1、 UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended March 31,2024 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 193

2、4 For the Transition Period From toCommission File Number 001-37845 MICROSOFT CORPORATION WASHINGTON 91-1144442(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 class Trading Symbol Name

3、of exchange on which registered Common stock,$0.00000625 par value per share MSFT NASDAQ3.125%Notes due 2028 MSFT NASDAQ2.625%Notes due 2033 MSFT NASDAQIndicate 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 1

4、934 during 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 r

5、equired to 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 fil

6、er,a non-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

7、 Filer Smaller 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

8、 Act.Indicate 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 April 22,2024 Common Stock,$0.

9、00000625 par value per share 7,432,305,794 shares MICROSOFT CORPORATION FORM 10-Q For the Quarter Ended March 31,2024INDEX PagePART I.FINANCIAL INFORMATION Item 1.Financial Statements a)Income Statements for the Three and Nine Months Ended March 31,2024 and 20233 b)Comprehensive Income Statements fo

10、r the Three and Nine Months Ended March 31,2024 and 20234 c)Balance Sheets as of March 31,2024 and June 30,20235 d)Cash Flows Statements for the Three and Nine Months Ended March 31,2024 and 20236 e)Stockholders Equity Statements for the Three and Nine Months Ended March 31,2024 and 20237 f)Notes to

11、 Financial Statements8 g)Report of Independent Registered Public Accounting Firm31 Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations32 Item 3.Quantitative and Qualitative Disclosures About Market Risk49 Item 4.Controls and Procedures49 PART II.OTHER INFORMAT

12、ION Item 1.Legal Proceedings50 Item 1A.Risk Factors50 Item 2.Unregistered Sales of Equity Securities and Use of Proceeds64 Item 5.Other Information65 Item 6.Exhibits66 SIGNATURE67 2PART IItem 1 PART I.FINANCIAL INFORMATIONITEM 1.FINANCIAL STATEMENTSINCOME STATEMENTS(In millions,except per share amou

13、nts)(Unaudited)Three Months EndedMarch 31,Nine Months EndedMarch 31,2024 2023 2024 2023 Revenue:Product$17,080$15,588$51,556$47,846 Service and other 44,778 37,269 128,839 107,880 Total revenue 61,858 52,857 180,395 155,726 Cost of revenue:Product 4,339 3,941 13,834 13,933 Service and other 14,166 1

14、2,187 40,596 35,135 Total cost of revenue 18,505 16,128 54,430 49,068 Gross margin 43,353 36,729 125,965 106,658 Research and development 7,653 6,984 21,454 20,456 Sales and marketing 6,207 5,750 17,640 16,555 General and administrative 1,912 1,643 5,363 5,378 Operating income 27,581 22,352 81,508 6

15、4,269 Other income(expense),net (854)321 (971)315 Income before income taxes 26,727 22,673 80,537 64,584 Provision for income taxes 4,788 4,374 14,437 12,304 Net income$21,939$18,299$66,100$52,280 Earnings per share:Basic$2.95$2.46$8.90$7.02 Diluted$2.94$2.45$8.85$6.99 Weighted average shares outsta

16、nding:Basic 7,431 7,441 7,431 7,450 Diluted 7,472 7,464 7,467 7,474 Refer to accompanying notes.3PART IItem 1 COMPREHENSIVE INCOME STATEMENTS(In millions)(Unaudited)Three Months EndedMarch 31,Nine Months Ended March 31,2024 2023 2024 2023 Net income$21,939$18,299$66,100$52,280 Other comprehensive in

17、come(loss),net of tax:Net change related to derivatives 10 (9)28 (34)Net change related to investments (202)753 869 (796)Translation adjustments and other (294)69 11 (136)Other comprehensive income(loss)(486)813 908 (966)Comprehensive income$21,453$19,112$67,008$51,314 Refer to accompanying notes.4P

18、ART IItem 1 BALANCE SHEETS (In millions)(Unaudited)March 31,2024 June 30,2023 Assets Current assets:Cash and cash equivalents$19,634$34,704 Short-term investments 60,387 76,558 Total cash,cash equivalents,and short-term investments 80,021 111,262 Accounts receivable,net of allowance for doubtful acc

19、ounts of$616 and$650 44,029 48,688 Inventories 1,304 2,500 Other current assets 21,826 21,807 Total current assets 147,180 184,257 Property and equipment,net of accumulated depreciation of$74,945 and$68,251 121,375 95,641 Operating lease right-of-use assets 17,371 14,346 Equity and other investments

20、 14,807 9,879 Goodwill 119,163 67,886 Intangible assets,net 28,828 9,366 Other long-term assets 35,551 30,601 Total assets$484,275$411,976 Liabilities and stockholders equity Current liabilities:Accounts payable$18,087$18,095 Short-term debt 20,535 0 Current portion of long-term debt 2,249 5,247 Acc

21、rued compensation 10,432 11,009 Short-term income taxes 7,311 4,152 Short-term unearned revenue 41,888 50,901 Other current liabilities 18,023 14,745 Total current liabilities 118,525 104,149 Long-term debt 42,658 41,990 Long-term income taxes 26,786 25,560 Long-term unearned revenue 2,945 2,912 Def

22、erred income taxes 2,469 433 Operating lease liabilities 14,469 12,728 Other long-term liabilities 23,271 17,981 Total liabilities 231,123 205,753 Commitments and contingencies Stockholders equity:Common stock and paid-in capital shares authorized 24,000;outstanding 7,433 and 7,432 99,193 93,718 Ret

23、ained earnings 159,394 118,848 Accumulated other comprehensive loss (5,435)(6,343)Total stockholders equity 253,152 206,223 Total liabilities and stockholders equity$484,275$411,976 Refer to accompanying notes.5PART IItem 1 CASH FLOWS STATEMENTS (In millions)(Unaudited)Three Months EndedMarch 31,Nin

24、e Months EndedMarch 31,2024 2023 2024 2023 Operations Net income$21,939$18,299$66,100$52,280 Adjustments to reconcile net income to net cash from operations:Depreciation,amortization,and other 6,027 3,549 15,907 9,987 Stock-based compensation expense 2,703 2,465 8,038 7,195 Net recognized losses(gai

25、ns)on investments and derivatives 49 (40)261 152 Deferred income taxes (1,323)(1,675)(3,593)(4,171)Changes in operating assets and liabilities:Accounts receivable (2,028)(1,408)6,055 7,157 Inventories 260 106 1,229 868 Other current assets 951 1,152 880 428 Other long-term assets (2,137)(554)(5,577)

26、(1,285)Accounts payable 648 (407)(659)(4,032)Unearned revenue (645)(181)(10,309)(8,689)Income taxes 2,622 1,414 2,493 (1,039)Other current liabilities 2,803 1,715 215 (490)Other long-term liabilities 48 6 313 451 Net cash from operations 31,917 24,441 81,353 58,812 Financing Proceeds from issuance(r

27、epayments)of debt,maturities of 90 days or less,net (3,810)0 6,392 0 Proceeds from issuance of debt 6,352 0 24,198 0 Repayments of debt (11,589)0 (16,005)(1,750)Common stock issued 522 536 1,468 1,354 Common stock repurchased (4,213)(5,509)(13,044)(16,541)Common stock cash dividends paid (5,572)(5,0

28、59)(16,197)(14,746)Other,net (498)(258)(1,006)(839)Net cash used in financing (18,808)(10,290)(14,194)(32,522)Investing Additions to property and equipment (10,952)(6,607)(30,604)(19,164)Acquisition of companies,net of cash acquired,and purchases of intangible and other assets (1,575)(301)(67,790)(1

29、,329)Purchases of investments (2,183)(9,063)(14,901)(25,675)Maturities of investments 3,350 13,154 23,218 26,744 Sales of investments 1,941 1,239 8,871 8,725 Other,net (1,281)(1,686)(916)(2,847)Net cash used in investing (10,700)(3,264)(82,122)(13,546)Effect of foreign exchange rates on cash and cas

30、h equivalents (80)29 (107)(113)Net change in cash and cash equivalents 2,329 10,916 (15,070)12,631 Cash and cash equivalents,beginning of period 17,305 15,646 34,704 13,931 Cash and cash equivalents,end of period$19,634$26,562$19,634$26,562 Refer to accompanying notes.6PART IItem 1 STOCKHOLDERS EQUI

31、TY STATEMENTS (In millions,except per share amounts)(Unaudited)Three Months EndedMarch 31,Nine Months EndedMarch 31,2024 2023 2024 2023 Common stock and paid-in capital Balance,beginning of period$97,480$90,225$93,718$86,939 Common stock issued 522 536 1,468 1,354 Common stock repurchased (1,512)(1,

32、133)(4,213)(3,394)Stock-based compensation expense 2,703 2,465 8,038 7,195 Other,net 0 0 182 (1)Balance,end of period 99,193 92,093 99,193 92,093 Retained earnings Balance,beginning of period 145,737 99,368 118,848 84,281 Net income 21,939 18,299 66,100 52,280 Common stock cash dividends (5,573)(5,0

33、53)(16,718)(15,176)Common stock repurchased (2,709)(4,380)(8,836)(13,151)Balance,end of period 159,394 108,234 159,394 108,234 Accumulated other comprehensive loss Balance,beginning of period (4,949)(6,457)(6,343)(4,678)Other comprehensive income(loss)(486)813 908 (966)Balance,end of period (5,435)(

