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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 31,2025 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 24,2025 Common Stock,$0.

9、00000625 par value per share 7,432,543,865 shares 2MICROSOFT CORPORATION FORM 10-Q For the Quarter Ended March 31,2025INDEX PagePART I.FINANCIAL INFORMATION Item 1.Financial Statements a)Income Statements for the Three and Nine Months Ended March 31,2025 and 20243 b)Comprehensive Income Statements f

10、or the Three and Nine Months Ended March 31,2025 and 20244 c)Balance Sheets as of March 31,2025 and June 30,20245 d)Cash Flows Statements for the Three and Nine Months Ended March 31,2025 and 20246 e)Stockholders Equity Statements for the Three and Nine Months Ended March 31,2025 and 20247 f)Notes t

11、o 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 Risk47 Item 4.Controls and Procedures47 PART II.OTHER INFORMA

12、TION Item 1.Legal Proceedings48 Item 1A.Risk Factors48 Item 2.Unregistered Sales of Equity Securities and Use of Proceeds63 Item 5.Other Information64 Item 6.Exhibits65 SIGNATURE66 PART IItem 1 3PART I.FINANCIAL INFORMATIONITEM 1.FINANCIAL STATEMENTSINCOME STATEMENTS(In millions,except per share amo

13、unts)(Unaudited)Three Months EndedMarch 31,Nine Months EndedMarch 31,2025 2024 2025 2024 Revenue:Product$15,319$17,080$46,810$51,556 Service and other 54,747 44,778 158,473 128,839 Total revenue 70,066 61,858 205,283 180,395 Cost of revenue:Product 3,037 4,339 10,187 13,834 Service and other 18,882

14、14,166 53,630 40,596 Total cost of revenue 21,919 18,505 63,817 54,430 Gross margin 48,147 43,353 141,466 125,965 Research and development 8,198 7,653 23,659 21,454 Sales and marketing 6,212 6,207 18,369 17,640 General and administrative 1,737 1,912 5,233 5,363 Operating income 32,000 27,581 94,205

15、81,508 Other expense,net (623)(854)(3,194)(971)Income before income taxes 31,377 26,727 91,011 80,537 Provision for income taxes 5,553 4,788 16,412 14,437 Net income$25,824$21,939$74,599$66,100 Earnings per share:Basic$3.47$2.95$10.03$8.90 Diluted$3.46$2.94$9.99$8.85 Weighted average shares outstand

16、ing:Basic 7,434 7,431 7,434 7,431 Diluted 7,461 7,472 7,466 7,467 Refer to accompanying notes.PART IItem 1 4COMPREHENSIVE INCOME STATEMENTS(In millions)(Unaudited)Three Months EndedMarch 31,Nine Months Ended March 31,2025 2024 2025 2024 Net income$25,824$21,939$74,599$66,100 Other comprehensive inco

17、me(loss),net of tax:Net change related to derivatives (20)10 4 28 Net change related to investments 450 (202)1,130 869 Translation adjustments and other 353 (294)(377)11 Other comprehensive income(loss)783 (486)757 908 Comprehensive income$26,607$21,453$75,356$67,008 Refer to accompanying notes.PART

18、 IItem 1 5BALANCE SHEETS (In millions)(Unaudited)March 31,2025 June 30,2024 Assets Current assets:Cash and cash equivalents$28,828$18,315 Short-term investments 50,790 57,228 Total cash,cash equivalents,and short-term investments 79,618 75,543 Accounts receivable,net of allowance for doubtful accoun

19、ts of$695 and$830 51,700 56,924 Inventories 848 1,246 Other current assets 24,478 26,021 Total current assets 156,644 159,734 Property and equipment,net of accumulated depreciation of$87,074 and$76,421 183,939 135,591 Operating lease right-of-use assets 24,475 18,961 Equity and other investments 16,

20、035 14,600 Goodwill 119,329 119,220 Intangible assets,net 23,968 27,597 Other long-term assets 38,234 36,460 Total assets$562,624$512,163 Liabilities and stockholders equity Current liabilities:Accounts payable$26,250$21,996 Short-term debt 0 6,693 Current portion of long-term debt 2,999 2,249 Accru

21、ed compensation 10,579 12,564 Short-term income taxes 6,805 5,017 Short-term unearned revenue 44,636 57,582 Other current liabilities 22,937 19,185 Total current liabilities 114,206 125,286 Long-term debt 39,882 42,688 Long-term income taxes 25,061 27,931 Long-term unearned revenue 2,840 2,602 Defer

22、red income taxes 2,522 2,618 Operating lease liabilities 17,686 15,497 Other long-term liabilities 38,536 27,064 Total liabilities 240,733 243,686 Commitments and contingencies Stockholders equity:Common stock and paid-in capital shares authorized 24,000;outstanding 7,434 and 7,434 106,965 100,923 R

23、etained earnings 219,759 173,144 Accumulated other comprehensive loss (4,833)(5,590)Total stockholders equity 321,891 268,477 Total liabilities and stockholders equity$562,624$512,163 Refer to accompanying notes.PART IItem 1 6CASH FLOWS STATEMENTS (In millions)(Unaudited)Three Months EndedMarch 31,N

24、ine Months EndedMarch 31,2025 2024 2025 2024 Operations Net income$25,824$21,939$74,599$66,100 Adjustments to reconcile net income to net cash from operations:Depreciation,amortization,and other 8,740 6,027 22,950 15,907 Stock-based compensation expense 2,980 2,703 8,901 8,038 Net recognized losses(

25、gains)on investments and derivatives (298)49 553 261 Deferred income taxes (2,244)(1,323)(4,835)(3,593)Changes in operating assets and liabilities:Accounts receivable (2,461)(2,028)5,598 6,055 Inventories 52 260 390 1,229 Other current assets 1,076 951 642 880 Other long-term assets (518)(2,137)(3,3

26、68)(5,577)Accounts payable 1,179 648 1,221 (659)Unearned revenue (1,032)(645)(12,923)(10,309)Income taxes 1,298 2,622 (1,081)2,493 Other current liabilities 2,839 2,803 576 215 Other long-term liabilities (391)48 292 313 Net cash from operations 37,044 31,917 93,515 81,353 Financing Proceeds from is

27、suance(repayments)of debt,maturities of 90 days or less,net 0 (3,810)(5,746)6,392 Proceeds from issuance of debt 0 6,352 0 24,198 Repayments of debt (2,250)(11,589)(3,216)(16,005)Common stock issued 546 522 1,508 1,468 Common stock repurchased (4,781)(4,213)(13,874)(13,044)Common stock cash dividend

28、s paid (6,169)(5,572)(17,913)(16,197)Other,net (382)(498)(1,614)(1,006)Net cash used in financing (13,036)(18,808)(40,855)(14,194)Investing Additions to property and equipment (16,745)(10,952)(47,472)(30,604)Acquisition of companies,net of cash acquired and divestitures,and purchases of intangible a

29、nd other assets (981)(1,575)(4,235)(67,790)Purchases of investments (4,474)(2,183)(8,144)(14,901)Maturities of investments 6,721 3,350 11,461 23,218 Sales of investments 2,161 1,941 6,688 8,871 Other,net 604 (1,281)(325)(916)Net cash used in investing (12,714)(10,700)(42,027)(82,122)Effect of foreig

30、n exchange rates on cash and cash equivalents 52 (80)(120)(107)Net change in cash and cash equivalents 11,346 2,329 10,513 (15,070)Cash and cash equivalents,beginning of period 17,482 17,305 18,315 34,704 Cash and cash equivalents,end of period$28,828$19,634$28,828$19,634 Refer to accompanying notes

