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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) January 30, 2024

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. ¨

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Item 2.02.	Results of Operations and Financial Condition

On January 30, 2024, Microsoft Corporation issued a press release announcing its financial results for the fiscal quarter ended December 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 January 30, 2024, issued by Microsoft Corporation
	104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

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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: January 30, 2024		/s/ ALICE L. JOLLA
		Alice L. Jolla
		Corporate Vice President and Chief Accounting Officer

 

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Exhibit 99.1

Microsoft Cloud Strength Drives Second Quarter Results

REDMOND, Wash. — January 30, 2024 — Microsoft Corp. today announced the following results for the quarter ended December 31, 2023, as compared to the corresponding period of last fiscal year:

Microsoft completed the acquisition of Activision Blizzard, Inc. (“Activision”) on October 13, 2023. Financial results from the acquired business are reported in the More Personal Computing segment.

"We’ve moved from talking about AI to applying AI at scale," said Satya Nadella, chairman and chief executive officer of Microsoft. "By infusing AI across every layer of our tech stack, we’re winning new customers and helping drive new benefits and productivity gains across every sector.”

“Strong execution by our sales teams and partners drove Microsoft Cloud revenue to $33.7 billion, up 24% (up 22% in constant currency) year-over-year,” said Amy Hood, executive vice president and chief financial officer of Microsoft.

The following table reconciles our financial results reported in accordance with generally accepted accounting principles (GAAP) to non-GAAP financial results. Additional information regarding our non-GAAP definition is provided below. All growth comparisons relate to the corresponding period in the last fiscal year.

 

		Three Months Ended December 31,
($ in millions, except per share amounts)		Revenue		Operating Income		Net Income		Diluted Earnings per Share
2022 As Reported (GAAP)		$52,747		$20,399		$16,425		$2.20
Severance, hardware-related impairment, and lease consolidation costs		-		1,171		946		0.12
2022 As Adjusted (non-GAAP)		$52,747		$21,570		$17,371		$2.32
2023 As Reported (GAAP)		$62,020		$27,032		$21,870		$2.93
Percentage Change Y/Y (GAAP)		18%		33%		33%		33%
Percentage Change Y/Y Constant Currency		16%		30%		30%		30%
Percentage Change Y/Y (non-GAAP)		18%		25%		26%		26%
Percentage Change Y/Y (non-GAAP) Constant Currency		16%		23%		23%		23%

Business Highlights

Revenue in Productivity and Business Processes was $19.2 billion and increased 13% (up 12% in constant currency), with the following business highlights:

 

 

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Revenue in Intelligent Cloud was $25.9 billion and increased 20% (up 19% in constant currency), with the following business highlights:

Revenue in More Personal Computing was $16.9 billion and increased 19% (up 18% in constant currency), with the following business highlights:

Microsoft returned $8.4 billion to shareholders in the form of share repurchases and dividends in the second quarter of fiscal year 2024.

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, corporate secretary and 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 January 30, 2025.

 

 

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Non-GAAP Definition

Q2 charge. In the second quarter of fiscal year 2023, Microsoft recorded costs related to decisions announced on January 18th, 2023, including employee severance expenses, impairment charges resulting from changes to our hardware portfolio, and costs related to lease consolidation activities.

Microsoft has provided non-GAAP financial measures related to the Q2 charge to aid investors in better understanding our performance. Microsoft believes these non-GAAP measures assist investors by providing additional insight into its operational performance and help clarify trends affecting its business. For comparability of reporting, management considers non-GAAP measures in conjunction with GAAP financial results in evaluating business 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.

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 December 31,
($ in millions, except per share amounts)		Revenue		Operating Income		Net Income		Diluted Earnings per Share
2022 As Reported (GAAP)		$52,747		$20,399		$16,425		$2.20
2022 As Adjusted (non-GAAP)		$52,747		$21,570		$17,371		$2.32
2023 As Reported (GAAP)		$62,020		$27,032		$21,870		$2.93
Percentage Change Y/Y (GAAP)		18%		33%		33%		33%
Percentage Change Y/Y (non-GAAP)		18%		25%		26%		26%
Constant Currency Impact		$756		$565		$510		$0.07
Percentage Change Y/Y Constant Currency		16%		30%		30%		30%
Percentage Change Y/Y (non-GAAP) Constant Currency		16%		23%		23%		23%

 

 

Segment Revenue Constant Currency Reconciliation

 

