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) January 25, 2022

Microsoft Corporation

Washington	001-37845	91-1144442
(State or Other Jurisdiction<br><br>of Incorporation)	(Commission<br><br>File Number)	(IRS Employer<br><br>Identification No.)
One Microsoft Way, Redmond, Washington	98052-6399
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(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)
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☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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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 January 25, 2022, Microsoft Corporation issued a press release announcing its financial results for the fiscal quarter ended December 31, 2021. 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 25, 2022, 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: January 25, 2022	/S/ ALICE L. JOLLA
	Alice L. Jolla
	Corporate Vice President and Chief Accounting<br>Officer

EX-99.1

Exhibit 99.1

Microsoft Cloud Strength Fuels Second Quarter Results

REDMOND, Wash. — January 25, 2022 — Microsoft Corp. today announced the following results for the quarter ended December 31, 2021, as compared to the corresponding period of last fiscal year:

•	Revenue was $51.7 billion and increased 20%
•	Operating income was $22.2 billion and increased 24%
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•	Net income was $18.8 billion and increased 21%
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•	Diluted earnings per share was $2.48 and increased 22%
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“Digital technology is the most malleable resource at the world’s disposal to overcome constraints and reimagine everyday work and life,” said Satya Nadella, chairman and chief executive officer of Microsoft. “As tech as a percentage of global GDP continues to increase, we are innovating and investing across diverse and growing markets, with a common underlying technology stack and an operating model that reinforces a common strategy, culture, and sense of purpose.”

“Solid commercial execution, represented by strong bookings growth driven by long-term Azure commitments, increased Microsoft Cloud revenue to $22.1 billion, up 32% year over year” said Amy Hood, executive vice president and chief financial officer of Microsoft.

Business Highlights

Revenue in Productivity and Business Processes was $15.9 billion and increased 19%, with the following business highlights:

•	Office Commercial products and cloud services revenue increased 14% driven by Office 365 Commercial<br>revenue growth of 19%
•	Office Consumer products and cloud services revenue increased 15% and Microsoft 365 Consumer<br>subscribers grew to 56.4 million
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•	LinkedIn revenue increased 37% (up 36% in constant currency)
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•	Dynamics products and cloud services revenue increased 29% driven by Dynamics 365 revenue growth of<br>45% (up 44% in constant currency)
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Revenue in Intelligent Cloud was $18.3 billion and increased 26%, with the following business highlights:

•	Server products and cloud services revenue increased 29% driven by Azure and other cloud services<br>revenue growth of 46%

Revenue in More Personal Computing was $17.5 billion and increased 15%, with the following business highlights:

•	Windows OEM revenue increased 25%
•	Windows Commercial products and cloud services revenue increased 13% (up 14% in constant currency)
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•	Xbox content and services revenue increased 10%
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•	Search and news advertising revenue excluding traffic acquisition costs increased 32%
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•	Surface revenue increased 8%
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Microsoft returned $10.9 billion to shareholders in the form of share repurchases and dividends in the second quarter of fiscal year 2022, an increase of 9% compared to the second quarter of fiscal year 2021.

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 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, general manager 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 25, 2023.

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
2020 AsReported (GAAP)	****	43,076	17,897	15,463	$2.03
2021 AsReported (GAAP)	****	51,728	22,247	18,765	$2.48
Percentage Change<br>Y/Y (GAAP)		20%	24%	21%	22%
ConstantCurrency Impact	****	(4)	44	(10)	$0.00
Percentage Change<br>Y/Y (non-GAAP) Constant Currency		20%	24%	21%	22%

All values are in US Dollars.

Segment Revenue Constant Currency Reconciliation

	Three Months Ended December 31,
($ in millions)	ProductivityandBusiness Processes
2020 AsReported (GAAP)	****	13,353	14,601	$15,122
2021 AsReported (GAAP)	****	15,936	18,327	$17,465
Percentage Change<br>Y/Y (GAAP)		19%	26%	15%
ConstantCurrency Impact	****	14	(32)	$14
Percentage Change<br>Y/Y (non-GAAP) Constant Currency		19%	26%	15%

All values are in US Dollars.

Selected Product and Service Revenue Constant Currency Reconciliation

	Three Months Ended December 31, 2021
	Percentage ChangeY/Y(GAAP)		Constant CurrencyImpact		Percentage Change<br><br><br>Y/Y (non-GAAP)<br><br><br>Constant<br> <br>Currency
OfficeCommercial products and cloud services	****	14%	****	0%	****	14%
Office 365Commercial	****	19%	****	0%	****	19%
OfficeConsumer products and cloud services	****	15%	****	0%	****	15%
LinkedIn	****	37%	****	(1)%	****	36%
Dynamicsproducts and cloud services	****	29%	****	0%	****	29%
Dynamics365	****	45%	****	(1)%	****	44%
Serverproducts and cloud services	****	29%	****	0%	****	29%
Azure andother cloud services	****	46%	****	0%	****	46%
WindowsOEM	****	25%	****	0%	****	25%
WindowsCommercial products and cloud services	****	13%	****	1%	****	14%
Xbox contentand services	****	10%	****	0%	****	10%
Search andnews advertising excluding traffic acquisition costs	****	32%	****	0%	****	32%
Surface	****	8%	****	0%	****	8%