31、.PART IItem 1 7STOCKHOLDERS EQUITY STATEMENTS (In millions,except per share amounts)(Unaudited)Three Months EndedMarch 31,Nine Months EndedMarch 31,2025 2024 2025 2024 Common stock and paid-in capital Balance,beginning of period$104,829$97,480$100,923$93,718 Common stock issued 546 522 1,508 1,468 C

32、ommon stock repurchased (1,390)(1,512)(4,366)(4,213)Stock-based compensation expense 2,980 2,703 8,901 8,038 Other,net 0 0 (1)182 Balance,end of period 106,965 99,193 106,965 99,193 Retained earnings Balance,beginning of period 203,482 145,737 173,144 118,848 Net income 25,824 21,939 74,599 66,100 C

33、ommon stock cash dividends (6,168)(5,573)(18,508)(16,718)Common stock repurchased (3,379)(2,709)(9,476)(8,836)Balance,end of period 219,759 159,394 219,759 159,394 Accumulated other comprehensive loss Balance,beginning of period (5,616)(4,949)(5,590)(6,343)Other comprehensive income(loss)783 (486)75

34、7 908 Balance,end of period (4,833)(5,435)(4,833)(5,435)Total stockholders equity$321,891$253,152$321,891$253,152 Cash dividends declared per common share$0.83$0.75$2.49$2.25 Refer to accompanying notes.PART IItem 1 8NOTES TO FINANCIAL STATEMENTS(Unaudited)NOTE 1 ACCOUNTING POLICIESAccounting Princi

35、ples Our unaudited interim consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America(“GAAP”).In the opinion of management,the unaudited interim consolidated financial statements reflect all adjust

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

37、in the Microsoft Corporation fiscal year 2024 Form 10-K and Form 8-K filed with the U.S.Securities and Exchange Commission on July 30,2024 and December 3,2024,respectively.Principles of Consolidation The consolidated financial statements include the accounts of Microsoft Corporation and its subsidia

38、ries.Intercompany transactions and balances have been eliminated.Recast of Certain Prior Period InformationIn August 2024,we announced changes to the composition of our segments.These changes align our segments with how we currently manage our business,most notably bringing the commercial components

39、 of Microsoft 365 together in the Productivity and Business Processes segment.Beginning in fiscal year 2025,the information that our chief operating decision maker is regularly provided and reviews for purposes of allocating resources and assessing performance reflects these segment changes.Prior pe

40、riod segment information has been recast to conform to the way we internally manage and monitor our business during fiscal year 2025.These changes impacted Note 8 Goodwill,Note 12 Unearned Revenue,and Note 17 Segment Information and Geographic Data.The recast of prior period information had no impac

41、t on our consolidated balance sheets,consolidated income statements,or consolidated cash flows statements.Estimates and Assumptions Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets,liabilities,revenue,and expenses.Example

42、s of estimates and assumptions include:for revenue recognition,determining the nature and timing of satisfaction of performance obligations,and determining the standalone selling price of performance obligations,variable consideration,and other obligations such as product returns and refunds;loss co

43、ntingencies;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 tangible and intangible assets;allowances for doubtful accounts;the market value of,and demand for,our inventory;stock-based

44、compensation forfeiture rates;when technological feasibility is achieved for our products;the potential outcome of uncertain tax positions that have been recognized in our consolidated financial statements or tax returns;and determining the timing and amount of impairments for investments.Actual res

45、ults and outcomes may differ from managements estimates and assumptions due to risks and uncertainties.Financial InstrumentsInvestmentsWe consider all highly liquid interest-earning investments with a maturity of three months or less at the date of purchase to be cash equivalents.The fair values of

46、these investments approximate their carrying values.In general,investments with original maturities of greater than three months and remaining maturities of less than one year are classified as short-term investments.Investments with maturities beyond one year may be classified as short-term based o

47、n their highly liquid nature and because such marketable securities represent the investment of cash that is available for current operations.PART IItem 1 9Debt investments are classified as available-for-sale and realized gains and losses are recorded using the specific identification method.Change

48、s 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 other estimates determined by management.If the cost of an investment exceeds its fair value,we evaluate,among other factors,g

49、eneral 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 methodology that considers available quantitative and qualitative evidence.In addition,we consider specific adverse conditions

50、 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 the security before recovery,then a decline in fair value below cost is recorded as an impairment charge in other income(expe

51、nse),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 with readily determinable fair values are measured at fair value.Equity investments without readily determinable fair values are

52、 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 qualitative assessment on a periodic basis and recognize an impairment if there are sufficient indicators that the fair value

53、 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”)are evaluated to determine whether we are the primary beneficiary of the VIE,in which case we would be required to consolidate t

54、he 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 or the right to receive benefits from the VIE that could potentially be significant to the VIE.We have determined we are not t

55、he 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 accounting.We have an investment in OpenAI Global,LLC(“OpenAI”)and have made total funding commitments of$13 billion.The investment is

56、 accounted for under the equity method of accounting.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.Fo

57、r derivative instruments designated as fair value 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(expen

58、se),net.For derivative instruments designated as cash 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 f

59、rom the assessment of effectiveness are recognized 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 lia

60、bilities at fair value.The hierarchy below lists three 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

61、 to the fair value measurement in its entirety.These 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 l

62、iabilities include those actively traded on exchanges.PART IItem 1 10Level 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 mode

63、l)for which all significant inputs are observable in 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

64、observable inputs including interest rate curves,credit 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 not

65、es and bonds,and municipal securities.Our Level 2 derivative 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 participa

66、nts would use in pricing the asset or liability.The 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

67、and intangible assets,when they are recorded at fair 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 value

68、s of these investments are determined based on valuation 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

69、 their carrying values.Contract Balances and Other Receivables As of both March 31,2025 and June 30,2024,long-term accounts receivable,net of allowance for doubtful accounts,was$4.9 billion and is included in other long-term assets in our consolidated balance sheets.As of March 31,2025 and June 30,2

70、024,other receivables related to activities to facilitate the purchase of server components were$10.8 billion and$10.5 billion,respectively,and are included in other current assets in our consolidated balance sheets.We record financing receivables when we offer certain customers the option to acquir

71、e our software products and services offerings through a financing program in a limited number of countries.As of March 31,2025 and June 30,2024,our financing receivables,net were$2.6 billion and$4.5 billion,respectively,for short-term and long-term financing receivables,which are included in other

72、current assets and other 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

73、,Inc.(“Inflection”),pursuant 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 Interchang

74、e LLC(“Reprogrammed”)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 particip

75、ate in any portions of the meetings of our Board of Directors or any committee thereof to review and approve the transaction with Inflection.PART IItem 1 11Recent Accounting GuidanceSegment Reporting Improvements to Reportable Segment DisclosuresIn November 2023,the Financial Accounting Standards Bo

76、ard(“FASB”)issued a new 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

77、effective for us beginning 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 issue

78、d a new standard to improve 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 u

79、s beginning with our annual reporting for fiscal year 2026,with early adoption permitted.We are currently evaluating the impact of this standard on our income tax disclosures.Income Statement Disaggregation of Income Statement ExpensesIn November 2024,the FASB issued a new standard to expand disclos

80、ures about income statement expenses.The guidance requires disaggregation of certain costs and expenses included in each relevant expense caption on our consolidated income statements in a separate note to the financial statements at each interim and annual reporting period,including amounts of purc

81、hases of inventory,employee compensation,depreciation,and intangible asset amortization.The standard will be effective for us beginning with our annual reporting for fiscal year 2028 and interim periods thereafter,with early adoption permitted.We are currently evaluating the impact of this standard