34、5,644)(5,435)(5,644)Total stockholders equity$253,152$194,683$253,152$194,683 Cash dividends declared per common share$0.75$0.68$2.25$2.04 Refer to accompanying notes.7PART IItem 1 NOTES TO FINANCIAL STATEMENTS(Unaudited)NOTE 1 ACCOUNTING POLICIESAccounting Principles Our unaudited interim consolida

35、ted 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 normal recurring nature t

36、hat 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 Microsoft Corporation fiscal

37、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,consolidated income statements

38、,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 financial statements requires ma

39、nagement 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 determining the standalone sel

40、ling 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 cycles;useful lives of our

41、 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 been recognized in our co

42、nsolidated 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 highly liquid interest-

43、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 maturities of less than one yea

44、r 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.8PART IItem 1 Debt investments a

45、re 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 information or

46、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 systematic

47、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 required to sell

48、 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.Equity investments wi

49、th 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 alternative).We perform a

50、 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.Investments that are considered variable interest entities(“VIEs”)ar

51、e evaluated to determine whether we are the primary beneficiary of the VIE,in which case we would be required to consolidate the entity.We evaluate whether we have(1)the power to direct the activities that most significantly impact the VIEs economic performance,and(2)the obligation to absorb losses

52、or the right to receive benefits from the VIE that could potentially be significant to the VIE.We have determined we are not the primary beneficiary of any of our VIE investments.Therefore,our VIE investments are not consolidated and the majority are accounted for under the equity method of accounti

53、ng.DerivativesDerivative instruments are recognized 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

54、hedges,gains and losses are recognized in other 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 c

55、ash flow hedges,gains and losses are initially reported 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

56、 in other income(expense),net.For derivative instruments 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 t

57、hree levels of fair value based on the extent to 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.The

58、se levels are:Level 1 inputs are based upon unadjusted 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 exchan

59、ges.9PART IItem 1 Level 2 inputs are based upon quoted prices 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 i

60、n the market or can be corroborated by observable market data 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 present value using market-based observable inputs including interest rate curves,cr

61、edit spreads,foreign exchange rates,and forward and spot prices 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 d

62、erivative assets and liabilities include certain cleared swap contracts and over-the-counter forward,option,and swap contracts.Level 3 inputs are generally unobservable and typically reflect managements estimates of assumptions that market participants would use in pricing the asset or liability.The

63、 fair values are therefore determined using model-based techniques,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 fai

64、r value due to an impairment charge.Unobservable inputs used in 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 valu

65、ation techniques using the best information available,and may include 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.Contract Balances and Other

66、Receivables As of March 31,2024 and June 30,2023,long-term accounts receivable,net of allowance for doubtful accounts,was$4.8 billion and$4.5 billion,respectively,and is included in other long-term assets in our consolidated balance sheets.As of March 31,2024 and June 30,2023,other receivables relat

67、ed to activities to facilitate the purchase of server components were$10.1 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 produc

68、ts and services offerings through a financing program in a limited number of countries.As of March 31,2024 and June 30,2023,our financing receivables,net were$2.7 billion and$5.3 billion,respectively,for short-term and long-term financing receivables,which are included in other current assets and ot

69、her long-term assets in our consolidated balance sheets.We record an allowance to cover expected losses based on troubled accounts,historical experience,and other currently available evidence.Related Party TransactionsIn March 2024,we entered into an agreement with Inflection AI,Inc.(“Inflection”),p

70、ursuant to which we obtained a non-exclusive license to Inflections intellectual property.Reid Hoffman,a member of our Board of Directors,is a co-founder of and serves on the board of directors of Inflection.As of the date of the agreement with Inflection,Reprogrammed Interchange LLC(“Reprogrammed”)

71、and entities affiliated with Greylock Ventures(“Greylock”)each held less than a 10%equity interest in Inflection.Mr.Hoffman may be deemed to beneficially own the shares held by Reprogrammed and Greylock by virtue of his relationship with such entities.Mr.Hoffman did not participate in any portions o

72、f the meetings of our Board of Directors or any committee thereof to review and approve the transaction with Inflection.10PART IItem 1 Recent Accounting GuidanceSegment Reporting Improvements to Reportable Segment DisclosuresIn November 2023,the Financial Accounting Standards Board(“FASB”)issued a n

73、ew standard to improve reportable segment disclosures.The guidance expands the disclosures required for reportable segments in our annual and interim consolidated financial statements,primarily through enhanced disclosures about significant segment expenses.The standard will be effective for us begi

74、nning with our annual reporting for fiscal year 2025 and interim periods thereafter,with early adoption permitted.We are currently evaluating the impact of this standard on our segment disclosures.Income Taxes Improvements to Income Tax DisclosuresIn December 2023,the FASB issued a new standard to i

75、mprove income tax disclosures.The guidance requires disclosure of disaggregated income taxes paid,prescribes standardized categories for the components of the effective tax rate reconciliation,and modifies other income tax-related disclosures.The standard will be effective for us beginning with our

76、annual reporting for fiscal year 2026,with early adoption permitted.We are currently evaluating the impact of this standard on our income tax disclosures.NOTE 2 EARNINGS PER SHAREBasic earnings per share(“EPS”)is computed based on the weighted average number of shares of common stock outstanding dur

77、ing the period.Diluted EPS 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.

78、The components of basic and diluted EPS were as follows:(In millions,except per share amounts)Three Months EndedMarch 31,Nine Months EndedMarch 31,2024 2023 2024 2023 Net income available for common shareholders(A)$21,939$18,299$66,100$52,280 Weighted average outstanding shares of common stock(B)7,4

79、31 7,441 7,431 7,450 Dilutive effect of stock-based awards 41 23 36 24 Common stock and common stock equivalents(C)7,472 7,464 7,467 7,474 Earnings Per Share Basic(A/B)$2.95$2.46$8.90$7.02 Diluted(A/C)$2.94$2.45$8.85$6.99 Anti-dilutive stock-based awards excluded from the calculations of diluted EPS

80、 were immaterial during the periods presented.11PART IItem 1 NOTE 3 OTHER INCOME(EXPENSE),NET The components of other income(expense),net were as follows:(In millions)Three Months EndedMarch 31,Nine Months EndedMarch 31,2024 2023 2024 2023 Interest and dividends income$619$748$2,519$2,089 Interest e

81、xpense (800)(496)(2,234)(1,486)Net recognized gains(losses)on investments (25)105 (63)103 Net losses on derivatives (24)(65)(198)(255)Net gains(losses)on foreign currency remeasurements (138)122 (203)26 Other,net (486)(93)(792)(162)Total$(854)$321$(971)$315 Other,net primarily reflects net recognize

82、d losses on equity method investments.Net Recognized Gains(Losses)on Investments Net recognized gains(losses)on debt investments were as follows:(In millions)Three Months EndedMarch 31,Nine Months EndedMarch 31,2024 2023 2024 2023 Realized gains from sales of available-for-sale securities$8$4$14$19

83、Realized losses from sales of available-for-sale securities (24)(30)(78)(73)Impairments and allowance for credit losses 3 0 15 (13)Total$(13)$(26)$(49)$(67)Net recognized gains(losses)on equity investments were as follows:(In millions)Three Months EndedMarch 31,Nine Months EndedMarch 31,2024 2023 20

84、24 2023 Net realized gains(losses)on investments sold$15$(13)$29$77 Net unrealized gains(losses)on investments still held (7)144 156 109 Impairments of investments (20)0 (199)(16)Total$(12)$131$(14)$170 12PART IItem 1 NOTE 4 INVESTMENTSInvestment ComponentsThe components of investments were as follo

85、ws:(In millions)FairValueLevel AdjustedCostBasis UnrealizedGains UnrealizedLosses RecordedBasis Cashand CashEquivalents Short-termInvestments Equity and Other Investments March 31,2024 Changes in Fair Value Recorded in Other Comprehensive Income Commercial paper Level 2$5,535$0$0$5,535$5,535$0$0 Cer

86、tificates of deposit Level 2 2,300 0 0 2,300 2,256 44 0 U.S.government securities Level 1 52,036 3 (3,074)48,965 4 48,961 0 U.S.agency securities Level 2 23 0 0 23 0 23 0 Foreign government bonds Level 2 352 4 (12)344 0 344 0 Mortgage-and asset-backed securities Level 2 980 4 (34)950 0 950 0 Corpora

87、te notes and bonds Level 2 9,874 40 (340)9,574 0 9,574 0 Corporate notes and bonds Level 3 1,646 0 (1)1,645 0 145 1,500 Municipal securities Level 2 263 1 (14)250 0 250 0 Municipal securities Level 3 104 0 (16)88 0 88 0 Total debt investments$73,113$52$(3,491)$69,674$7,795$60,379$1,500 Changes in Fa

88、ir Value Recorded in Net Income Equity investments Level 1$3,340$258$0$3,082 Equity investments Other 10,225 0 0 10,225 Total equity investments$13,565$258$0$13,307 Cash$11,581$11,581$0$0 Derivatives,net 8 0 8 0 Total$94,828$19,634$60,387$14,807 13(a)PART IItem 1(In millions)FairValueLevel AdjustedC

