares of our common stock for$3.6 billion and$4.6 billion,respectively,through our share repurchase program.All repurchases were made using cash resources.As of September 30,2023,

301、$18.7 billion remained of our$60 billion share repurchase program.Refer to Note 14 Stockholders Equity of the Notes to Financial Statements(Part I,Item 1 of this Form 10-Q)for further discussion.DividendsFor the three months ended September 30,2023 and 2022,our Board of Directors declared quarterly

302、dividends of$0.75 per share and$0.68 per share,totaling$5.6 billion and$5.1 billion,respectively.We intend to continue returning capital to shareholders in the form of dividends,subject to declaration by our Board of Directors.Refer to Note 14 Stockholders Equity of the Notes to Financial Statements

303、(Part I,Item 1 of this Form 10-Q)for further discussion.Other Planned Uses of CapitalOn October 13,2023,we completed our acquisition of Activision Blizzard,Inc.for a cash payment of$61.8 billion,net of cash acquired.We will continue to invest in sales,marketing,product support infrastructure,and exi

304、sting and advanced areas of technology,as well as acquisitions that align with our business strategy.Additions to property and equipment will continue,including new facilities,datacenters,and computer systems for research and development,sales and marketing,support,and administrative staff.We expect

305、 capital expenditures to increase in coming years to support growth in our cloud offerings and our investments in AI infrastructure.We have operating and finance leases for datacenters,corporate offices,research and development facilities,Microsoft Experience Centers,and certain equipment.We have no

306、t engaged in any related party transactions or arrangements with unconsolidated entities or other persons that are reasonably likely to materially affect liquidity or the availability of capital resources.39PART IItem 2CRITICAL ACCOUNTING ESTIMATESOur consolidated financial statements and accompanyi

307、ng notes are prepared in accordance with GAAP.Preparing consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets,liabilities,revenue,and expenses.Critical accounting estimates are those estimates that involve a significant lev

308、el of estimation uncertainty and could have a material impact on our financial condition or results of operations.We have critical accounting estimates in the areas of revenue recognition,impairment of investment securities,goodwill,research and development costs,legal and other contingencies,income

309、 taxes,and inventories.Revenue RecognitionOur contracts with customers often include promises to transfer multiple products and services to a customer.Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together may

310、 require significant judgment.When a cloud-based service includes both on-premises software licenses and cloud services,judgment is required to determine whether the software license is considered distinct and accounted for separately,or not distinct and accounted for together with the cloud service

311、 and recognized over time.Certain cloud services,primarily Office 365,depend on a significant level of integration,interdependency,and interrelation between the desktop applications and cloud services,and are accounted for together as one performance obligation.Revenue from Office 365 is recognized

312、ratably over the period in which the cloud services are provided.Judgment is required to determine the standalone selling price(“SSP)for each distinct performance obligation.We use a single amount to estimate SSP for items that are not sold separately,including on-premises licenses sold with SA or s

313、oftware updates provided at no additional charge.We use a range of amounts to estimate SSP when we sell each of the products and services separately and need to determine whether there is a discount to be allocated based on the relative SSP of the various products and services.In instances where SSP

314、 is not directly observable,such as when we do not sell the product or service separately,we determine the SSP using information that may include market conditions and other observable inputs.We typically have more than one SSP for individual products and services due to the stratification of those

315、products and services by customers and circumstances.In these instances,we may use information such as the size of the customer and geographic region in determining the SSP.Due to the various benefits from and the nature of our SA program,judgment is required to assess the pattern of delivery,includ

316、ing the exercise pattern of certain benefits across our portfolio of customers.Our products are generally sold with a right of return,we may provide other credits or incentives,and in certain instances we estimate customer usage of our products and services,which are accounted for as variable consid

317、eration when determining the amount of revenue to recognize.Returns and credits are estimated at contract inception and updated at the end of each reporting period if additional information becomes available.Changes to our estimated variable consideration were not material for the periods presented.

318、Impairment of Investment SecuritiesWe review debt investments quarterly for credit losses and impairment.If the cost of an investment exceeds its fair value,we evaluate,among other factors,general market conditions,credit quality of debt instrument issuers,and the extent to which the fair value is l

319、ess than cost.This determination requires significant judgment.In making this judgment,we employ a systematic methodology that considers available quantitative and qualitative evidence in evaluating potential impairment of our investments.In addition,we consider specific adverse conditions related t

320、o the financial health of,and business outlook for,the investee.If we have plans to sell the security or it is more likely than not that we will be required to sell the security before recovery,then a decline in fair value below cost is recorded as an impairment charge in other income(expense),net a

321、nd a new cost basis in the investment is established.If market,industry,and/or investee conditions deteriorate,we may incur future impairments.Equity investments without readily determinable fair values are written down to fair value if a qualitative assessment indicates that the investment is impai

322、red and the fair value of the investment is less than carrying value.We perform a qualitative assessment on a periodic basis.We are required to estimate the fair value of the investment to determine the amount of the impairment loss.Once an investment is determined to be impaired,an impairment charg

323、e is recorded in other income(expense),net.40PART IItem 2GoodwillWe allocate goodwill to reporting units based on the reporting unit expected to benefit from the business combination.We evaluate our reporting units on an annual basis and,if necessary,reassign goodwill using a relative fair value all

324、ocation approach.Goodwill is tested for impairment at the reporting unit level(operating segment or one level below an operating segment)on an annual basis(May 1)and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting u

325、nit below its carrying value.These events or circumstances could include a significant change in the business climate,legal factors,operating performance indicators,competition,or sale or disposition of a significant portion of a reporting unit.Application of the goodwill impairment test requires ju

326、dgment,including the identification of reporting units,assignment of assets and liabilities to reporting units,assignment of goodwill to reporting units,and determination of the fair value of each reporting unit.The fair value of each reporting unit is estimated primarily through the use of a discou

327、nted cash flow methodology.This analysis requires significant judgments,including estimation of future cash flows,which is dependent on internal forecasts,estimation of the long-term rate of growth for our business,estimation of the useful life over which cash flows will occur,and determination of o

328、ur weighted average cost of capital.The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results,market conditions,and other factors.Changes in these estimates and assumptions could materially affect the determination of fair value and goodwi

329、ll impairment for each reporting unit.Research and Development CostsCosts incurred internally in researching and developing a computer software product are charged to expense until technological feasibility has been established for the product.Once technological feasibility is established,software c

330、osts are capitalized until the product is available for general release to customers.Judgment is required in determining when technological feasibility of a product is established.We have determined that technological feasibility for our software products is reached after all high-risk development i

331、ssues have been resolved through coding and testing.Generally,this occurs shortly before the products are released to production.The amortization of these costs is included in cost of revenue over the estimated life of the products.Legal and Other ContingenciesThe outcomes of legal proceedings and c

332、laims brought against us are subject to significant uncertainty.An estimated loss from a loss contingency such as a legal proceeding or claim is accrued by a charge to income if it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonab

333、ly estimated.In determining whether a loss should be accrued we evaluate,among other factors,the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss.Changes in these factors could materially impact our consolidated financial statements.Income TaxesThe objectives of accounting for income taxes are to recognize the amount of taxes payab