82、on our disclosures.NOTE 2 EARNINGS PER SHAREBasic earnings per share(“EPS”)is computed based on the weighted average number of shares of common stock outstanding during the period.Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of dilutive poten

83、tial common shares outstanding during the period using the treasury stock method.Dilutive potential common shares include outstanding stock options and stock awards.The components of basic and diluted EPS were as follows:(In millions,except per share amounts)Three Months EndedMarch 31,Nine Months En

84、dedMarch 31,2025 2024 2025 2024 Net income available for common shareholders(A)$25,824$21,939$74,599$66,100 Weighted average outstanding shares of common stock(B)7,434 7,431 7,434 7,431 Dilutive effect of stock-based awards 27 41 32 36 Common stock and common stock equivalents(C)7,461 7,472 7,466 7,

85、467 Earnings Per Share Basic(A/B)$3.47$2.95$10.03$8.90 Diluted(A/C)$3.46$2.94$9.99$8.85 Anti-dilutive stock-based awards excluded from the calculations of diluted EPS were immaterial during the periods presented.PART IItem 1 12NOTE 3 OTHER INCOME(EXPENSE),NET The components of other income(expense),

86、net were as follows:(In millions)Three Months EndedMarch 31,Nine Months EndedMarch 31,2025 2024 2025 2024 Interest and dividends income$597$619$1,878$2,519 Interest expense (594)(800)(1,770)(2,234)Net recognized gains(losses)on investments 111 (25)(286)(63)Net gains(losses)on derivatives 187 (24)(26

87、7)(198)Net gains(losses)on foreign currency remeasurements 89 (138)112 (203)Other,net (1,013)(486)(2,861)(792)Total$(623)$(854)$(3,194)$(971)Other,net primarily reflects net recognized losses on equity method investments,including OpenAI.Net Recognized Gains(Losses)on Investments Net recognized gain

88、s(losses)on debt investments were as follows:(In millions)Three Months EndedMarch 31,Nine Months EndedMarch 31,2025 2024 2025 2024 Realized gains from sales of available-for-sale securities$8$8$25$14 Realized losses from sales of available-for-sale securities (17)(24)(51)(78)Impairments and allowanc

89、e for credit losses 3 3 1 15 Total$(6)$(13)$(25)$(49)Net recognized gains(losses)on equity investments were as follows:(In millions)Three Months EndedMarch 31,Nine Months EndedMarch 31,2025 2024 2025 2024 Net realized gains on investments sold$9$15$66$29 Net unrealized gains(losses)on investments st

90、ill held 135 (7)572 156 Impairments of investments (27)(20)(899)(199)Total$117$(12)$(261)$(14)PART IItem 1 13NOTE 4 INVESTMENTSInvestment ComponentsThe components of investments were as follows:(In millions)FairValueLevel AdjustedCostBasis UnrealizedGains UnrealizedLosses RecordedBasis Cashand CashE

91、quivalents Short-termInvestments Equityand OtherInvestments March 31,2025 Changes in Fair Value Recorded in Other Comprehensive Income Commercial paper Level 2$11,101$0$0$11,101$11,002$99$0 Certificates of deposit Level 2 3,517 0 0 3,517 3,473 44 0 U.S.government securities Level 1 42,349 7 (1,747)4

92、0,609 858 39,751 0 U.S.agency securities Level 2 1,953 0 0 1,953 1,944 9 0 Foreign government bonds Level 2 321 6 (13)314 1 313 0 Mortgage-and asset-backed securities Level 2 1,610 6 (27)1,589 0 1,589 0 Corporate notes and bonds Level 2 8,637 62 (139)8,560 0 8,560 0 Corporate notes and bonds Level 3

93、 2,410 0 (12)2,398 0 123 2,275 Municipal securities Level 2 216 1 (9)208 0 208 0 Municipal securities Level 3 104 0 (16)88 0 88 0 Total debt investments$72,218$82$(1,963)$70,337$17,278$50,784$2,275 Changes in Fair Value Recorded in Net Income Equity investments Level 1$4,427$870$0$3,557 Equity inves

94、tments Other 9,930 0 0 9,930 Total equity investments$14,357$870$0$13,487 Cash$10,680$10,680$0$0 Derivatives,net 279 0 6 273 Total$95,653$28,828$50,790$16,035 (a)PART IItem 1 14(In millions)FairValueLevel AdjustedCostBasis UnrealizedGains UnrealizedLosses RecordedBasis Cashand CashEquivalents Short-

95、termInvestments Equityand OtherInvestments June 30,2024 Changes in Fair Value Recorded in Other Comprehensive Income Commercial paper Level 2$4,666$0$0$4,666$4,666$0$0 Certificates of deposit Level 2 1,547 0 0 1,547 1,503 44 0 U.S.government securities Level 1 49,603 4 (2,948)46,659 14 46,645 0 U.S.

96、agency securities Level 2 17 0 0 17 0 17 0 Foreign government bonds Level 2 319 3 (16)306 0 306 0 Mortgage-and asset-backed securities Level 2 944 3 (35)912 0 912 0 Corporate notes and bonds Level 2 9,106 28 (318)8,816 0 8,816 0 Corporate notes and bonds Level 3 1,641 0 (1)1,640 0 140 1,500 Municipa

97、l securities Level 2 262 0 (13)249 0 249 0 Municipal securities Level 3 104 0 (17)87 0 87 0 Total debt investments$68,209$38$(3,348)$64,899$6,183$57,216$1,500 Changes in Fair Value Recorded in Net Income Equity investments Level 1$3,547$561$0$2,986 Equity investments Other 10,114 0 0 10,114 Total eq

98、uity investments$13,661$561$0$13,100 Cash$11,571$11,571$0$0 Derivatives,net 12 0 12 0 Total$90,143$18,315$57,228$14,600 (a)Refer to Note 5 Derivatives for further information on the fair value of our derivative instruments.Equity investments presented as“Other”in the tables above include investments

99、 without readily determinable fair values measured at cost with adjustments for observable changes in price or impairments,measured using the equity method,or measured at fair value using net asset value as a practical expedient which are not categorized in the fair value hierarchy.As of March 31,20

100、25 and June 30,2024,equity investments without readily determinable fair values measured at cost with adjustments for observable changes in price or impairments were$2.9 billion and$3.9 billion,respectively,and equity investments measured using the equity method were$6.8 billion and$6.0 billion,resp

101、ectively.(a)PART IItem 1 15Unrealized 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)Fair Value Un

102、realizedLosses Fair Value UnrealizedLosses TotalFair Value March 31,2025 U.S.government and agency securities$492$(50)$38,754$(1,697)$39,246$(1,747)Foreign government bonds 66 (3)127 (10)193 (13)Mortgage-and asset-backed securities 649 (3)227 (24)876 (27)Corporate notes and bonds 1,720 (14)3,629 (13

103、7)5,349 (151)Municipal securities 0 0 212 (25)212 (25)Total$2,927$(70)$42,949$(1,893)$45,876$(1,963)Less than 12 Months 12 Months or Greater TotalUnrealizedLosses (In millions)Fair Value UnrealizedLosses Fair Value UnrealizedLosses TotalFair Value June 30,2024 U.S.government and agency securities$52

104、9$(12)$45,821$(2,936)$46,350$(2,948)Foreign government bonds 79 (2)180 (14)259 (16)Mortgage-and asset-backed securities 201 (1)409 (34)610 (35)Corporate notes and bonds 1,310 (9)5,779 (310)7,089 (319)Municipal securities 38 (1)243 (29)281 (30)Total$2,157$(25)$52,432$(3,323)$54,589$(3,348)Unrealized