89、ostBasis UnrealizedGains UnrealizedLosses RecordedBasis Cashand CashEquivalents Short-termInvestments Equity and OtherInvestments June 30,2023 Changes in Fair Value Recorded in Other Comprehensive Income Commercial paper Level 2$16,589$0$0$16,589$12,231$4,358$0 Certificates of deposit Level 2 2,701

90、0 0 2,701 2,657 44 0 U.S.government securities Level 1 65,237 2 (3,870)61,369 2,991 58,378 0 U.S.agency securities Level 2 2,703 0 0 2,703 894 1,809 0 Foreign government bonds Level 2 498 1 (24)475 0 475 0 Mortgage-and asset-backed securities Level 2 824 1 (39)786 0 786 0 Corporate notes and bonds L

91、evel 2 10,809 8 (583)10,234 0 10,234 0 Corporate notes and bonds Level 3 120 0 0 120 0 120 0 Municipal securities Level 2 285 1 (18)268 7 261 0 Municipal securities Level 3 103 0 (16)87 0 87 0 Total debt investments$99,869$13$(4,550)$95,332$18,780$76,552$0 Changes in Fair Value Recorded in Net Incom

92、e Equity investments Level 1$10,138$7,446$0$2,692 Equity investments Other 7,187 0 0 7,187 Total equity investments$17,325$7,446$0$9,879 Cash$8,478$8,478$0$0 Derivatives,net 6 0 6 0 Total$121,141$34,704$76,558$9,879 (a)Refer to Note 5 Derivatives for further information on the fair value of our deri

93、vative 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 or impairments,and investments measured at fair value using

94、net asset value as a practical expedient which are not categorized in the fair value hierarchy.As of March 31,2024 and June 30,2023,equity investments without readily determinable fair values measured at cost with adjustments for observable changes in price or impairments were$4.0 billion and$4.2 bi

95、llion,respectively.14(a)PART IItem 1 Unrealized 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 TotalUnrealizedLosses (In millions)Fai

96、r Value UnrealizedLosses Fair Value UnrealizedLosses TotalFair Value March 31,2024 U.S.government and agency securities$650$(17)$48,044$(3,057)$48,694$(3,074)Foreign government bonds 40 0 226 (12)266 (12)Mortgage-and asset-backed securities 264 (4)339 (30)603 (34)Corporate notes and bonds 1,000 (9)6

97、,435 (332)7,435 (341)Municipal securities 44 (1)237 (29)281 (30)Total$1,998$(31)$55,281$(3,460)$57,279$(3,491)Less than 12 Months 12 Months or Greater TotalUnrealizedLosses (In millions)Fair Value UnrealizedLosses Fair Value UnrealizedLosses TotalFair Value June 30,2023 U.S.government and agency sec

98、urities$7,950$(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 (34)Total$10,721$(398)$53,598$(4,152)$64,319$(

99、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 Maturities The following table outlines maturit

100、ies of our debt investments as of March 31,2024:(In millions)AdjustedCost Basis EstimatedFair Value March 31,2024 Due in one year or less$19,613$19,428 Due after one year through five years 42,885 40,676 Due after five years through 10 years 9,230 8,304 Due after 10 years 1,385 1,266 Total$73,113$69

101、,674 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 derivatives include reducing,eliminating,and efficiently man

102、aging 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 liabilities are exposed to foreign currency risk.We mon

103、itor our foreign currency exposures daily to maximize the economic effectiveness of our foreign currency hedge positions.15PART IItem 1 Foreign currency risks related to certain non-U.S.dollar-denominated investments are hedged using foreign exchange forward contracts that are designated as fair val

104、ue 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 instruments are also used to manage the variability i

105、n 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 hedging instruments to effectively convert the fixed in

106、terest 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 that correlate to certain broad-based fixed-income ind

107、ices 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 risk.At times,we may hold options,futures,and swap con

108、tracts.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 broad-based indices and to facilitate portfolio diversif

109、ication.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 require our issued and outstanding long-term unsecured

110、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 over-the-counter derivatives.As of March 31,2024,our lo

111、ng-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 in U.S.dollar equivalents:(In millions)March 31,2024 June

112、30,2023 Designated as Hedging Instruments Foreign exchange contracts purchased$1,492$1,492 Interest rate contracts purchased 1,109 1,078 Not Designated as Hedging Instruments Foreign exchange contracts purchased 9,245 7,874 Foreign exchange contracts sold 23,116 25,159 Equity contracts purchased 3,9

113、39 3,867 Equity contracts sold 2,152 2,154 Other contracts purchased 1,672 1,224 Other contracts sold 767 581 16PART IItem 1 Fair Values of Derivative InstrumentsThe following table presents our derivative instruments:(In millions)DerivativeAssets DerivativeLiabilities DerivativeAssets DerivativeLia

114、bilities March 31,2024 June 30,2023 Designated as Hedging Instruments Foreign exchange contracts$38$(68)$34$(67)Interest rate contracts 6 0 16 0 Not Designated as Hedging Instruments Foreign exchange contracts 121 (192)249 (332)Equity contracts 72 (526)165 (400)Other contracts 5 (1)5 (6)Gross amount

115、s of derivatives 242 (787)469 (805)Gross amounts of derivatives offset in the balance sheet (125)126 (202)206 Cash collateral received 0 (17)0 (125)Net amounts of derivatives$117$(678)$267$(724)Reported as Short-term investments$8$0$6$0 Other current assets 103 0 245 0 Other long-term assets 6 0 16

116、0 Other current liabilities 0 (271)0 (341)Other long-term liabilities 0 (407)0 (383)Total$117$(678)$267$(724)Gross derivative assets and liabilities subject to legally enforceable master netting agreements for which we have elected to offset were$226 million and$786 million,respectively,as of March

117、31,2024,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 March 31,2024 Derivative assets$0$233$9$242 Derivative liabilities 0 (787)0 (787)June 30,2023

118、 Derivative assets 0 462 7 469 Derivative liabilities 0 (805)0 (805)17PART IItem 1 Gains(losses)on derivative instruments recognized in other income(expense),net were as follows:(In millions)Three Months Ended March 31,Nine Months EndedMarch 31,2024 2023 2024 2023 Designated as Fair Value Hedging In

119、struments Interest rate contracts Derivatives$(21)$1$(15)$(37)Hedged items 10 (15)(21)20 Designated as Cash Flow Hedging Instruments Foreign exchange contracts Amount reclassified from accumulated other comprehensive loss (37)18 (32)62 Not Designated as Hedging Instruments Foreign exchange contracts

120、 299 (10)171 (20)Equity contracts (22)(61)(196)(230)Other contracts (8)1 (5)(34)Gains(losses),net of tax,on derivative instruments recognized in our consolidated comprehensive income statements were as follows:(In millions)Three Months EndedMarch 31,Nine Months EndedMarch 31,2024 2023 2024 2023 Desi

121、gnated as Cash Flow Hedging Instruments Foreign exchange contracts Included in effectiveness assessment$(19)$5$3$14 NOTE 6 INVENTORIESThe components of inventories were as follows:(In millions)March 31,2024 June 30,2023 Raw materials$341$709 Work in process 12 23 Finished goods 951 1,768 Total$1,304

122、$2,500 NOTE 7 BUSINESS COMBINATIONSActivision Blizzard,Inc.On October 13,2023,we completed our acquisition of Activision Blizzard,Inc.(“Activision Blizzard”)for a total purchase price of$75.4 billion,consisting primarily of cash.Activision Blizzard is a leader in game development and an interactive

123、entertainment content publisher.The acquisition will accelerate the growth in our gaming business across mobile,PC,console,and cloud gaming.The financial results of Activision Blizzard have been included in our consolidated financial statements since the date of the acquisition.Activision Blizzard i

124、s reported as part of our More Personal Computing segment.18PART IItem 1 The purchase price allocation as of the date of acquisition was based on a preliminary valuation and is subject to revision as more detailed analyses are completed and additional information about the fair value of assets acqui

125、red and liabilities assumed becomes available.The primary areas that remain preliminary relate to the fair values of goodwill,intangible assets,and income taxes.The major classes of assets and liabilities to which we have preliminarily allocated the purchase price were as follows:(In millions)Cash a

126、nd cash equivalents$12,976 Goodwill 50,989 Intangible assets 21,969 Other assets 2,440 Long-term debt (2,799)Long-term income taxes (1,868)Deferred income taxes (4,678)Other liabilities (3,623)Total purchase price$75,406 Goodwill was assigned to our More Personal Computing segment.The goodwill was p

127、rimarily attributed to increased synergies that are expected to be achieved from the integration of Activision Blizzard.Substantially all of the goodwill is expected to be non-deductible for income tax purposes.Following are the details of the purchase price allocated to the intangible assets acquir

128、ed:(In millions,except average life)Amount WeightedAverage Life Marketing-related$11,619 24 years Technology-based 9,689 4 years Customer-related 661 4 years Fair value of intangible assets acquired$21,969 15 years Following is the net impact of the Activision Blizzard acquisition on our consolidate

129、d income statements since the date of acquisition:(In millions)Three Months EndedMarch 31,Nine Months EndedMarch 31,2024 2024 Revenue$1,969$4,053 Operating loss (353)(790)The change of Activision Blizzard content from third-party to first-party is reflected in the net impact.Following are the supple

