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8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported) April 25, 2023

Microsoft Corporation

Washington

001-37845

91-1144442

(State or Other Jurisdiction

of Incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)


One Microsoft Way, Redmond, Washington		98052-6399

(425) 882-8080

www.microsoft.com/investor

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of exchange on which registered
Common stock, $0.00000625 par value per share	MSFT	NASDAQ
3.125% Notes due 2028	MSFT	NASDAQ
2.625% Notes due 2033	MSFT	NASDAQ

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ☐

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

Item 2.02. Results of Operations and Financial Condition

On April 25, 2023, Microsoft Corporation issued a press release announcing its financial results for the fiscal quarter ended March 31, 2023. A copy of the press release is furnished as Exhibit 99.1 to this report.

In accordance with General Instruction B.2 of Form 8-K, the information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits:


99.1		Press release, dated April 25, 2023, issued by Microsoft Corporation
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


		MICROSOFT CORPORATION
		(Registrant)

Date: April 25, 2023		/S/ ALICE L. JOLLA
		Alice L. Jolla
		Corporate Vice President and Chief Accounting Officer

EX-99.1

Exhibit 99.1

Microsoft Cloud Strength Drives Third Quarter Results

REDMOND, Wash. — April 25, 2023 — Microsoft Corp. today announced the following results for the quarter ended March 31, 2023, as compared to the corresponding period of last fiscal year:

•

Revenue was $52.9 billion and increased 7% (up 10% in constant currency)

•

Operating income was $22.4 billion and increased 10% (up 15% in constant currency)

•

Net income was $18.3 billion and increased 9% (up 14% in constant currency)

•

Diluted earnings per share was $2.45 and increased 10% (up 14% in constant currency)

“The world’s most advanced AI models are coming together with the world’s most universal user interface - natural language - to create a new era of computing,” said Satya Nadella, chairman and chief executive officer of Microsoft. “Across the Microsoft Cloud, we are the platform of choice to help customers get the most value out of their digital spend and innovate for this next generation of AI.”

“Focused execution by our sales teams and partners in this dynamic environment resulted in Microsoft Cloud revenue of $28.5 billion, up 22% (up 25% in constant currency) year-over-year,” said Amy Hood, executive vice president and chief financial officer of Microsoft.

Business Highlights

Revenue in Productivity and Business Processes was $17.5 billion and increased 11% (up 15% in constant currency), with the following business highlights:

•

Office Commercial products and cloud services revenue increased 13% (up 17% in constant currency) driven by Office 365 Commercial revenue growth of 14% (up 18% in constant currency)

•

Office Consumer products and cloud services revenue increased 1% (up 4% in constant currency) and Microsoft 365 Consumer subscribers grew to 65.4 million

•

LinkedIn revenue increased 8% (up 10% in constant currency)

•

Dynamics products and cloud services revenue increased 17% (up 21% in constant currency) driven by Dynamics 365 revenue growth of 25% (up 29% in constant currency)

Revenue in Intelligent Cloud was $22.1 billion and increased 16% (up 19% in constant currency), with the following business highlights:

•

Server products and cloud services revenue increased 17% (up 21% in constant currency) driven by Azure and other cloud services revenue growth of 27% (up 31% in constant currency)

Revenue in More Personal Computing was $13.3 billion and decreased 9% (down 7% in constant currency), with the following business highlights:

•

Windows OEM revenue decreased 28%

•

Devices revenue decreased 30% (down 26% in constant currency)

•

Windows Commercial products and cloud services revenue increased 14% (up 18% in constant currency)

•

Xbox content and services revenue increased 3% (up 5% in constant currency)

•

Search and news advertising revenue excluding traffic acquisition costs increased 10% (up 13% in constant currency)

Microsoft returned $9.7 billion to shareholders in the form of share repurchases and dividends in the third quarter of fiscal year 2023.

Business Outlook

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

Quarterly Highlights, Product Releases, and Enhancements

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

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

Environmental, Social, and Governance (ESG)

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

Webcast Details

Satya Nadella, chairman and chief executive officer, Amy Hood, executive vice president and chief financial officer, Alice Jolla, chief accounting officer, Keith Dolliver, deputy general counsel, and Brett Iversen, vice president of investor relations, will host a conference call and webcast at 2:30 p.m. Pacific time (5:30 p.m. Eastern time) today to discuss details of the company’s performance for the quarter and certain forward-looking information. The session may be accessed at http://www.microsoft.com/en-us/investor. The webcast will be available for replay through the close of business on April 25, 2024.