105、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 maturities of our debt i

106、nvestments as of March 31,2025:(In millions)AdjustedCost Basis EstimatedFair Value March 31,2025 Due in one year or less$31,746$31,609 Due after one year through five years 32,127 30,870 Due after five years through 10 years 6,919 6,530 Due after 10 years 1,426 1,328 Total$72,218$70,337 NOTE 5 DERIV

107、ATIVESWe 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 managing the economi

108、c 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 monitor our foreign

109、currency exposures daily to maximize the economic effectiveness of our foreign currency hedge positions.PART IItem 1 16Foreign currency risks related to certain Euro-denominated debt are hedged using foreign exchange forward contracts that are designated as cash flow hedging instruments.Certain opti

110、ons and forwards not designated as hedging instruments are also used to manage the variability in foreign exchange rates on certain balance sheet amounts and to manage other foreign currency exposures.Interest Rate Interest rate risks related to certain fixed-rate debt are hedged using interest rate

111、 swaps that are designated as fair value hedging instruments to effectively convert the fixed interest rates to floating interest rates.Securities held in our fixed-income portfolio are subject to different interest rate risks based on their maturities.We manage the average maturity of our fixed-inc

112、ome portfolio to achieve economic returns that correlate to certain broad-based fixed-income indices using option,futures,and swap contracts.These contracts are not designated as hedging instruments and are included in“Other contracts”in the tables below.Equity Securities held in our equity investme

113、nts portfolio are subject to market price risk.At times,we may hold options,futures,and swap contracts.These contracts are not designated as hedging instruments.Credit Our fixed-income portfolio is diversified and consists primarily of investment-grade securities.We use credit default swap contracts

114、 to manage credit exposures relative to broad-based indices and to facilitate portfolio diversification.These contracts are not designated as hedging instruments and are included in“Other contracts”in the tables below.Credit-Risk-Related Contingent Features Certain counterparty agreements for deriva

115、tive instruments contain provisions that require our issued and outstanding long-term unsecured debt to maintain an investment grade credit rating and require us to maintain minimum liquidity of$1.0 billion.To the extent we fail to meet these requirements,we will be required to post collateral,simil

116、ar to the standard convention related to over-the-counter derivatives.As of March 31,2025,our long-term unsecured debt rating was AAA,and cash investments were in excess of$1.0 billion.As a result,no collateral was required to be posted.The following table presents the notional amounts of our outsta

117、nding derivative instruments measured in U.S.dollar equivalents:(In millions)March 31,2025 June 30,2024 Designated as Hedging Instruments Foreign exchange contracts purchased$1,492$1,492 Interest rate contracts purchased 1,151 1,100 Not Designated as Hedging Instruments Foreign exchange contracts pu

118、rchased 9,641 7,167 Foreign exchange contracts sold 34,881 31,793 Equity contracts purchased 5,100 4,016 Equity contracts sold 2,170 2,165 Other contracts purchased 2,693 2,113 Other contracts sold 1,195 811 PART IItem 1 17Fair Values of Derivative InstrumentsThe following table presents our derivat

119、ive instruments:(In millions)DerivativeAssets DerivativeLiabilities DerivativeAssets DerivativeLiabilities March 31,2025 June 30,2024 Designated as Hedging Instruments Foreign exchange contracts$26$(80)$24$(76)Interest rate contracts 5 0 19 0 Not Designated as Hedging Instruments Foreign exchange co

120、ntracts 224 (751)213 (230)Equity contracts 282 (1,085)63 (491)Other contracts 13 (4)12 (3)Gross amounts of derivatives 550 (1,920)331 (800)Gross amounts of derivatives offset in the balance sheets (142)145 (151)152 Cash collateral received 0 (126)0 (104)Net amounts of derivatives$408$(1,901)$180$(75

121、2)Reported as Short-term investments$6$0$12$0 Other current assets 124 0 149 0 Equity and other investments 273 0 0 0 Other long-term assets 5 0 19 0 Other current liabilities 0 (1,730)0 (401)Other long-term liabilities 0 (171)0 (351)Total$408$(1,901)$180$(752)Gross derivative assets and liabilities

122、 subject to legally enforceable master netting agreements for which we have elected to offset were$259 million and$1.9 billion,respectively,as of March 31,2025,and$304 million and$800 million,respectively,as of June 30,2024.The following table presents the fair value of our derivatives instruments o

123、n a gross basis:(In millions)Level 1 Level 2 Level 3 Total March 31,2025 Derivative assets$0$267$283$550 Derivative liabilities 0 (1,920)0 (1,920)June 30,2024 Derivative assets 0 327 4 331 Derivative liabilities (1)(799)0 (800)PART IItem 1 18Gains(losses)on derivative instruments recognized in other

124、 income(expense),net were as follows:(In millions)Three Months Ended March 31,Nine Months EndedMarch 31,2025 2024 2025 2024 Designated as Fair Value Hedging Instruments Interest rate contracts Derivatives$3$(21)$5$(15)Hedged items (12)10 (36)(21)Designated as Cash Flow Hedging Instruments Foreign ex

125、change contracts Amount reclassified from accumulated other comprehensive loss 50 (37)(7)(32)Not Designated as Hedging Instruments Foreign exchange contracts (372)299 383 171 Equity contracts 176 (22)(283)(196)Other contracts 18 (8)16 (5)Gains(losses),net of tax,on derivative instruments recognized

126、in our consolidated comprehensive income statements were as follows:(In millions)Three Months EndedMarch 31,Nine Months EndedMarch 31,2025 2024 2025 2024 Designated as Cash Flow Hedging Instruments Foreign exchange contracts Included in effectiveness assessment$20$(19)$(1)$3 NOTE 6 INVENTORIESThe co

127、mponents of inventories were as follows:(In millions)March 31,2025 June 30,2024 Raw materials$327$394 Work in process 13 7 Finished goods 508 845 Total$848$1,246 NOTE 7 BUSINESS COMBINATIONSActivision Blizzard,Inc.On October 13,2023,we completed our acquisition of Activision Blizzard,Inc.(“Activisio

128、n 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 entertainment content publisher.The acquisition will accelerate the growth in our gaming business across mobile,PC,console,and cloud gaming.The f

129、inancial results of Activision Blizzard have been included in our consolidated financial statements since the date of the acquisition.Activision Blizzard is reported as part of our More Personal Computing segment.PART IItem 1 19The allocation of the purchase price to the assets acquired and liabilit

130、ies assumed was completed as of September 30,2024.The major classes of assets and liabilities to which we have allocated the purchase price were as follows:(In millions)Cash and cash equivalents$12,976 Goodwill 51,001 Intangible assets 21,969 Other assets 2,503 Long-term debt (2,799)Long-term income

131、 taxes (1,946)Deferred income taxes (4,676)Other liabilities (3,620)Total purchase price$75,408 Goodwill was assigned to our More Personal Computing segment.The goodwill was primarily attributed to increased synergies that are expected to be achieved from the integration of Activision Blizzard.Subst

132、antially 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 acquired:(In millions,except average life)Amount WeightedAverage Life Marketing-related$11,619 24 years Technology-based 9,689 4 ye

133、ars Customer-related 661 4 years Fair value of intangible assets acquired$21,969 15 years Following are the supplemental 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 amo

134、unts)Three Months EndedMarch 31,Nine Months EndedMarch 31,2024 2024 Revenue$61,856$182,717 Net income 21,931 66,278 Diluted earnings per share 2.94 8.88 These pro forma results were based on estimates and assumptions,which we believe are reasonable.They are not the results that would have been reali

135、zed had we been a combined company during the periods 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 ot