130、mental consolidated financial results of Microsoft Corporation on an unaudited pro forma basis,as if the acquisition had been consummated on July 1,2022:(In millions,except per share amounts)Three Months EndedMarch 31,Nine Months EndedMarch 31,2024 2023 2024 2023 Revenue$61,856$54,945$182,717$161,74

131、5 Net income 21,931 18,258 66,278 51,536 Diluted earnings per share 2.94 2.45 8.88 6.90 19PART IItem 1 These pro forma results were based on estimates and assumptions,which we believe are reasonable.They are not the results that would have been realized had we been a combined company during the peri

132、ods presented and are not necessarily indicative of our consolidated results of operations in future periods.The pro forma results include adjustments related to purchase accounting,primarily amortization of intangible assets.Acquisition costs and other nonrecurring charges were immaterial and are i

133、ncluded in the earliest period presented.NOTE 8 GOODWILLChanges in the carrying amount of goodwill were as follows:(In millions)June 30,2023 Acquisitions Other March 31,2024 Productivity and Business Processes$24,775$0$3$24,778 Intelligent Cloud 30,469 0 (17)30,452 More Personal Computing 12,642 51,

134、235 56 63,933 Total$67,886$51,235$42$119,163 (a)Includes goodwill of$51.0 billion related to Activision Blizzard.See Note 7 Business Combinations for further information.The measurement periods for the valuation of assets acquired and liabilities assumed end as soon as information on the facts and c

135、ircumstances 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 the periods in which the adjustments are determined.Any change in the goodwill amounts result

136、ing 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 segments due to reorganizations,as applicable.NOTE 9 INTANGIBLE ASSETS The components of intangible assets,all o

137、f which are finite-lived,were as follows:(In millions)GrossCarryingAmount AccumulatedAmortization NetCarryingAmount GrossCarryingAmount AccumulatedAmortization NetCarryingAmount March 31,2024 June 30,2023 Marketing-related$16,549$(2,945)$13,604$4,935$(2,473)$2,462 Technology-based 21,735 (9,721)12,0

138、14 11,245 (7,589)3,656 Customer-related 6,049 (2,853)3,196 7,281 (4,047)3,234 Contract-based 36 (22)14 29 (15)14 Total$44,369$(15,541)$28,828$23,490$(14,124)$9,366 (a)Includes intangible assets of$22.0 billion related to Activision Blizzard.See Note 7 Business Combinations for further information.In

139、tangible assets amortization expense was$1.4 billion and$3.4 billion for the three and nine months ended March 31,2024,respectively,and$612 million and$1.9 billion for the three and nine months ended March 31,2023,respectively.20(a)(a)(a)PART IItem 1 The following table outlines the estimated future

140、 amortization expense related to intangible assets held as of March 31,2024:(In millions)Year Ending June 30,2024(excluding the nine months ended March 31,2024)$1,454 2025 5,860 2026 4,436 2027 2,777 2028 1,869 Thereafter 12,432 Total$28,828 NOTE 10 DEBT Short-term DebtAs of March 31,2024,we had$20.

141、5 billion of commercial paper issued and outstanding,with a weighted average interest rate of 5.4%and maturities ranging from 6 days to 216 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-

142、term DebtThe components of long-term debt were as follows:(In millions,issuance by calendar year)Maturities(calendar year)Stated InterestRate Effective InterestRate March 31,2024 June 30,2023 2009 issuance of$3.8 billion 2039 5.20%5.24%$520$520 2010 issuance of$4.8 billion 2040 4.50%4.57%486 486 201

143、1 issuance of$2.3 billion 2041 5.30%5.36%718 718 2012 issuance of$2.3 billion 2042 3.50%3.57%454 454 2013 issuance of$5.2 billion 2043 3.75%4.88%3.83%4.92%314 1,814 2013 issuance of 4.1 billion 20282033 2.63%3.13%2.69%3.22%2,484 2,509 2015 issuance of$23.8 billion 20252055 2.70%4.75%2.77%4.78%9,805

144、9,805 2016 issuance of$19.8 billion 20262056 2.40%3.95%2.46%4.03%7,930 9,430 2017 issuance of$17.1 billion 20262057 3.30%4.50%3.38%5.49%6,833 8,945 2020 issuance of$10.1 billion 20302060 1.35%2.68%2.53%5.43%10,111 10,000 2021 issuance of$8.2 billion 20522062 2.92%3.04%2.92%3.04%8,185 8,185 2023 issu

145、ance of$3.4 billion 20262050 1.35%4.50%5.16%5.49%3,401 0 Total face value 51,241 52,866 Unamortized discount and issuance costs (1,246)(438)Hedge fair value adjustments (85)(106)Premium on debt exchange (5,003)(5,085)Total debt 44,907 47,237 Current portion of long-term debt (2,249)(5,247)Long-term

146、debt$42,658$41,990 (a)Includes$3.6 billion of debt at face value related to the Activision Blizzard acquisition.See Note 7 Business Combinations for further information.(b)Refer to Note 5 Derivatives for further information on the interest rate swaps related to fixed-rate debt.21(a)(a)(a)(b)PART IIt

147、em 1 As of March 31,2024 and June 30,2023,the estimated fair value of long-term debt,including the current portion,was$43.2 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 equal

148、ly with our other outstanding obligations.Interest is paid semi-annually,except 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 March 31,2024:(In millions)Year Ending June 30,2024(excluding the nin

149、e months ended March 31,2024)$0 2025 2,250 2026 3,000 2027 9,250 2028 0 Thereafter 36,741 Total$51,241 NOTE 11 INCOME TAXESEffective Tax RateOur effective tax rate was 18%and 19%for the three months ended March 31,2024 and 2023,respectively,and 18%and 19%for the nine months ended March 31,2024 and 2

150、023,respectively.The decrease in our effective tax rate for the three and nine months ended March 31,2024 compared to the prior year was primarily due to increased tax benefits from stock-based compensation and tax benefits from tax law changes,including the impact from the issuance of Notice 2023-5

151、5 and Notice 2023-80 by the Internal Revenue Service(“IRS”)and U.S.Treasury Department.Notice 2023-55,issued in the first quarter of fiscal year 2024,delayed the effective date of final foreign tax credit regulations to fiscal year 2024 for Microsoft.Notice 2023-80,issued in the second quarter of fi

152、scal year 2024,further delayed the effective date of final foreign tax credit regulations indefinitely.Our effective tax rate was lower than the U.S.federal statutory rate for the three and nine months ended March 31,2024,primarily due to earnings taxed at lower rates in foreign jurisdictions result

153、ing from producing and distributing our products and services through our foreign regional operations center in Ireland.Uncertain Tax PositionsAs of March 31,2024 and June 30,2023,unrecognized tax benefits and other income tax liabilities were$23.8 billion and$18.7 billion,respectively,and are inclu

154、ded in long-term income taxes in our consolidated balance sheets.The balance as of March 31,2024 includes$1.9 billion of acquired unrecognized tax benefits and other income tax liabilities due to the acquisition of Activision Blizzard.See Note 7 Business Combinations for further information.We remai

155、n under audit by the IRS 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 add

156、itional tax payment of$28.9 billion plus penalties and interest.As of March 31,2024,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,judi

157、cial proceedings.We 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 m

158、any jurisdictions outside 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 stat

159、ements.22PART IItem 1 NOTE 12 UNEARNED REVENUE Unearned revenue by segment was as follows:(In millions)March 31,2024 June 30,2023 Productivity and Business Processes$22,929$27,572 Intelligent Cloud 16,696 21,563 More Personal Computing 5,208 4,678 Total$44,833$53,813 Changes in unearned revenue were

160、 as follows:(In millions)Nine Months Ended March 31,2024 Balance,beginning of period$53,813 Deferral of revenue 94,800 Recognition of unearned revenue (103,780)Balance,end of period$44,833 Revenue allocated to remaining performance obligations,which includes unearned revenue and amounts that will be

161、 invoiced and recognized as revenue in future periods,was$242 billion as of March 31,2024,of which$235 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 13 LEASESWe have operating

162、and finance 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 17 years,some of which include options to extend the leases for up to 5 years,and some of which inc

163、lude options to terminate the leases within 1 year.The components of lease expense were as follows:(In millions)Three Months Ended March 31,Nine Months Ended March 31,2024 2023 2024 2023 Operating lease cost$882$766$2,473$2,112 Finance lease cost:Amortization of right-of-use assets$453$348$1,241$994

164、 Interest on lease liabilities 190 132 507 364 Total finance lease cost$643$480$1,748$1,358 23PART IItem 1 Supplemental cash flow information related to leases was as follows:(In millions)Three Months Ended March 31,Nine Months Ended March 31,2024 2023 2024 2023 Cash paid for amounts included in the

165、 measurement of lease liabilities:Operating cash flows from operating leases$836$690$2,433$1,989 Operating cash flows from finance leases 190 132 507 364 Financing cash flows from finance leases 323 272 896 790 Right-of-use assets obtained in exchange for lease obligations:Operating leases 1,831 663

166、 4,482 2,377 Finance leases 3,421 1,044 6,921 2,253 Supplemental balance sheet information related to leases was as follows:(In millions,except lease term and discount rate)March 31,2024 June 30,2023 Operating Leases Operating lease right-of-use assets$17,371$14,346 Other current liabilities$3,413$2