		Three Months Ended December 31,
($ in millions)		Productivity and Business Processes		Intelligent Cloud		More Personal Computing
2022 As Reported (GAAP)		$17,002		$21,508		$14,237
2023 As Reported (GAAP)		$19,249		$25,880		$16,891
Percentage Change Y/Y (GAAP)		13%		20%		19%
Constant Currency Impact		$230		$367		$159
Percentage Change Y/Y Constant Currency		12%		19%		18%

 

 

 

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Selected Product and Service Revenue Constant Currency Reconciliation

 

		Three Months Ended December 31, 2023
		Percentage Change Y/Y (GAAP)		Constant Currency Impact		Percentage Change Y/Y Constant Currency
Microsoft Cloud		24%		(2)%		22%
Office Commercial products and cloud services		15%		(2)%		13%
Office 365 Commercial		17%		(1)%		16%
Office Consumer products and cloud services		5%		(1)%		4%
LinkedIn		9%		(1)%		8%
Dynamics products and cloud services		21%		(2)%		19%
Dynamics 365		27%		(3)%		24%
Server products and cloud services		22%		(2)%		20%
Azure and other cloud services		30%		(2)%		28%
Windows		9%		0%		9%
Windows OEM		11%		0%		11%
Windows Commercial products and cloud services		9%		(2)%		7%
Devices		(9)%		(1)%		(10)%
Xbox content and services		61%		(1)%		60%
Search and news advertising excluding traffic acquisition costs		8%		(1)%		7%

 

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:

 

 

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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 December 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.

 

 

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MICROSOFT CORPORATION

 

INCOME STATEMENTS

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

 

		Three Months Ended December 31,				Six Months Ended December 31,
		2023		2022		2023		2022
Revenue:
Product		$18,941		$16,517		$34,476		$32,258
Service and other		43,079		36,230		84,061		70,611
Total revenue		62,020		52,747		118,537		102,869
Cost of revenue:
Product		5,964		5,690		9,495		9,992
Service and other		13,659		11,798		26,430		22,948
Total cost of revenue		19,623		17,488		35,925		32,940
Gross margin		42,397		35,259		82,612		69,929
Research and development		7,142		6,844		13,801		13,472
Sales and marketing		6,246		5,679		11,433		10,805
General and administrative		1,977		2,337		3,451		3,735
Operating income		27,032		20,399		53,927		41,917
Other expense, net		(506)		(60)		(117)		(6)
Income before income taxes		26,526		20,339		53,810		41,911
Provision for income taxes		4,656		3,914		9,649		7,930
Net income		$21,870		$16,425		$44,161		$33,981
Earnings per share:
Basic		$2.94		$2.20		$5.94		$4.56
Diluted		$2.93		$2.20		$5.92		$4.54
Weighted average shares outstanding:
Basic		7,432		7,451		7,431		7,454
Diluted		7,468		7,473		7,465		7,479

 

 

 

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COMPREHENSIVE INCOME STATEMENTS

(In millions) (Unaudited)

 

		Three Months Ended				Six Months Ended
		December 31,				December 31,
		2023		2022		2023		2022
Net income		$21,870		$16,425		$44,161		$33,981
Other comprehensive income (loss), net of tax:
Net change related to derivatives		(3)		(32)		18		(25)
Net change related to investments		1,331		348		1,071		(1,549)
Translation adjustments and other		660		570		305		(205)
Other comprehensive income (loss)		1,988		886		1,394		(1,779)
Comprehensive income		$23,858		$17,311		$45,555		$32,202

 

 

 

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BALANCE SHEETS

(In millions) (Unaudited)

 

		December 31, 2023		June 30, 2023
Assets
Current assets:
Cash and cash equivalents		$17,305		$34,704
Short-term investments		63,712		76,558
Total cash, cash equivalents, and short-term investments		81,017		111,262
Accounts receivable, net of allowance for doubtful accounts of $591 and $650		42,831		48,688
Inventories		1,615		2,500
Other current assets		21,930		21,807
Total current assets		147,393		184,257
Property and equipment, net of accumulated depreciation of $72,949 and $68,251		112,308		95,641
Operating lease right-of-use assets		16,398		14,346
Equity investments		13,367		9,879
Goodwill		118,931		67,886
Intangible assets, net		29,896		9,366
Other long-term assets		32,265		30,601
Total assets		$470,558		$411,976
Liabilities and stockholders' equity
Current liabilities:
Accounts payable		$17,695		$18,095
Short-term debt		27,041		0
Current portion of long-term debt		2,250		5,247
Accrued compensation		8,813		11,009
Short-term income taxes		5,787		4,152
Short-term unearned revenue		43,068		50,901
Other current liabilities		16,362		14,745
Total current liabilities		121,016		104,149
Long-term debt		44,928		41,990
Long-term income taxes		25,890		25,560
Long-term unearned revenue		2,966		2,912
Deferred income taxes		2,548		433
Operating lease liabilities		14,155		12,728
Other long-term liabilities		20,787		17,981
Total liabilities		232,290		205,753
Commitments and contingencies
Stockholders' equity:
Common stock and paid-in capital - shares authorized 24,000; outstanding 7,432 and 7,432		97,480		93,718
Retained earnings		145,737		118,848
Accumulated other comprehensive loss		(4,949)		(6,343)
Total stockholders' equity		238,268		206,223
Total liabilities and stockholders' equity		$470,558		$411,976