Constant Currency

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

Financial Performance Constant Currency Reconciliation

Three Months Ended March 31,

($ in millions, except per share amounts)

Revenue

Operating

Income

Net Income

Diluted

Earnings per

Share

2022 As Reported (GAAP)

$49,360

$20,364

$16,728

$2.22

2023 As Reported (GAAP)

$52,857

$22,352

$18,299

$2.45

Percentage Change Y/Y (GAAP)

10%

Constant Currency Impact

$(1,482)

$(1,069)

$(704)

$(0.09)

Percentage Change Y/Y Constant Currency

10%

15%

14%

Segment Revenue Constant Currency Reconciliation

Three Months Ended March 31,

($ in millions)

Productivity and

Business Processes

Intelligent Cloud

More Personal

Computing

2022 As Reported (GAAP)

$15,789

$18,987

$14,584

2023 As Reported (GAAP)

$17,516

$22,081

$13,260

Percentage Change Y/Y (GAAP)

11%

16%

(9)%

Constant Currency Impact

$(587)

$(591)

$(304)

Percentage Change Y/Y Constant Currency

15%

19%

(7)%

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

Selected Product and Service Revenue Constant Currency Reconciliation

Three Months Ended March 31, 2023

Percentage Change

Y/Y (GAAP)

Constant Currency

Impact

Percentage Change

Y/Y Constant

Currency

Microsoft Cloud revenue

22%

25%

Office Commercial products and cloud services

13%

17%

Office 365 Commercial

14%

18%

Office Consumer products and cloud services

LinkedIn

10%

Dynamics products and cloud services

17%

21%

Dynamics 365

25%

29%

Server products and cloud services

17%

21%

Azure and other cloud services

27%

31%

Windows OEM

(28)%

Windows Commercial products and cloud services

14%

18%

Xbox content and services

Search and news advertising excluding traffic acquisition costs

10%

13%

Devices

(30)%

(26)%

About Microsoft

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

Forward-Looking Statements

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

•

intense competition in all of our markets that may lead to lower revenue or operating margins;

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

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

•

the development of the internet of things presenting security, privacy, and execution risks;

•

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

•

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

•

quality or supply problems;

•

government litigation and regulatory activity relating to competition rules that may limit how we design and market our products;

•

potential consequences under trade, anti-corruption, and other laws resulting from our global operations;

•

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

•

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

•

uncertainties relating to our business with government customers;

•

additional tax liabilities;

•

the possibility that we may fail to protect our source code;

•

legal changes, our evolving business model, piracy, and other factors may decrease the value of our intellectual property;

•

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

•

damage to our reputation or our brands that may harm our business and operating results;

•

adverse economic or market conditions that may harm our business;

•

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

•

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

•

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

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

All information in this release is as of March 31, 2023. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.

For more information, press only:

Microsoft Media Relations, WE Communications for Microsoft, (425) 638-7777, rrt@we-worldwide.com

For more information, financial analysts and investors only:

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

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

MICROSOFT CORPORATION

INCOME STATEMENTS

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

Three Months Ended
March 31,

Nine Months Ended
March 31,

2023

2022

2023

2022

Revenue:

Product

$15,588

$17,366

$47,846

$54,776

Service and other

37,269

31,994

107,880

91,629

Total revenue

52,857

49,360

155,726

146,405

Cost of revenue:

Product

3,941

4,584

13,933

14,707

Service and other

12,187

11,031

35,135

31,514

Total cost of revenue

16,128

15,615

49,068

46,221

Gross margin

36,729

33,745

106,658

100,184

Research and development

6,984

6,306

20,456

17,663

Sales and marketing

5,750

5,595

16,555

15,521

General and administrative

1,643

1,480

5,378

4,151

Operating income

22,352

20,364

64,269

62,849

Other income (expense), net

321

(174)

315

380

Income before income taxes

22,673

20,190

64,584

63,229

Provision for income taxes

4,374

3,462

12,304

7,231

Net income

$18,299

$16,728

$52,280

$55,998

Earnings per share:

Basic

$2.46

$2.23

$7.02

$7.46

Diluted

$2.45

$2.22

$6.99

$7.41

Weighted average shares outstanding:

Basic

7,441

7,493

7,450

7,504

Diluted

7,464

7,534

7,474

7,552

COMPREHENSIVE INCOME STATEMENTS

(In millions) (Unaudited)

Three Months Ended

March 31,

Nine Months Ended

March 31,

2023

2022

2023

2022

Net income

$18,299

$16,728

$52,280

$55,998

Other comprehensive income (loss), net of tax:

Net change related to derivatives

(9)

(34)

Net change related to investments

753

(2,882)

(796)

(4,047)

Translation adjustments and other

(37)

(136)

(259)

Other comprehensive income (loss)

813

(2,913)

(966)

(4,298)

Comprehensive income

$19,112

$13,815

$51,314

$51,700

BALANCE SHEETS

(In millions) (Unaudited)


	March 31, 2023		June 30, 2022

Assets
Current assets:
Cash and cash equivalents		$26,562		$13,931
Short-term investments		77,865		90,826