167、,409 Operating lease liabilities 14,469 12,728 Total operating lease liabilities$17,882$15,137 Finance Leases Property and equipment,at cost$27,328$20,538 Accumulated depreciation (5,865)(4,647)Property and equipment,net$21,463$15,891 Other current liabilities$1,869$1,197 Other long-term liabilities

168、 21,036 15,870 Total finance lease liabilities$22,905$17,067 Weighted Average Remaining Lease Term Operating leases 8 years 8 years Finance leases 12 years 11 years Weighted Average Discount Rate Operating leases 3.3%2.9%Finance leases 3.8%3.4%The following table outlines maturities of our lease lia

169、bilities as of March 31,2024:(In millions)Year Ending June 30,Operating Leases Finance Leases 2024(excluding the nine months ended March 31,2024)$956$560 2025 3,566 2,694 2026 3,076 2,398 2027 2,608 2,409 2028 2,100 2,409 Thereafter 7,812 18,058 Total lease payments 20,118 28,528 Less imputed intere

170、st (2,236)(5,623)Total$17,882$22,905 24PART IItem 1 As of March 31,2024,we had additional operating and finance leases,primarily for datacenters,that had not yet commenced of$8.4 billion and$87.8 billion,respectively.These operating and finance leases will commence between fiscal year 2024 and fisca

171、l year 2030 with lease terms of 1 year to 20 years.NOTE 14 CONTINGENCIESU.S.Cell Phone LitigationMicrosoft Mobile Oy,a subsidiary of Microsoft,along with other handset manufacturers and network operators,is a defendant in 45 lawsuits filed in the Superior Court for the District of Columbia by indivi

172、dual plaintiffs who allege that radio emissions from cellular handsets caused their brain tumors and other adverse health effects.We assumed responsibility for these claims in our agreement to acquire Nokias Devices and Services business and have been substituted for the Nokia defendants.Twelve of t

173、hese cases were consolidated for certain pre-trial proceedings;the remaining cases are stayed.In a separate 2009 decision,the Court of Appeals for the District of Columbia held that adversehealth effect claims arising from the use of cellular handsets that operate within the U.S.Federal Communicatio

174、ns Commission radio frequency emission guidelines(“FCC Guidelines”)are pre-empted by federal law.The plaintiffs allege 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 t

175、o manipulate the science and testing around emission guidelines.In 2013,the defendants in the consolidated cases 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 defenda

176、nts motion to exclude the plaintiffs general causation experts.The defendants filed an interlocutory appeal to the 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 a

177、dvocated by the defendants and remanding the cases to the trial court for further proceedings under that standard.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 co

178、urt granted defendants motion to strike the testimony of plaintiffs experts that cell phones cause brain cancer and entered an order excluding all of plaintiffs experts from testifying.The parties agreed to a stipulated dismissal of the consolidated cases to allow plaintiffs to appeal the expert tes

179、timony order.Plaintiffs appealed the courts order in August of 2023,and the parties have filed their briefs on the appeal.A hearing on the status of the stayed cases occurred in December of 2023.Irish Data Protection Commission MatterIn 2018,the Irish Data Protection Commission(“IDPC”)began investig

180、ating a complaint against LinkedIn as to whether LinkedIns targeted 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 preli

181、minary draft decision alleging GDPR violations and proposing a fine.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

182、 in the ordinary course of our business.Although management currently 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 th

183、ese matters may change in the future.As of March 31,2024,we accrued aggregate legal liabilities of$665 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

184、unfavorable final outcomes to occur,there exists the possibility of a material adverse impact in our consolidated financial statements for the period in which the effects become reasonably estimable.25PART IItem 1 NOTE 15 STOCKHOLDERS EQUITYShare RepurchasesOn September 14,2021,our Board of Director

185、s approved a share repurchase program authorizing up to$60.0 billion in share repurchases.This share repurchase program commenced in November 2021,has no expiration date,and may be terminated at any time.As of March 31,2024,$13.1 billion remained of this$60.0 billion share repurchase program.We repu

186、rchased the following shares of common stock under the share repurchase program:(In millions)Shares Amount Shares Amount Fiscal Year 2024 2023 First Quarter 11$3,560 17$4,600 Second Quarter 7 2,800 20 4,600 Third Quarter 7 2,800 18 4,600 Total 25$9,160 55$13,800 All repurchases were made using cash

187、resources.All shares repurchased were under the share repurchase program approved on September 14,2021.The above table excludes shares repurchased to settle employee tax withholding related to the vesting of stock awards of$1.4 billion and$3.9 billion for the three and nine months ended March 31,202

188、4,respectively,and$909 million and$2.7 billion for the three and nine months ended March 31,2023,respectively.DividendsOur Board of Directors declared the following dividends:Declaration Date Record Date Payment Date DividendPer Share Amount Fiscal Year 2024 (In millions)September 19,2023 November 1

189、6,2023 December 14,2023$0.75$5,574 November 28,2023 February 15,2024 March 14,2024 0.75 5,573 March 12,2024 May 16,2024 June 13,2024 0.75 5,574 Total$2.25$16,721 Fiscal Year 2023 September 20,2022 November 17,2022 December 8,2022$0.68$5,066 November 29,2022 February 16,2023 March 9,2023 0.68 5,059 M

190、arch 14,2023 May 18,2023 June 8,2023 0.68 5,054 Total$2.04$15,179 The dividend declared on March 12,2024 was included in other current liabilities as of March 31,2024.26PART IItem 1 NOTE 16 ACCUMULATED OTHER COMPREHENSIVE INCOME(LOSS)The following table summarizes the changes in accumulated other co

191、mprehensive income(loss)by component:(In millions)Three Months EndedMarch 31,Nine Months EndedMarch 31,2024 2023 2024 2023 Derivatives Balance,beginning of period$(9)$(38)$(27)$(13)Unrealized gains(losses),net of tax of$(5),$1,$1,and$3 (19)5 3 14 Reclassification adjustments for(gains)losses include

192、d in other income(expense),net 37 (18)32 (62)Tax expense(benefit)included in provision for income taxes (8)4 (7)14 Amounts reclassified from accumulated other comprehensive loss 29 (14)25 (48)Net change related to derivatives,net of tax of$3,$(3),$8,and$(11)10 (9)28 (34)Balance,end of period$1$(47)$

193、1$(47)Investments Balance,beginning of period$(2,511)$(3,687)$(3,582)$(2,138)Unrealized gains(losses),net of tax of$(56),$194,$221,and$(225)(212)732 830 (851)Reclassification adjustments for losses included in other income(expense),net 13 26 49 68 Tax benefit included in provision for income taxes (

194、3)(5)(10)(13)Amounts reclassified from accumulated other comprehensive loss 10 21 39 55 Net change related to investments,net of tax of$(53),$199,$231,and$(212)(202)753 869 (796)Balance,end of period$(2,713)$(2,934)$(2,713)$(2,934)Translation Adjustments and Other Balance,beginning of period$(2,429)

195、$(2,732)$(2,734)$(2,527)Translation adjustments and other,net of tax of$0,$0,$0,and$0 (294)69 11 (136)Balance,end of period$(2,723)$(2,663)$(2,723)$(2,663)Accumulated other comprehensive loss,end of period$(5,435)$(5,644)$(5,435)$(5,644)27PART IItem 1 NOTE 17 SEGMENT INFORMATION AND GEOGRAPHIC DATAI

196、n its operation of the business,management,including our chief operating decision maker,who is also our Chief Executive Officer,reviews certain financial information,including segmented internal profit and loss statements prepared on a basis not consistent with GAAP.During the periods presented,we r

197、eported our financial performance based on the following segments:Productivity and Business Processes,Intelligent Cloud,and More Personal Computing.Our reportable segments are described below.Productivity and Business ProcessesOur Productivity and Business Processes segment consists of products and

198、services in our portfolio of productivity,communication,and information services,spanning a variety of devices and platforms.This segment primarily comprises:Office Commercial(Office 365 subscriptions,the Office 365 portion of Microsoft 365 Commercial subscriptions,and Office licensed on-premises),c

199、omprising Office,Exchange,SharePoint,Microsoft Teams,Office 365 Security and Compliance,Microsoft Viva,and Copilot for Microsoft 365.Office Consumer,including Microsoft 365 Consumer and Copilot Pro subscriptions,Office licensed on-premises,and other Office services.LinkedIn,including Talent Solution

200、s,Marketing Solutions,Premium Subscriptions,and Sales Solutions.Dynamics business solutions,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.Intelligent C

201、loudOur Intelligent Cloud segment consists of our public,private,and hybrid server products and cloud services that can power modern business and developers.This segment primarily comprises:Server products and cloud services,including Azure and other cloud services;SQL Server,Windows Server,Visual S

202、tudio,System Center,and related Client Access Licenses(“CALs”);and Nuance and GitHub.Enterprise and partner services,including Enterprise Support Services,Industry Solutions,Nuance professional services,Microsoft Partner Network,and Learning Experience.More Personal ComputingOur More Personal Comput

203、ing segment consists of products and services that put customers at the center of the experience with our technology.This segment primarily comprises:Windows,including Windows original equipment manufacturer(“OEM”)licensing and other non-volume licensing of the Windows operating system;Windows Comme