136、her nonrecurring charges were immaterial and are included in the earliest period presented.NOTE 8 GOODWILLChanges in the carrying amount of goodwill were as follows:(In millions)June 30,2024 Acquisitions Other March 31,2025 Productivity and Business Processes$31,361$0$20$31,381 Intelligent Cloud 25,

137、648 0 7 25,655 More Personal Computing 62,211 0 82 62,293 Total$119,220$0$109$119,329 We have recast certain prior period amounts to conform to the way we internally manage and monitor our business.Refer to Note 1 Accounting Policies for further information.PART IItem 1 20The measurement periods for

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

139、ll during the periods in which the adjustments are determined.Any change in the goodwill amounts resulting from foreign currency translations and purchase accounting adjustments are presented as“Other”in the table above.Also included in“Other”are business dispositions and transfers between segments

140、due to reorganizations,as applicable.As discussed in Note 1 Accounting Policies,during the first quarter of fiscal year 2025 we made changes to our segments.These segment changes also resulted in changes to our reporting units.We reallocated goodwill across impacted reporting units using a relative

141、fair value approach.In addition,we completed an assessment of any potential goodwill impairment for all reporting units immediately prior to the reallocation and determined that no impairment existed.NOTE 9 INTANGIBLE ASSETS The components of intangible assets,all of which are finite-lived,were as f

142、ollows:(In millions)GrossCarryingAmount AccumulatedAmortization NetCarryingAmount GrossCarryingAmount AccumulatedAmortization NetCarryingAmount March 31,2025 June 30,2024 Marketing-related$16,503$(3,703)$12,800$16,500$(3,101)$13,399 Technology-based 22,437 (13,813)8,624 21,913 (10,741)11,172 Custome

143、r-related 4,382 (2,001)2,381 6,038 (3,051)2,987 Contract-based 193 (30)163 58 (19)39 Total$43,515$(19,547)$23,968$44,509$(16,912)$27,597 Intangible assets amortization expense was$1.5 billion and$4.5 billion for the three and nine months ended March 31,2025,respectively,and$1.4 billion and$3.4 billi

144、on for the three and nine months ended March 31,2024,respectively.The following table outlines the estimated future amortization expense related to intangible assets held as of March 31,2025:(In millions)Year Ending June 30,2025(excluding the nine months ended March 31,2025)$1,525 2026 4,582 2027 2,

145、866 2028 2,007 2029 1,834 Thereafter 11,154 Total$23,968 PART IItem 1 21NOTE 10 DEBT Short-term DebtAs of March 31,2025,we had no commercial paper issued or outstanding.As of June 30,2024,we had$6.7 billion of commercial paper issued and outstanding,with a weighted average interest rate of 5.4%and m

146、aturities ranging from 28 days to 152 days.The estimated fair value of this commercial paper approximates its carrying value.Long-term DebtThe components of long-term debt were as follows:(In millions,issuance by calendar year)Maturities(calendar year)Stated InterestRate Effective InterestRate March

147、 31,2025 June 30,2024 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 2011 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%314 314 2013 is

148、suance of 4.1 billion 20282033 2.63%3.13%2.69%3.22%2,484 2,465 2015 issuance of$23.8 billion 20252055 3.13%4.75%3.18%4.78%7,555 9,805 2016 issuance of$19.8 billion 20262056 2.40%3.95%2.46%4.03%7,930 7,930 2017 issuance of$17.1 billion 20262057 3.30%4.50%3.38%5.49%6,833 6,833 2020 issuance of$10.1 bi

149、llion 20302060 1.35%2.68%2.53%5.43%10,111 10,111 2021 issuance of$8.2 billion 20522062 2.92%3.04%2.92%3.04%8,185 8,185 2023 issuance of$0.1 billion 20262050 1.35%4.50%5.16%5.49%56 56 2024 issuance of$3.3 billion 20262050 1.35%4.50%5.16%5.49%3,344 3,344 Total face value 48,990 51,221 Unamortized disc

150、ount and issuance costs (1,171)(1,227)Hedge fair value adjustments (45)(81)Premium on debt exchange (4,893)(4,976)Total debt 42,881 44,937 Current portion of long-term debt (2,999)(2,249)Long-term debt$39,882$42,688 (a)Refer to Note 5 Derivatives for further information on the interest rate swaps re

151、lated to fixed-rate debt.As of March 31,2025 and June 30,2024,the estimated fair value of long-term debt,including the current portion,was$40.2 billion and$42.3 billion,respectively.The estimated fair values are based on Level 2 inputs.Debt in the table above is comprised of senior unsecured obligat

152、ions and ranks equally 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 31,2025:(In millions)Year Ending June 30,20

153、25(excluding the nine months ended March 31,2025)$0 2026 3,000 2027 9,250 2028 0 2029 1,890 Thereafter 34,850 Total$48,990 (a)PART IItem 1 22NOTE 11 INCOME TAXESEffective Tax RateOur effective tax rate was 18%for both the three months ended March 31,2025 and 2024,and 18%for both the nine months ende

154、d March 31,2025 and 2024.Our effective tax rate for the three months ended March 31,2025 was primarily impacted by changes in the mix of our earnings and tax expenses between the U.S.and foreign countries.Our effective tax rate for the nine months ended March 31,2025 was primarily impacted by tax be

155、nefits from tax law changes in the prior fiscal year,including the delay of the effective date of final foreign tax credit regulations,and changes in the mix of our earnings and tax expenses between the U.S.and foreign countries.Our effective tax rate was lower than the U.S.federal statutory rate fo

156、r the three and nine months ended March 31,2025,primarily due to earnings taxed at lower rates in foreign jurisdictions resulting from producing and distributing our products and services through our foreign regional operations center in Ireland.Uncertain Tax PositionsAs of March 31,2025 and June 30

157、,2024,unrecognized tax benefits and other income tax liabilities were$26.4 billion and$24.9 billion,respectively,and are included in long-term income taxes in our consolidated balance sheets.We remain under audit by the IRS for tax years 2014 to 2017.With respect to the audit for tax years 2004 to 2

158、013,on September 26,2023,we received Notices of Proposed Adjustment(“NOPAs”)from the IRS.The primary issues in the NOPAs relate to intercompany transfer pricing.In the NOPAs,the IRS is seeking an additional tax payment of$28.9 billion plus penalties and interest.As of March 31,2025,we believe our al

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

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

161、on for tax years 1996 to 2024,some of which are currently under audit by local tax authorities.The resolution of each of these audits is not expected to be material to our consolidated financial statements.NOTE 12 UNEARNED REVENUE Unearned revenue by segment was as follows:(In millions)March 31,2025

162、 June 30,2024 Productivity and Business Processes$34,244$43,599 Intelligent Cloud 10,240 13,683 More Personal Computing 2,992 2,902 Total$47,476$60,184 We have recast certain prior period amounts to conform to the way we internally manage and monitor our business.Refer to Note 1 Accounting Policies

163、for further information.Changes in unearned revenue were as follows:(In millions)Nine Months Ended March 31,2025 Balance,beginning of period$60,184 Deferral of revenue 118,709 Recognition of unearned revenue (131,417)Balance,end of period$47,476 PART IItem 1 23Revenue allocated to remaining performa

164、nce obligations,which includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods,was$321 billion as of March 31,2025,of which$315 billion is related to the commercial portion of revenue.We expect to recognize approximately 40%of our total company remainin

165、g performance obligation revenue over the next 12 months and the remainder thereafter.NOTE 13 LEASESWe have operating and finance leases for datacenters,corporate offices,research and development facilities,Microsoft Experience Centers,and certain equipment.Our leases have remaining lease terms of l