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;
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•	significant investments in products and services that may not achieve expected returns;
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•	acquisitions, joint ventures, and strategic alliances that may have an adverse effect on our<br>business;
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•	impairment of goodwill or amortizable intangible assets causing a significant charge to earnings;
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•	cyberattacks and security vulnerabilities that could lead to reduced revenue, increased costs,<br>liability claims, or harm to our reputation or competitive position;
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•	disclosure and misuse of personal data that could cause liability and harm to our reputation;
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•	the possibility that we may not be able to protect information stored in our products and services<br>from use by others;
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•	abuse of our advertising or social platforms that may harm our reputation or user engagement;
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•	the development of the internet of things presenting security, privacy, and execution risks;
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•	issues about the use of artificial intelligence in our offerings that may result in competitive harm,<br>legal liability, or reputational harm;
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•	excessive outages, data losses, and disruptions of our online services if we fail to maintain an<br>adequate operations infrastructure;
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•	quality or supply problems;
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•	government litigation and regulatory activity relating to competition rules that may limit how we<br>design and market our products;
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•	potential consequences under trade, anti-corruption, and other laws resulting from our global<br>operations;
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•	laws and regulations relating to the handling of personal data that may impede the adoption of our<br>services or result in increased costs, legal claims, fines, or reputational damage;
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•	claims against us that may result in adverse outcomes in legal disputes;
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•	uncertainties relating to our business with government customers;
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•	additional tax liabilities;
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•	the possibility that we may fail to protect our source code;
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•	legal changes, our evolving business model, piracy, and other factors may decrease the value of our<br>intellectual property;
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•	claims that Microsoft has infringed the intellectual property rights of others;
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•	damage to our reputation or our brands that may harm our business and operating results;
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•	adverse economic or market conditions that may harm our business;
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•	catastrophic events or geo-political conditions, such as the COVID-19 pandemic, that may disrupt our business;
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•	exposure to increased economic and operational uncertainties from operating a global business,<br>including the effects of foreign currency exchange and
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•	the dependence of our business on our ability to attract and retain talented employees.
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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, 2021. 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, General Manager, 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 EndedDecember 31,
	2021
Revenue:
Product	****	20,779	19,460	37,410	$35,263
Service and other	****	30,949	23,616	59,635	44,967
Total revenue	****	51,728	43,076	97,045	80,230
Cost of revenue:
Product	****	6,331	6,058	10,123	9,655
Service and other	****	10,629	8,136	20,483	15,541
Total cost of revenue	****	16,960	14,194	30,606	25,196
Gross margin	****	34,768	28,882	66,439	55,034
Research and development	****	5,758	4,899	11,357	9,825
Sales and marketing	****	5,379	4,947	9,926	9,178
General and administrative	****	1,384	1,139	2,671	2,258
Operating income	****	22,247	17,897	42,485	33,773
Other income, net	****	268	440	554	688
Income before income taxes	****	22,515	18,337	43,039	34,461
Provision for income taxes	****	3,750	2,874	3,769	5,105
Net income	****	18,765	15,463	39,270	$29,356
Earnings per share:
Basic	****	2.50	2.05	5.23	$3.88
Diluted	****	2.48	2.03	5.19	$3.85
Weighted average shares outstanding:
Basic	****	7,505	7,555	7,509	7,561
Diluted	****	7,555	7,616	7,561	7,627

All values are in US Dollars.

COMPREHENSIVE INCOME STATEMENTS

(In millions) (Unaudited)

	Three Months EndedDecember 31,				Six Months EndedDecember 31,
	2021		2020		2021		2020
Net income	$	18,765	$	15,463	$	39,270	$	29,356
Other comprehensive income (loss), net of tax:
Net change related to derivatives	****	0		8	****	2		12
Net change related to investments	****	(743)		(492)	****	(1,165)		(693)
Translation adjustments and other	****	(103)		741	****	(222)		852
Other comprehensive income (loss)	****	(846)		257	****	(1,385)		171
Comprehensive income	$	17,919	$	15,720	$	37,885	$	29,527

BALANCE SHEETS

(In millions) (Unaudited)