204、rcial,comprising volume licensing of the Windows operating system,Windows cloud services,and other Windows commercial offerings;patent licensing;and Windows Internet of Things.Devices,including Surface,HoloLens,and PC accessories.Gaming,including Xbox hardware and Xbox content and services,comprisin

205、g first-party content(such as Activision Blizzard)and third-party content,including games and in-game content;Xbox Game Pass and other subscriptions;Xbox Cloud Gaming;advertising;third-party disc royalties;and other cloud services.Search and news advertising,comprising Bing(including Copilot),Micros

206、oft News,Microsoft Edge,and third-party affiliates.28PART IItem 1 Revenue and costs are generally directly attributed to our segments.However,due to the integrated structure of our business,certain revenue recognized and costs incurred by one segment may benefit other segments.Revenue from certain c

207、ontracts 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 profit margin.Cost of revenue is allocated in certain cases based on a relati

208、ve 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.In addition,certain costs are incurred at a corporate level and allocate

209、d 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,and severance incurred as part of a corporate program.Each allocation is m

210、easured differently based on the specific facts and circumstances of the costs being allocated and is generally based on relative gross margin or relative headcount.Segment revenue and operating income were as follows during the periods presented:(In millions)Three Months EndedMarch 31,Nine Months E

211、ndedMarch 31,2024 2023 2024 2023 Revenue Productivity and Business Processes$19,570$17,516$57,411$50,983 Intelligent Cloud 26,708 22,081 76,847 63,914 More Personal Computing 15,580 13,260 46,137 40,829 Total$61,858$52,857$180,395$155,726 Operating Income Productivity and Business Processes$10,143$8

212、,639$30,397$25,137 Intelligent Cloud 12,513 9,476 36,725 27,358 More Personal Computing 4,925 4,237 14,386 11,774 Total$27,581$22,352$81,508$64,269 No sales to an individual customer or country other than the United States accounted for more than 10%of revenue for the three or nine months ended Marc

213、h 31,2024 or 2023.Revenue,classified by the major geographic areas in which our customers were located,was as follows:(In millions)Three Months EndedMarch 31,Nine Months EndedMarch 31,2024 2023 2024 2023 United States$31,437$26,007$92,544$78,850 Other countries 30,421 26,850 87,851 76,876 Total$61,8

214、58$52,857$180,395$155,726 (a)Includes billings to OEMs and certain multinational organizations because of the nature of these businesses and the impracticability of determining the geographic source of the revenue.29(a)PART IItem 1 Revenue,classified by significant product and service offerings,was

215、as follows:(In millions)Three Months EndedMarch 31,Nine Months EndedMarch 31,2024 2023 2024 2023 Server products and cloud services$24,832$20,025$71,093$58,007 Office products and cloud services 13,911 12,468 40,528 35,912 Windows 5,929 5,328 16,758 15,449 Gaming 5,451 3,607 16,481 11,975 LinkedIn 4

216、,013 3,659 12,121 11,120 Search and news advertising 3,134 3,036 9,407 9,158 Enterprise and partner services 1,861 2,047 5,722 5,883 Dynamics products and cloud services 1,646 1,389 4,762 3,951 Devices 1,067 1,282 3,490 4,160 Other 14 16 33 111 Total$61,858$52,857$180,395$155,726 We have recast cert

217、ain prior period amounts to conform to the way we internally manage and 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$35.1 billion and$100.

218、6 billion for the three and nine months ended March 31,2024,respectively,and$28.5 billion and$81.3 billion for the three and nine months ended March 31,2023,respectively.These amounts are primarily included in Server products and cloud services,Office products and cloud services,LinkedIn,and Dynamic

219、s products and cloud services in the table above.Assets are not allocated to segments for internal reporting presentations.A portion of amortization and depreciation is included with various other costs in an overhead allocation to each segment.It is impracticable for us to separately identify the a

220、mount of amortization and depreciation by segment that is included in the measure of segment profit or loss.30PART IItem 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Stockholders and the Board of Directors of Microsoft Corporation Results of Review of Interim Financial Information

221、We have reviewed the accompanying consolidated balance sheet of Microsoft Corporation and subsidiaries(the“Company”)as of March 31,2024,the related consolidated statements of income,comprehensive income,cash flows,and stockholders equity for the three-month and nine-month periods ended March 31,2024

222、 and 2023,and the related notes(collectively referred to as the“interim financial information”).Based on our reviews,we are not aware of any material modifications that should be made to the accompanying interim financial information for it to be in conformity with accounting principles generally ac

223、cepted in the United States of America.We have previously audited,in accordance with the standards of the Public Company Accounting Oversight Board(United States)(PCAOB),the consolidated balance sheet of the Company as of June 30,2023,and the related consolidated statements of income,comprehensive i

224、ncome,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 opinion on those consolidated financial statements.In our opinion,the information set forth in the accompanying consolidated balance sheet as of Jun

225、e 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 interim financial information is the responsibility of the Companys management.We are a public accounting firm registered with the PCAOB and a

226、re 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 Securities and Exchange Commission and the PCAOB.We conducted our reviews in accordance with standards of the PCAOB.A review of interim financi

227、al information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters.It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB,the objective of which is the expression of a

228、n opinion regarding the financial statements taken as a whole.Accordingly,we do not express such an opinion./S/DELOITTE&TOUCHE LLP Seattle,WashingtonApril 25,202431PART IItem 2 ITEM 2.MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSNote About Forward-Looking State

229、mentsThis report includes estimates,projections,statements relating to our business plans,objectives,and expected operating results that are“forward-looking statements”within the meaning of the Private Securities Litigation Reform Act of 1995,Section 27A of the Securities Act of 1933,and Section 21E

230、 of the Securities Exchange Act of 1934.Forward-looking statements may appear throughout this report,including the following sections:“Managements Discussion and Analysis of Financial Condition and Results of Operations”and“Risk Factors”(Part II,Item 1A of this Form 10-Q).These forward-looking state

231、ments generally are identified by the words“believe,”“project,”“expect,”“anticipate,”“estimate,”“intend,”“strategy,”“future,”“opportunity,”“plan,”“may,”“should,”“will,”“would,”“will be,”“will continue,”“will likely result,”and similar expressions.Forward-looking statements are based on current expec

232、tations and assumptions that are subject to risks and uncertainties that may cause actual results to differ materially.We describe risks and uncertainties that could cause actual results and events to differ materially in“Managements Discussion and Analysis of Financial Condition and Results of Oper

233、ations,”“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 or revise publicly any forward-looking statements,whether because of new information,future events,or otherwise.The following Managements Discu

234、ssion and Analysis of Financial Condition and Results of Operations(“MD&A”)is intended to help the reader understand the results of operations and financial condition 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 fo

235、r 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).OVERVIEWMicrosoft is a technology company whose mission is to empower every person and every organization on the planet to achieve more.We strive to create l

236、ocal opportunity,growth,and impact in every country around the world.We are creating the platforms and tools,powered by artificial intelligence(“AI”),that deliver better,faster,and more effective solutions to support small and large business competitiveness,improve educational and health outcomes,gr

237、ow public-sector efficiency,and empower human ingenuity.We generate revenue by offering a wide range of cloud-based solutions,content,and other services to people and businesses;licensing and supporting an array of software products;delivering relevant online advertising to a global audience;and des

238、igning and selling devices.Our most significant expenses are related to compensating employees;supporting and investing in our cloud-based services,including datacenter operations;designing,manufacturing,marketing,and selling our other products and services;and income taxes.Highlights from the third

239、 quarter of fiscal year 2024 compared with the third quarter of fiscal year 2023 included:Microsoft Cloud revenue increased 23%to$35.1 billion.Office Commercial products and cloud services revenue increased 13%driven by Office 365 Commercial growth of 15%.Office Consumer products and cloud services

240、revenue increased 4%and Microsoft 365 Consumer subscribers grew to 80.8 million.LinkedIn revenue increased 10%.Dynamics products and cloud services revenue increased 19%driven by Dynamics 365 growth of 23%.Server products and cloud services revenue increased 24%driven by Azure and other cloud servic

241、es growth of 31%.Windows revenue increased 11%with Windows original equipment manufacturer licensing(“Windows OEM”)revenue growth of 11%and Windows Commercial products and cloud services revenue growth of 13%.Devices revenue decreased 17%.32PART IItem 2 Xbox content and services revenue increased 62

242、%driven by 61 points of net impact from the Activision Blizzard Inc.(“Activision Blizzard”)acquisition.The net impact reflects the change of Activision Blizzard content from third-party to first-party.Search and news advertising revenue excluding traffic acquisition costs increased 12%.On October 13

243、,2023,we completed our acquisition of Activision Blizzard for a total purchase price of$75.4 billion,consisting primarily of cash.The financial results of Activision Blizzard have been included in our consolidated financial statements since the date of the acquisition.Activision Blizzard is reported

244、 as part of our More Personal Computing segment.Refer to Note 7 Business Combinations of the Notes to the Financial Statements(Part I,Item 1 of this Form 10-Q)for further discussion.Industry TrendsOur industry is dynamic and highly competitive,with frequent changes in both technologies and business

245、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 development activities that seek to identify and

246、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 new software and devices,while also deploying

247、 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.Aggregate demand for our software,services,and

248、 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 and devices will continue to increase our o

249、perating 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 for AI services.Our datacenters depend on the

250、 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 our products,we have the ability to use ot

251、her 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 ability to manufacture devices on time to mee

252、t 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,broad customer reach,scale in resources,the

253、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 denominated in currencies other than the U.S.dollar.