166、ess than 1 year to 20 years,some of which include options to extend the leases for up to 5 years,and some of which include 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 31,2025 2024 2025

167、2024 Operating lease cost$1,476$882$3,929$2,473 Finance lease cost:Amortization of right-of-use assets$900$453$2,426$1,241 Interest on lease liabilities 374 190 986 507 Total finance lease cost$1,274$643$3,412$1,748 Supplemental cash flow information related to leases was as follows:(In millions)Thr

168、ee Months Ended March 31,Nine Months Ended March 31,2025 2024 2025 2024 Cash paid for amounts included in the measurement of lease liabilities:Operating cash flows from operating leases$955$836$3,124$2,433 Operating cash flows from finance leases 344 190 938 507 Financing cash flows from finance lea

169、ses 352 323 1,634 896 Right-of-use assets obtained in exchange for lease obligations:Operating leases 1,918 1,831 6,909 4,482 Finance leases 3,241 3,421 14,008 6,921 PART IItem 1 24Supplemental balance sheet information related to leases was as follows:(In millions,except lease term and discount rat

170、e)March 31,2025 June 30,2024 Operating Leases Operating lease right-of-use assets$24,475$18,961 Other current liabilities$5,238$3,580 Operating lease liabilities 17,686 15,497 Total operating lease liabilities$22,924$19,077 Finance Leases Property and equipment,at cost$46,275$32,248 Accumulated depr

171、eciation (8,650)(6,386)Property and equipment,net$37,625$25,862 Other current liabilities$2,889$2,349 Other long-term liabilities 36,325 24,796 Total finance lease liabilities$39,214$27,145 Weighted Average Remaining Lease Term Operating leases 6 years 7 years Finance leases 12 years 12 years Weight

172、ed Average Discount Rate Operating leases 3.5%3.3%Finance leases 4.1%3.9%The following table outlines maturities of our lease liabilities as of March 31,2025:(In millions)Year Ending June 30,Operating Leases Finance Leases 2025(excluding the nine months ended March 31,2025)$1,709$1,065 2026 5,700 4,

173、465 2027 4,823 4,507 2028 3,286 4,509 2029 2,287 3,866 Thereafter 7,728 32,307 Total lease payments 25,533 50,719 Less imputed interest (2,609)(11,505)Total$22,924$39,214 As of March 31,2025,we had additional operating and finance leases,primarily for datacenters,that had not yet commenced of$4.4 bi

174、llion and$94.8 billion,respectively.These operating and finance leases will commence between fiscal year 2025 and fiscal year 2030 with lease terms of 1 year to 20 years.PART IItem 1 25NOTE 14 CONTINGENCIESU.S.Cell Phone LitigationMicrosoft Mobile Oy,a subsidiary of Microsoft,along with other handse

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

176、claims in our agreement to acquire Nokias Devices and Services business and have been substituted for the Nokia defendants.Twelve of these 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 Col

177、umbia held that adversehealth effect claims arising from the use of cellular handsets that operate within the U.S.Federal Communications Commission radio frequency emission guidelines(“FCC Guidelines”)are pre-empted by federal law.The plaintiffs allege that their handsets either operated outside the

178、 FCC Guidelines or were manufactured before the FCC Guidelines went into effect.The lawsuits also allege an industry-wide conspiracy to manipulate the science and testing around emission guidelines.In 2013,the defendants in the consolidated cases moved to exclude the plaintiffs expert evidence of ge

179、neral causation on the basis of flawed scientific methodologies.In 2014,the trial court granted in part and denied in part the defendants motion to exclude the plaintiffs general causation experts.The defendants filed an interlocutory appeal to the District of Columbia Court of Appeals challenging t

180、he standard for evaluating expert scientific evidence.In October 2016,the Court of Appeals issued its decision adopting the standard advocated by the defendants and remanding the cases to the trial court for further proceedings under that standard.The plaintiffs have filed supplemental expert eviden

181、ce,portions of which were stricken by the court.A hearing on general causation took place in September of 2022.In April of 2023,the court granted defendants motion to strike the testimony of plaintiffs experts that cell phones cause brain cancer and entered an order excluding all of plaintiffs exper

182、ts from testifying.The parties agreed to a stipulated dismissal of the consolidated cases to allow plaintiffs to appeal the expert testimony order.Plaintiffs appealed the courts order in August of 2023,and the appeal was argued in January of 2025.A hearing on the status of the stayed cases occurred

183、in December of 2023.In July 2024,the court entered summary judgment in nine of the stayed cases on the grounds that plaintiffs had agreed to be bound by the general causation outcome in the consolidated cases.Irish Data Protection Commission MatterIn 2018,the Irish Data Protection Commission(“IDPC”)

184、began investigating 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 October 2024,the IDPC provided LinkedIn with a

185、final decision alleging GDPR violations and assessing a fine.In November 2024,LinkedIn appealed the final decision to the Irish courts,and the next hearing is scheduled for May 2025.Other ContingenciesWe also are subject to a variety of other claims and suits that arise from time to time in the ordi

186、nary 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 these matters

187、may change in the future.As of March 31,2025,we accrued aggregate legal liabilities of$530 million.While we intend to defend these matters vigorously,adverse outcomes that we estimate could reach approximately$800 million in aggregate beyond recorded amounts are reasonably possible.Were unfavorable

188、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.PART IItem 1 26NOTE 15 STOCKHOLDERS EQUITYShare RepurchasesOn September 14,2021,our Board of Directors approved a

189、 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 31,2025,$549 million remained of this$60.0 billion share repurchase program.On September 16,2024

190、,our Board of Directors approved a share repurchase program authorizing up to$60.0 billion in share repurchases.This share repurchase program will commence following completion of the program approved on September 14,2021,has no expiration date,and may be terminated at any time.We repurchased the fo

191、llowing shares of common stock under the share repurchase program:(In millions)Shares Amount Shares Amount Fiscal Year 2025 2024 First Quarter 7$2,800 11$3,560 Second Quarter 8 3,500 7 2,800 Third Quarter 8 3,500 7 2,800 Total 23$9,800 25$9,160 All repurchases were made using cash resources.All shar

192、es 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$1.3 billion and$4.1 billion for the three and nine months ended March 31,2025,respectively,and

193、$1.4 billion and$3.9 billion for the three and nine months ended March 31,2024,respectively.DividendsOur Board of Directors declared the following dividends:Declaration Date Record Date Payment Date DividendPer Share Amount Fiscal Year 2025 (In millions)September 16,2024 November 21,2024 December 12

194、,2024$0.83$6,170 December 3,2024 February 20,2025 March 13,2025 0.83 6,169 March 11,2025 May 15,2025 June 12,2025 0.83 6,170 Total$2.49$18,509 Fiscal Year 2024 September 19,2023 November 16,2023 December 14,2023$0.75$5,574 November 28,2023 February 15,2024 March 14,2024 0.75 5,573 March 12,2024 May

195、16,2024 June 13,2024 0.75 5,574 Total$2.25$16,721 The dividend declared on March 11,2025 was included in other current liabilities as of March 31,2025.PART IItem 1 27NOTE 16 ACCUMULATED OTHER COMPREHENSIVE INCOME(LOSS)The following table summarizes the changes in accumulated other comprehensive inco

196、me(loss)by component:(In millions)Three Months EndedMarch 31,Nine Months EndedMarch 31,2025 2024 2025 2024 Derivatives Balance,beginning of period$21$(9)$(3)$(27)Unrealized gains(losses),net of tax of$5,$(5),$(1),and$1 20 (19)(1)3 Reclassification adjustments for(gains)losses included in other incom