Total cash, cash equivalents, and short-term investments		104,427		104,757
Accounts receivable, net of allowance for doubtful accounts of $495 and $633		37,420		44,261
Inventories		2,877		3,742
Other current assets		19,165		16,924

Total current assets		163,889		169,684
Property and equipment, net of accumulated depreciation of $65,998 and $59,660		88,132		74,398
Operating lease right-of-use assets		13,879		13,148
Equity investments		9,415		6,891
Goodwill		67,940		67,524
Intangible assets, net		9,879		11,298
Other long-term assets		26,954		21,897

Total assets		$380,088		$364,840

Liabilities and stockholders’ equity
Current liabilities:
Accounts payable		$15,305		$19,000
Current portion of long-term debt		6,245		2,749
Accrued compensation		10,411		10,661
Short-term income taxes		4,163		4,067
Short-term unearned revenue		36,903		45,538
Other current liabilities		12,664		13,067

Total current liabilities		85,691		95,082
Long-term debt		41,965		47,032
Long-term income taxes		25,000		26,069
Long-term unearned revenue		2,698		2,870
Deferred income taxes		302		230
Operating lease liabilities		12,312		11,489
Other long-term liabilities		17,437		15,526

Total liabilities		185,405		198,298

Commitments and contingencies
Stockholders’ equity:
Common stock and paid-in capital—shares authorized 24,000; outstanding 7,437 and 7,464		92,093		86,939
Retained earnings		108,234		84,281
Accumulated other comprehensive loss		(5,644)		(4,678)

Total stockholders’ equity		194,683		166,542

Total liabilities and stockholders’ equity		$380,088		$364,840

CASH FLOWS STATEMENTS

(In millions) (Unaudited)

Three Months Ended

March 31,

Nine Months Ended

March 31,

2023

2022

2023

2022

Operations

Net income

$18,299

$16,728

$52,280

$55,998

Adjustments to reconcile net income to net cash from operations:

Depreciation, amortization, and other

3,549

3,773

9,987

10,481

Stock-based compensation expense

2,465

1,906

7,195

5,505

Net recognized losses (gains) on investments and derivatives

(40)

105

152

(566)

Deferred income taxes

(1,675)

(198)

(4,171)

(5,985)

Changes in operating assets and liabilities:

Accounts receivable

(1,408)

857

7,157

5,800

Inventories

106

(279)

868

(662)

Other current assets

1,152

428

1,861

Other long-term assets

(554)

(724)

(1,285)

(2,230)

Accounts payable

(407)

520

(4,032)

284

Unearned revenue

(181)

(209)

(8,689)

(7,437)

Income taxes

1,414

1,091

(1,039)

1,687

Other current liabilities

1,715

1,287

(490)

(1,111)

Other long-term liabilities

438

451

781

Net cash from operations

24,441

25,386

58,812

64,406

Financing

Repayments of debt

(4,197)

(1,750)

(9,023)

Common stock issued

536

477

1,354

1,380

Common stock repurchased

(5,509)

(8,822)

(16,541)

(23,939)

Common stock cash dividends paid

(5,059)

(4,645)

(14,746)

(13,503)

Other, net

(258)

(158)

(839)

(522)

Net cash used in financing

(10,290)

(17,345)

(32,522)

(45,607)

Investing

Additions to property and equipment

(6,607)

(5,340)

(19,164)

(17,015)

Acquisition of companies, net of cash acquired, and purchases
of intangible and other assets

(301)

(18,719)

(1,329)

(20,775)

Purchases of investments

(9,063)

(8,723)

(25,675)

(21,537)

Maturities of investments

13,154

1,099

26,744

15,214

Sales of investments

1,239

16,693

8,725

25,218

Other, net

(1,686)

(1,181)

(2,847)

(1,687)

Net cash used in investing

(3,264)

(16,171)

(13,546)

(20,582)

Effect of foreign exchange rates on cash and cash equivalents

(113)

Net change in cash and cash equivalents

10,916

(8,106)

12,631

(1,726)

Cash and cash equivalents, beginning of period

15,646

20,604

13,931

14,224

Cash and cash equivalents, end of period

$26,562

$12,498

$26,562

$12,498

SEGMENT REVENUE AND OPERATING INCOME

(In millions) (Unaudited)

Three Months Ended

March 31,

Nine Months Ended

March 31,

2023

2022

2023

2022

Revenue

Productivity and Business Processes

$17,516

$15,789

$50,983

$46,764

Intelligent Cloud

22,081

18,987

63,914

54,161

More Personal Computing

13,260

14,584

40,829

45,480

Total

$52,857

$49,360

$155,726

$146,405

Operating Income

Productivity and Business Processes

$8,639

$7,185

$25,137

$22,454

Intelligent Cloud

9,476

8,391

27,358

24,395

More Personal Computing

4,237

4,788

11,774

16,000

Total

$22,352

$20,364

$64,269

$62,849

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