254、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 operations for the three and nine months ended Marc

255、h 31,2024.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 drivenby corporate year-end spending

256、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.33PART IItem 2 Reportable SegmentsWe report our financial performance based on the following segments:Productivity an

257、d 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 17 Segment Information and Geographic Data of the

258、Notes to Financial Statements(Part I,Item 1 of this Form 10-Q).MetricsWe 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 our ambitions,provide transparen

259、cy 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 to Financial Statements(Part I,Ite

260、m 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 year.In the first quarter of fiscal

261、 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,aligning with how we manage our bu

262、siness.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 investors to assess the overall health of

263、 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 recognized as revenue in future

264、 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 for our Microsoft Cloud business

265、 34PART IItem 2 Productivity 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 strategies and trend

266、s.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,Microsoft Teams,O

267、ffice 365 Security and Compliance,Microsoft Viva,and Copilot for Microsoft 365 Office Consumer products and cloud services revenue growth Revenue from Office Consumer products and cloud services,including Microsoft 365 Consumer and Copilot Pro subscriptions,Office licensed on-premises,and other Offi

268、ce services Office 365 Commercial seat growth The number of Office 365 Commercial seats at end of period where seats are paidusers covered by an Office 365 Commercial subscription Microsoft 365 Consumer subscribers The number of Microsoft 365 Consumer and Copilot Pro subscribers at end of period Dyn

269、amics products and 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 Linked

270、In revenue growth Revenue 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

271、 Studio,System Center,and related Client Access Licenses(“CALs”);and Nuance and GitHub More 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

272、assess 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 license

273、s sold 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 Re

274、venue from Devices,including Surface,HoloLens,and PC accessories Xbox content and services revenue growth Revenue from Xbox content and services,comprising first-party content(such as Activision Blizzard)and third-party content,including games and in-game content;Xbox Game Pass and other subscriptio

275、ns;Xbox Cloud Gaming;advertising;third-party disc royalties;and other cloud services Search 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 partners 35PART IItem 2 SUMMARY RESUL

276、TS OF OPERATIONS(In millions,except percentages and per share amounts)Three Months EndedMarch 31,PercentageChange Nine Months EndedMarch 31,PercentageChange 2024 2023 2024 2023 Revenue$61,858$52,857 17%$180,395$155,726 16%Gross margin 43,353 36,729 18%125,965 106,658 18%Operating income 27,581 22,35

277、2 23%81,508 64,269 27%Net income 21,939 18,299 20%66,100 52,280 26%Diluted earnings per share 2.94 2.45 20%8.85 6.99 27%Adjusted gross margin(non-GAAP)43,353 36,729 18%125,965 106,810 18%Adjusted operating income(non-GAAP)27,581 22,352 23%81,508 65,440 25%Adjusted net income(non-GAAP)21,939 18,299 2

278、0%66,100 53,226 24%Adjusted diluted earnings per share(non-GAAP)2.94 2.45 20%8.85 7.12 24%Adjusted gross margin,operating income,net income,and diluted earnings per share(“EPS”)are non-GAAP financial measures.Prior year non-GAAP financial measures exclude the impact of a$1.2 billion charge in the se

279、cond quarter of fiscal year 2023(“Q2 charge”),which included employee severance expenses,impairment charges resulting from changes to our hardware portfolio,and costs related to lease consolidation activities.Refer to the Non-GAAP Financial Measures section below for a reconciliation of our financia

280、l results reported in accordance with GAAP to non-GAAP financial results.Three Months Ended March 31,2024 Compared with Three Months Ended March 31,2023Revenue increased$9.0 billion or 17%driven by growth across each of our segments.Intelligent Cloud revenue increased driven by Azure.More Personal C

281、omputing revenue increased driven by Gaming.Productivity and Business Processes revenue increased driven by Office 365 Commercial.Cost of revenue increased$2.4 billion or 15%driven by growth in Microsoft Cloud and Gaming.Gross margin increased$6.6 billion or 18%driven by growth across each of our se

282、gments.Gross margin percentage increased slightly.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 1 point driven by improvement in More Personal Computing.Microsoft Cloud gross margin perc

283、entage decreased slightly to 72%.Excluding the impact of the change in accounting estimate,Microsoft Cloud gross margin percentage increased slightly driven by improvements in Azure and Office 365 Commercial,inclusive of scaling our AI infrastructure,offset in part by sales mix shift to Azure.Operat

284、ing expenses increased$1.4 billion or 10%driven by Gaming,with 9 points of growth from the Activision Blizzard acquisition.Operating income increased$5.2 billion or 23%driven by growth across each of our segments.Nine Months Ended March 31,2024 Compared with Nine Months Ended March 31,2023Revenue in

285、creased$24.7 billion or 16%driven by growth across each of our segments.Intelligent Cloud revenue increased driven by Azure.Productivity and Business Processes revenue increased driven by Office 365 Commercial.More Personal Computing revenue increased driven by Gaming.Cost of revenue increased$5.4 b

286、illion or 11%driven by growth in Microsoft Cloud and Gaming,offset in part by a decline in Devices.36PART IItem 2 Gross margin increased$19.3 billion or 18%driven by growth across each of our segments.Gross margin percentage increased.Excluding the impact of the change in accounting estimate,gross m

287、argin percentage increased 2 points driven by improvement in More Personal Computing.Microsoft Cloud gross margin percentage of 72%was relatively unchanged.Excluding the impact of the change in accounting estimate,Microsoft Cloud gross margin percentage increased 1 point driven by improvements in Az

288、ure and Office 365 Commercial,inclusive of scaling our AI infrastructure,offset in part by sales mix shift to Azure.Operating expenses increased$2.1 billion or 5%driven by Gaming,with 7 points of growth from the Activision Blizzard acquisition,offset in part by 2 points of favorable impact from the

289、prior year Q2 charge.Operating income increased$17.2 billion or 27%,including a favorable foreign currency impact of 2%,driven by growth across each of our segments.Prior year gross margin,operating income,net income,and diluted EPS were negatively impacted by the Q2 charge,which resulted in decreas

290、es of$152 million,$1.2 billion,$946 million,and$0.13,respectively.SEGMENT RESULTS OF OPERATIONS(In millions,except percentages)Three Months EndedMarch 31,PercentageChange Nine Months EndedMarch 31,PercentageChange 2024 2023 2024 2023 Revenue Productivity and Business Processes$19,570$17,516 12%$57,4

291、11$50,983 13%Intelligent Cloud 26,708 22,081 21%76,847 63,914 20%More Personal Computing 15,580 13,260 17%46,137 40,829 13%Total$61,858$52,857 17%$180,395$155,726 16%Operating Income Productivity and Business Processes$10,143$8,639 17%$30,397$25,137 21%Intelligent Cloud 12,513 9,476 32%36,725 27,358

292、 34%More Personal Computing 4,925 4,237 16%14,386 11,774 22%Total$27,581$22,352 23%$81,508$64,269 27%Reportable SegmentsThree Months Ended March 31,2024 Compared with Three Months Ended March 31,2023Productivity and Business ProcessesRevenue increased$2.1 billion or 12%.Office Commercial products an

293、d cloud services revenue increased$1.4 billion or 13%.Office 365 Commercial revenue grew 15%with seat growth of 8%,driven by small and medium business and frontline worker offerings,as well as growth in revenue per user.Office Commercial products revenue declined 20%driven by continued customer shif

294、t to cloud offerings.Office Consumer products and cloud services revenue increased$63 million or 4%.Microsoft 365 Consumer subscribers grew 14%to 80.8 million.LinkedIn revenue increased$354 million or 10%driven by growth across all lines of business Talent Solutions,Premium Subscriptions,Marketing S

295、olutions,and Sales Solutions.Dynamics products and cloud services revenue increased$257 million or 19%driven by Dynamics 365.Dynamics 365 revenue grew 23%driven by growth across all workloads.37PART IItem 2 Operating income increased$1.5 billion or 17%.Gross margin increased$1.6 billion or 11%driven

296、 by growth in Office 365 Commercial.Gross margin percentage decreased slightly.Excluding the impact of the change in accounting estimate,gross margin percentage increased slightly driven by improvement in Office 365 Commercial.Operating expenses increased$57 million or 1%.Intelligent CloudRevenue in

297、creased$4.6 billion or 21%.Server products and cloud services revenue increased$4.8 billion or 24%driven by Azure and other cloud services.Azure andother cloud services revenue grew 31%driven by growth in our consumption-based services.Server products revenue increased 6%driven by continued demand f

298、or our hybrid solutions,including Windows Server and SQL Server running in multi-cloud environments.Enterprise and partner services revenue decreased$186 million or 9%on a strong prior year comparable for Enterprise Support Services.Operating income increased$3.0 billion or 32%.Gross margin increase

299、d$3.1 billion or 20%driven by growth in Azure.Gross margin percentage decreased slightly.Excluding the impact of the change in accounting estimate,gross margin percentage increased slightly primarily driven by improvement in Azure,inclusive of scaling our AI infrastructure,offset in part by sales mi

300、x shift to Azure.Operating expenses increased$49 million or 1%driven by investments in Azure.More Personal ComputingRevenue increased$2.3 billion or 17%.Windows revenue increased$601 million or 11%driven by growth in Windows Commercial and Windows OEM.Windows Commercial products and cloud services r

301、evenue increased 13%driven by demand for Microsoft 365.Windows OEM revenue increased 11%.Gaming revenue increased$1.8 billion or 51%driven by growth in Xbox content and services.Xbox content and services revenue increased 62%driven by 61 points of net impact from the Activision Blizzard acquisition.