Assets
Current assets:
Cash and cash equivalents	20,604	$14,224
Short-term investments	104,765	116,110
Total cash, cash equivalents, and short-term<br>investments	125,369	130,334
Accounts receivable, net of allowance for doubtful accounts of<br>551 and 751	33,520	38,043
Inventories	3,019	2,636
Other current assets	12,280	13,393
Total current assets	174,188	184,406
Property and equipment, net of accumulated depreciation of<br>55,277 and 51,351	67,214	59,715
Operating lease right-of-use assets	12,354	11,088
Equity investments	6,994	5,984
Goodwill	50,921	49,711
Intangible assets, net	7,462	7,800
Other long-term assets	21,256	15,075
Total assets	340,389	$333,779
Liabilities and stockholders’<br>equity
Current liabilities:
Accounts payable	15,314	$15,163
Current portion of long-term debt	4,998	8,072
Accrued compensation	7,782	10,057
Short-term income taxes	3,731	2,174
Short-term unearned revenue	34,001	41,525
Other current liabilities	11,684	11,666
Total current liabilities	77,510	88,657
Long-term debt	48,260	50,074
Long-term income taxes	26,121	27,190
Long-term unearned revenue	2,768	2,616
Deferred income taxes	199	198
Operating lease liabilities	10,774	9,629
Other long-term liabilities	14,747	13,427
Total liabilities	180,379	191,791
Commitments and contingencies
Stockholders’ equity:
Common stock and paid-in capital—shares authorized 24,000;<br>outstanding 7,500 and 7,519	84,528	83,111
Retained earnings	75,045	57,055
Accumulated other comprehensive income	437	1,822
Total stockholders’ equity	160,010	141,988
Total liabilities and stockholders’ equity	340,389	$333,779

All values are in US Dollars.

CASH FLOWS STATEMENTS

(In millions) (Unaudited)

	Three Months Ended December 31,
	2021
Operations
Net income	****	18,765	15,463	39,270	$29,356
Adjustments to reconcile net income to net cash from operations:
Depreciation, amortization, and other	****	3,496	2,761	6,708	5,406
Stock-based compensation expense	****	1,897	1,566	3,599	3,022
Net recognized gains on investments and derivatives	****	(307)	(354)	(671)	(482)
Deferred income taxes	****	183	(17)	(5,787)	(28)
Changes in operating assets and liabilities:	****
Accounts receivable	****	(5,543)	(4,008)	4,943	4,835
Inventories	****	394	788	(383)	(20)
Other current assets	****	830	730	1,770	676
Other long-term assets	****	(908)	(1,499)	(1,506)	(1,561)
Accounts payable	****	235	33	(236)	348
Unearned revenue	****	(4,343)	(3,227)	(7,228)	(6,291)
Income taxes	****	(2,057)	(2,368)	596	(3,351)
Other current liabilities	****	1,745	1,755	(2,398)	(1,196)
Other long-term liabilities	****	93	893	343	1,137
Net cash from operations	****	14,480	12,516	39,020	31,851
Financing
Repayments of debt	****	0	(3,250)	(4,826)	(3,250)
Common stock issued	****	291	302	903	847
Common stock repurchased	****	(7,433)	(6,535)	(15,117)	(13,278)
Common stock cash dividends paid	****	(4,652)	(4,230)	(8,858)	(8,086)
Other, net	****	(192)	79	(364)	(156)
Net cash used in financing	****	(11,986)	(13,634)	(28,262)	(23,923)
Investing
Additions to property and equipment	****	(5,865)	(4,174)	(11,675)	(9,081)
Acquisition of companies, net of cash acquired, and purchases of intangible and<br>other assets	****	(850)	(415)	(2,056)	(896)
Purchases of investments	****	(2,505)	(15,092)	(12,814)	(29,672)
Maturities of investments	****	5,253	15,264	14,115	29,530
Sales of investments	****	2,895	2,421	8,525	4,835
Other, net	****	(89)	327	(506)	(1,756)
Net cash used in investing	****	(1,161)	(1,669)	(4,411)	(7,040)
Effect of foreign exchange rates on cash and cash equivalents	****	106	14	33	(32)
Net change in cash and cash equivalents	****	1,439	(2,773)	6,380	856
Cash and cash equivalents, beginning of period	****	19,165	17,205	14,224	13,576
Cash and cash equivalents, end of period	****	20,604	14,432	20,604	$14,432

All values are in US Dollars.

SEGMENT REVENUE AND OPERATING INCOME

(In millions) (Unaudited)

	Three Months EndedDecember 31,
	2021
Revenue
Productivity and Business Processes	****	15,936	13,353	30,975	$25,672
Intelligent Cloud	****	18,327	14,601	35,291	27,587
More Personal Computing	****	17,465	15,122	30,779	26,971
Total	****	51,728	43,076	97,045	$80,230
Operating Income
Productivity and Business Processes	****	7,688	6,181	15,269	$11,887
Intelligent Cloud	****	8,197	6,492	15,759	11,914
More Personal Computing	****	6,362	5,224	11,457	9,972
Total	****	22,247	17,897	42,485	$33,773

All values are in US Dollars.