197、e(expense),net (50)37 7 32 Tax expense(benefit)included in provision for income taxes 10 (8)(2)(7)Amounts reclassified from accumulated other comprehensive loss (40)29 5 25 Net change related to derivatives,net of tax of$(5),$3,$1,and$8 (20)10 4 28 Balance,end of period$1$1$1$1 Investments Balance,b

198、eginning of period$(1,945)$(2,511)$(2,625)$(3,582)Unrealized gains(losses),net of tax of$118,$(56),$294,and$221 445 (212)1,110 830 Reclassification adjustments for losses included in other income(expense),net 6 13 25 49 Tax benefit included in provision for income taxes (1)(3)(5)(10)Amounts reclassi

199、fied from accumulated other comprehensive loss 5 10 20 39 Net change related to investments,net of tax of$119,$(53),$299,and$231 450 (202)1,130 869 Balance,end of period$(1,495)$(2,713)$(1,495)$(2,713)Translation Adjustments and Other Balance,beginning of period$(3,692)$(2,429)$(2,962)$(2,734)Transl

200、ation adjustments and other,net of tax of$0,$0,$0,and$0 353 (294)(377)11 Balance,end of period$(3,339)$(2,723)$(3,339)$(2,723)Accumulated other comprehensive loss,end of period$(4,833)$(5,435)$(4,833)$(5,435)NOTE 17 SEGMENT INFORMATION AND GEOGRAPHIC DATAIn its operation of the business,management,i

201、ncluding 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 reported our financial performance based on t

202、he following segments:Productivity and Business Processes,Intelligent Cloud,and More Personal Computing.We have recast certain prior period amounts to conform to the way we internally manage and monitor our business.Refer to Note 1 Accounting Policies for further information.PART IItem 1 28Our repor

203、table segments are described below.Productivity and Business ProcessesOur Productivity and Business Processes segment consists of products and services in our portfolio of productivity,communication,and information services,spanning a variety of devices and platforms.This segment primarily comprises

204、:Microsoft 365 Commercial products and cloud services,including Microsoft 365 Commercial cloud,comprising Microsoft 365 Commercial,Enterprise Mobility+Security,the cloud portion of Windows Commercial,the per-user portion of Power BI,Exchange,SharePoint,Microsoft Teams,Microsoft 365 Security and Comp

205、liance,Microsoft Viva,and Microsoft 365 Copilot;and Microsoft 365 Commercial products,comprising Windows Commercial on-premises and Office licensed on-premises.Microsoft 365 Consumer products and cloud services,including Microsoft 365 Consumer subscriptions,Office licensed on-premises,and other cons

206、umer services.LinkedIn,including Talent Solutions,Marketing Solutions,Premium Subscriptions,and Sales Solutions.Dynamics products and cloud services,including Dynamics 365,comprising a set of intelligent,cloud-based applications across ERP,CRM,Power Apps,and Power Automate;and on-premises ERP and CR

207、M applications.Intelligent CloudOur Intelligent Cloud segment consists of our public,private,and hybrid server products and cloud services that can power modern business and developers.This segment primarily comprises:Server products and cloud services,including Azure and other cloud services,compri

208、sing cloud and AI consumption-based services,GitHub cloud services,Nuance Healthcare cloud services,virtual desktop offerings,and other cloud services;and Server products,comprising SQL Server,Windows Server,Visual Studio,System Center,related Client Access Licenses(“CALs”),and other on-premises off

209、erings.Enterprise and partner services,including Enterprise Support Services,Industry Solutions,Nuance professional services,Microsoft Partner Network,and Learning Experience.More Personal ComputingOur More Personal Computing segment consists of products and services that put customers at the center

210、 of the experience with our technology.This segment primarily comprises:Windows and Devices,including Windows,comprising Windows OEM licensing(Windows Pro and non-Pro licenses sold through the OEM channel),Windows Internet of Things,and patent licensing;and Devices,comprising Surface,HoloLens,and PC

211、 accessories.Gaming,including Xbox hardware and Xbox content and services,comprising first-and third-party content(including games and in-game content),Xbox Game Pass and other subscriptions,Xbox Cloud Gaming,advertising,third-party disc royalties,and other cloud services.Search and news advertising

212、,comprising Bing(including Copilot),Microsoft News,Microsoft Edge,and third-party affiliates.Revenue and costs are generally directly attributed to our segments.However,due to the integrated structure of our business,certain revenue recognized and costs incurred by one segment may benefit other segm

213、ents.Revenue from certain contracts is allocated among the segments based on the relative value of the underlying products and services,which can include allocation based on actual prices charged,prices when sold separately,or estimated costs plus a profit margin.Cost of revenue is allocated in cert

214、ain cases based on a relative revenue methodology.Operating expenses that are allocated primarily include those relating to marketing of products and services from which multiple segments benefit and are generally allocated based on relative gross margin.PART IItem 1 29In addition,certain costs are

215、incurred at a corporate level and allocated to our segments.These allocated costs generally include legal,including settlements and fines,information technology,human resources,finance,excise taxes,field selling,shared facilities services,customer service and support,and severance incurred as part o

216、f a corporate program.Each allocation is measured differently based on the specific facts and circumstances of the costs being allocated and is generally based on relative gross margin or relative headcount.Segment revenue and operating income were as follows during the periods presented:(In million

217、s)Three Months Ended March 31,Nine Months Ended March 31,2025 2024 2025 2024 Revenue Productivity and Business Processes$29,944$27,113$87,698$78,193 Intelligent Cloud 26,751 22,141 76,387 63,679 More Personal Computing 13,371 12,604 41,198 38,523 Total$70,066$61,858$205,283$180,395 Operating Income

218、Productivity and Business Processes$17,379$15,143$50,780$43,955 Intelligent Cloud 11,095 9,515 32,449 27,978 More Personal Computing 3,526 2,923 10,976 9,575 Total$32,000$27,581$94,205$81,508 No sales to an individual customer or country other than the United States accounted for more than 10%of rev

219、enue for the three or nine months ended March 31,2025 or 2024.Revenue,classified by the major geographic areas in which our customers were located,was as follows:(In millions)Three Months Ended March 31,Nine Months Ended March 31,2025 2024 2025 2024 United States$36,084$31,437$105,534$92,544 Other c

220、ountries 33,982 30,421 99,749 87,851 Total$70,066$61,858$205,283$180,395 (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.Revenue,classified by significant produ

221、ct and service offerings,was as follows:(In millions)Three Months EndedMarch 31,Nine Months EndedMarch 31,2025 2024 2025 2024 Server products and cloud services$24,761$20,266$70,557$57,925 Microsoft 365 Commercial products and cloud services 21,883 19,712 63,449 56,077 Gaming 5,721 5,451 17,923 16,4

222、81 LinkedIn 4,311 4,013 13,190 12,121 Windows and Devices 4,144 4,098 12,985 12,801 Search and news advertising 3,504 3,055 10,287 9,241 Enterprise and partner services 1,946 1,861 5,766 5,722 Dynamics products and cloud services 1,929 1,740 5,691 5,025 Microsoft 365 Consumer products and cloud serv

223、ices 1,821 1,648 5,369 4,970 Other 46 14 66 32 Total$70,066$61,858$205,283$180,395 (a)PART IItem 1 30Our Microsoft Cloud revenue,which includes Microsoft 365 Commercial cloud,Azure and other cloud services,the commercial portion of LinkedIn,and Dynamics 365,was$42.4 billion and$122.2 billion for the

224、 three and nine months ended March 31,2025,respectively,and$35.2 billion and$100.8 billion for the three and nine months ended March 31,2024,respectively.These amounts are included in Microsoft 365 Commercial products and cloud services,Server products and cloud services,LinkedIn,and Dynamics produc