302、Xbox hardware revenue decreased 31%driven by lower volume of consoles sold.Search and news advertising revenue increased$98 million or 3%.Search and news advertising revenue excluding traffic acquisition costs increased 12%driven by higher search volume.Devices revenue decreased$215 million or 17%.O

303、perating income increased$688 million or 16%.Gross margin increased$2.0 billion or 27%driven by growth in Gaming,with 13 points of net impact from the Activision Blizzard acquisition,as well as growth in Windows.Gross margin percentage increased driven by sales mix shift to higher margin businesses.

304、Operating expenses increased$1.3 billion or 41%driven by Gaming,with 43 points of growth from the Activision Blizzard acquisition.Nine Months Ended March 31,2024 Compared with Nine Months Ended March 31,2023Productivity and Business ProcessesRevenue increased$6.4 billion or 13%.Office Commercial pro

305、ducts and cloud services revenue increased$4.4 billion or 14%.Office 365 Commercial revenue grew 17%with seat growth of 8%,driven by small and medium business and frontline worker offerings,as well as growth in revenue per user.Office Commercial products revenue declined 18%driven by continued custo

306、mer shift to cloud offerings.38PART IItem 2 Office Consumer products and cloud services revenue increased$181 million or 4%with continued growth in Microsoft 365 Consumer subscribers.LinkedIn revenue increased$1.0 billion or 9%driven by growth across all lines of business Talent Solutions,Premium Su

307、bscriptions,Marketing Solutions,and Sales Solutions.Dynamics products and cloud services revenue increased$811 million or 21%driven by Dynamics 365.Dynamics 365 revenue grew 26%driven by growth across all workloads.Operating income increased$5.3 billion or 21%.Gross margin increased$5.2 billion or 1

308、3%driven by growth in Office 365 Commercial.Gross margin percentage was relatively unchanged.Excluding the impact of the change in accounting estimate,gross margin percentage increased slightly driven by improvement in Office 365 Commercial.Operating expenses decreased$97 million or 1%primarily driv

309、en by 2 points of favorable impact from the prior year Q2 charge.Intelligent CloudRevenue increased$12.9 billion or 20%.Server products and cloud services revenue increased$13.1 billion or 23%driven by Azure and other cloud services.Azure and other cloud services revenue grew 30%driven by growth in

310、our consumption-based services.Server products revenue increased 4%driven by continued demand for our hybrid solutions,including Windows Server and SQL Server running in multi-cloud environments.Enterprise and partner services revenue decreased$161 million or 3%driven by declines in Industry Solutio

311、ns and Enterprise Support Services.Operating income increased$9.4 billion or 34%.Gross margin increased$9.0 billion or 20%driven by growth in Azure.Gross margin percentage was relatively unchanged.Excluding the impact of the change in accounting estimate,gross margin percentage increased 1 point dri

312、ven by improvement in Azure,inclusive of scaling our AI infrastructure,offset in part by sales mix shift to Azure.Operating expenses decreased$369 million or 2%driven by 3 points of favorable impact from the prior year Q2 charge,offset in part by investments in Azure.More Personal ComputingRevenue i

313、ncreased$5.3 billion or 13%.Windows revenue increased$1.3 billion or 8%driven by growth in Windows Commercial and Windows OEM.Windows Commercial products and cloud services revenue increased 10%driven by demand for Microsoft 365.Windows OEM revenue increased 8%.Gaming revenue increased$4.5 billion o

314、r 38%driven by growth in Xbox content and services.Xbox content and services revenue increased 47%driven by 40 points of net impact from the Activision Blizzard acquisition.Xbox hardware revenue decreased 7%driven by lower volume of consoles sold,offset in part by sales mix shift to higher-priced co

315、nsoles.Search and news advertising revenue increased$249 million or 3%.Search and news advertising revenue excluding traffic acquisition costs increased 10%driven by higher search volume.Devices revenue decreased$670 million or 16%.Operating income increased$2.6 billion or 22%.Gross margin increased

316、$5.1 billion or 24%driven by growth in Gaming,with 10 points of net impact from the Activision Blizzard acquisition,as well as growth in Windows.Gross margin percentage increased driven by sales mix shift to higher margin businesses and improvement in Devices.Operating expenses increased$2.5 billion

317、 or 27%driven by Gaming,with 31 points of growth from the Activision Blizzard acquisition.39PART IItem 2 OPERATING EXPENSESResearch and Development(In millions,except percentages)Three Months EndedMarch 31,PercentageChange Nine Months EndedMarch 31,PercentageChange 2024 2023 2024 2023 Research and d

318、evelopment$7,653$6,984 10%$21,454$20,456 5%As a percent of revenue 12%13%(1)ppt 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

319、 also include third-party development and programming costs and the amortization of purchased software code and services content.Three Months Ended March 31,2024 Compared with Three Months Ended March 31,2023Research and development expenses increased$669 million or 10%driven by Gaming,with 9 points

320、 of growth from the Activision Blizzard acquisition.Nine Months Ended March 31,2024 Compared with Nine Months Ended March 31,2023Research and development expenses increased$998 million or 5%driven by Gaming,with 6 points of growth from the Activision Blizzard acquisition.Sales and Marketing(In milli

321、ons,except percentages)Three Months EndedMarch 31,PercentageChange Nine Months EndedMarch 31,PercentageChange 2024 2023 2024 2023 Sales and marketing$6,207$5,750 8%$17,640$16,555 7%As a percent of revenue 10%11%(1)ppt 10%11%(1)ppt Sales and marketing expenses include payroll,employee benefits,stock-

322、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 March 31,2024 Compared with Three Months Ended March 31,2023Sales and marketing expenses in

323、creased$457 million or 8%driven by Gaming,with 8 points of growth from the Activision Blizzard acquisition.Nine Months Ended March 31,2024 Compared with Nine Months Ended March 31,2023Sales and marketing expenses increased$1.1 billion or 7%driven by Gaming,with 6 points of growth from the Activision

324、 Blizzard acquisition.General and Administrative(In millions,except percentages)Three Months EndedMarch 31,PercentageChange Nine Months EndedMarch 31,PercentageChange 2024 2023 2024 2023 General and administrative$1,912$1,643 16%$5,363$5,378 0%As a percent of revenue 3%3%0ppt 3%3%0ppt 40PART IItem 2

325、 General and administrative expenses include 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 pe

326、rsonnel,certain taxes,and legal and other administrative fees.Three Months Ended March 31,2024 Compared with Three Months Ended March 31,2023General and administrative expenses increased$269 million or 16%driven by Gaming,with 17 points of growth from the Activision Blizzard acquisition.Nine Months

327、Ended March 31,2024 Compared with Nine Months Ended March 31,2023General and administrative expenses were relatively unchanged as prior year employee severance expenses were offset by growth from the Activision Blizzard acquisition.OTHER INCOME(EXPENSE),NETThe components of other income(expense),net

328、 were as follows:(In millions)Three Months EndedMarch 31,Nine Months EndedMarch 31,2024 2023 2024 2023 Interest and dividends income$619$748$2,519$2,089 Interest expense (800)(496)(2,234)(1,486)Net recognized gains(losses)on investments (25)105 (63)103 Net losses on derivatives (24)(65)(198)(255)Net

329、 gains(losses)on foreign currency remeasurements (138)122 (203)26 Other,net (486)(93)(792)(162)Total$(854)$321$(971)$315 We use derivative instruments to manage risks related to foreign currencies,interest rates,equity prices,and credit;to enhance investment returns;and to facilitate portfolio diver

330、sification.Gains and losses from changes in fair values of derivatives that are not designated as hedging instruments are primarily recognized in other income(expense),net.Three Months Ended March 31,2024 Compared with Three Months Ended March 31,2023Interest and dividends income decreased due to lo

331、wer portfolio balances.Interest expense increased due to the issuance of commercial paper.Net recognized losses on investments increased primarily due to higher equity impairments and lower gains on equity investments.Net losses on derivatives decreased primarily due to lower losses on equity deriva

332、tives.Other,net primarily reflects net recognized losses on equity method investments.Nine Months Ended March 31,2024 Compared with Nine Months Ended March 31,2023Interest and dividends income increased due to higher yields and higher portfolio balances.Interest expense increased due to the issuance

333、 of commercial paper.Net recognized losses on investments increased primarily due to higher equity impairments.Net losses on derivatives decreased primarily due to lower losses on equity and interest rate derivatives.Other,net primarily reflects net recognized losses on equity method investments.41PART IItem 2 INCOME TAXESEffective Tax RateOur effective tax rate was 18%and 19%for the three months