 

 

 

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CASH FLOWS STATEMENTS

(In millions) (Unaudited)

 

		Three Months Ended				Six Months Ended
		December 31,				December 31,
		2023		2022		2023		2022
Operations
Net income		$21,870		$16,425		$44,161		$33,981
Adjustments to reconcile net income to net cash from operations:
Depreciation, amortization, and other		5,959		3,648		9,880		6,438
Stock-based compensation expense		2,828		2,538		5,335		4,730
Net recognized losses on investments and derivatives		198		214		212		192
Deferred income taxes		(1,702)		(1,305)		(2,270)		(2,496)
Changes in operating assets and liabilities:
Accounts receivable		(2,951)		(3,164)		8,083		8,565
Inventories		1,474		1,305		969		762
Other current assets		725		(392)		(71)		(724)
Other long-term assets		(1,427)		(65)		(3,440)		(731)
Accounts payable		(2,521)		(2,058)		(1,307)		(3,625)
Unearned revenue		(5,538)		(5,186)		(9,664)		(8,508)
Income taxes		(1,554)		(2,863)		(129)		(2,453)
Other current liabilities		1,518		1,819		(2,588)		(2,205)
Other long-term liabilities		(26)		257		265		445
Net cash from operations		18,853		11,173		49,436		34,371
Financing
Proceeds from issuance (repayments) of debt, maturities of 90 days or less, net		(8,490)		0		10,202		0
Proceeds from issuance of debt		10,773		0		17,846		0
Repayments of debt		(2,916)		(750)		(4,416)		(1,750)
Common stock issued		261		243		946		818
Common stock repurchased		(4,000)		(5,459)		(8,831)		(11,032)
Common stock cash dividends paid		(5,574)		(5,066)		(10,625)		(9,687)
Other, net		(201)		(317)		(508)		(581)
Net cash from (used in) financing		(10,147)		(11,349)		4,614		(22,232)
Investing
Additions to property and equipment		(9,735)		(6,274)		(19,652)		(12,557)
Acquisition of companies, net of cash acquired, and purchases of intangible and other assets		(65,029)		(679)		(66,215)		(1,028)
Purchases of investments		(4,258)		(11,599)		(12,718)		(16,612)
Maturities of investments		4,150		6,928		19,868		13,590
Sales of investments		1,600		4,775		6,930		7,486
Other, net		1,347		(301)		365		(1,161)
Net cash used in investing		(71,925)		(7,150)		(71,422)		(10,282)
Effect of foreign exchange rates on cash and cash equivalents		72		88		(27)		(142)
Net change in cash and cash equivalents		(63,147)		(7,238)		(17,399)		1,715
Cash and cash equivalents, beginning of period		80,452		22,884		34,704		13,931
Cash and cash equivalents, end of period		$17,305		$15,646		$17,305		$15,646

 

 

 

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SEGMENT REVENUE AND OPERATING INCOME

(In millions) (Unaudited)

 

		Three Months Ended				Six Months Ended
		December 31,				December 31,
		2023		2022		2023		2022
Revenue
Productivity and Business Processes		$19,249		$17,002		$37,841		$33,467
Intelligent Cloud		25,880		21,508		50,139		41,833
More Personal Computing		16,891		14,237		30,557		27,569
Total		$62,020		$52,747		$118,537		$102,869
Operating Income
Productivity and Business Processes		$10,284		$8,175		$20,254		$16,498
Intelligent Cloud		12,461		8,904		24,212		17,882
More Personal Computing		4,287		3,320		9,461		7,537
Total		$27,032		$20,399		$53,927		$41,917

 

 

 

 

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