225、ts 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 amount of

226、 amortization and depreciation by segment that is included in the measure of segment profit or loss.PART IItem 1 31REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Stockholders and the Board of Directors of Microsoft Corporation Results of Review of Interim Financial InformationWe have

227、reviewed the accompanying consolidated balance sheet of Microsoft Corporation and subsidiaries(the Company)as of March 31,2025,the related consolidated statements of income,comprehensive income,cash flows,and stockholders equity for the three-month and nine-month periods ended March 31,2025 and 2024

228、,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 accepted in

229、 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 30,2024,and the related consolidated statements of income,comprehensive income,cas

230、h flows,and stockholders equity for the year then ended(not presented herein);and in our report dated July 30,2024(December 3,2024 as to the effects of the retrospective adjustments in Notes 1,8,9,13,and 19),we expressed an unqualified opinion on those consolidated financial statements.In our opinio

231、n,the information set forth in the accompanying consolidated balance sheet as of June 30,2024,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

232、 Companys management.We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conduct

233、ed our reviews in accordance with standards of the PCAOB.A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters.It is substantially less in scope than an audit conducted in acco

234、rdance with the standards of the PCAOB,the objective of which is the expression of an opinion regarding the financial statements taken as a whole.Accordingly,we do not express such an opinion./S/DELOITTE&TOUCHE LLP Seattle,WashingtonApril 30,2025PART IItem 2 32ITEM 2.MANAGEMENTS DISCUSSION AND ANALY

235、SIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSNote About Forward-Looking StatementsThis report includes estimates,projections,statements relating to our business plans,objectives,and expected operating results that are“forward-looking statements”within the meaning of the Private Securities Lit

236、igation Reform Act of 1995,Section 27A of the Securities Act of 1933,and Section 21E of the Securities Exchange Act of 1934.Forward-looking statements may appear throughout this report,including the following sections:“Managements Discussion and Analysis of Financial Condition and Results of Operati

237、ons”and“Risk Factors”(Part II,Item 1A of this Form 10-Q).These forward-looking statements generally are identified by the words“believe,”“project,”“expect,”“anticipate,”“estimate,”“intend,”“strategy,”“future,”“opportunity,”“plan,”“may,”“should,”“will,”“would,”“will be,”“will continue,”“will likely r

238、esult,”and similar expressions.Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties that may cause actual results to differ materially.We describe risks and uncertainties that could cause actual results and events to differ material

239、ly in“Managements Discussion and Analysis of Financial Condition and Results of Operations,”“Quantitative and Qualitative Disclosures About Market Risk”(Part I,Item 3 of this Form 10-Q),and“Risk Factors”.We undertake no obligation to update or revise publicly any forward-looking statements,whether b

240、ecause of new information,future events,or otherwise.The following Managements Discussion and Analysis of Financial Condition and Results of Operations(“MD&A”)is intended to help the reader understand the results of operations and financial condition of Microsoft Corporation.MD&A is provided as a su

241、pplement to,and should be read in conjunction with,our Annual Report on Form 10-K for the year ended June 30,2024,our Form 8-K filed on December 3,2024,and our consolidated financial statements and the accompanying Notes to Financial Statements(Part I,Item 1 of this Form 10-Q).OVERVIEWMicrosoft is a

242、 technology company committed to making digital technology and artificial intelligence(“AI”)available broadly and doing so responsibly,with a mission to empower every person and every organization on the planet to achieve more.We create platforms and tools,powered by AI,that deliver innovative solut

243、ions that meet the evolving needs of our customers.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 designin

244、g 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 quar

245、ter of fiscal year 2025 compared with the third quarter of fiscal year 2024 included:Microsoft Cloud revenue increased 20%to$42.4 billion.Microsoft 365 Commercial products and cloud services revenue increased 11%driven by Microsoft 365 Commercial cloud revenue growth of 12%.Microsoft 365 Consumer pr

246、oducts and cloud services revenue increased 10%driven by Microsoft 365 Consumer cloud revenue growth of 10%.LinkedIn revenue increased 7%.Dynamics products and cloud services revenue increased 11%driven by Dynamics 365 revenue growth of 16%.Server products and cloud services revenue increased 22%dri

247、ven by Azure and other cloud services revenue growth of 33%.Windows OEM and Devices revenue increased 3%.Xbox content and services revenue increased 8%.Search and news advertising revenue excluding traffic acquisition costs increased 21%.PART IItem 2 33Industry TrendsOur industry is dynamic and high

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

249、range of research and development activities that seek to identify and address the changing demands of customers and users,industry trends,and competitive forces.Economic Conditions,Challenges,and RisksThe markets for software,devices,and cloud-based services are dynamic and highly competitive.Our c

250、ompetitors are developing new software and devices,while also deploying competing cloud-based services for consumers and businesses.The devices and form factors customers prefer evolve rapidly,influencing how users access services in the cloud and,in some cases,the users choice of which suite of clo

251、ud-based services to use.Aggregate demand for our software,services,and devices is also correlated to global macroeconomic and geopolitical factors,which remain dynamic.We must continue to evolve and adapt over an extended time in pace with this changing environment.The investments we are making in

252、cloud and AI infrastructure and devices will continue to increase our operating costs and may decrease our operating margins.We continue to identify and evaluate opportunities to expand our datacenter locations and increase our server capacity to meet the evolving needs of our customers,particularly

253、 given the growing demand for AI services.Our datacenters depend on the availability of permitted and buildable land,predictable energy,networking supplies,and servers,including graphics processing units(“GPUs”)and other components.Our devices are primarily manufactured by third-party contract manuf

254、acturers.For the majority of our products,we have the ability to use other manufacturers if a current vendor becomes unavailable or unable to meet our requirements.However,some of our products contain certain components for which there are very few qualified suppliers.Extended disruptions at these s

255、uppliers could impact our ability to manufacture devices on time to meet consumer demand.Our success is highly dependent on our ability to attract and retain qualified employees.We hire a mix of university and industry talent worldwide.We compete for talented individuals globally by offering an exce

256、ptional working environment,broad customer reach,scale in resources,the ability to grow ones career across many different products and businesses,and competitive compensation and benefits.Our international operations provide a significant portion of our total revenue and expenses.Many of these reven

257、ue and expenses are denominated in currencies other than the U.S.dollar.As a result,changes in foreign exchange rates may significantly affect revenue and expenses.Fluctuations in the U.S.dollar relative to certain foreign currencies decreased reported revenue and expenses from our international ope

258、rations for the three months ended March 31,2025,and did not have a material impact on reported revenue and expenses from our international operations for the nine months ended March 31,2025.Further,global,regional,and local economic developments and changes in global trade policies such as restrict

259、ions on international trade,including tariffs and other controls on imports or exports,could result in increased supply chain challenges,cost volatility,and consumer and economic uncertainty which may adversely affect our results of operations.Refer to Risk Factors(Part II,Item 1A of this Form 10-Q)

260、for a discussion of these factors and other risks.SeasonalityOur revenue fluctuates quarterly and is generally higher in the fourth quarter of our fiscal year.Fourth quarter revenue is driven by a higher volume of multi-year contracts executed during the period.Reportable SegmentsWe report our finan

261、cial performance based on the following segments:Productivity and Business Processes,Intelligent Cloud,and More Personal Computing.The segment amounts included in MD&A are presented on a basis consistent with our internal management reporting.PART IItem 2 34In August 2024,we announced changes to the

262、 composition of our segments.These changes align our segments with how we currently manage our business,most notably bringing the commercial components of Microsoft 365 together in the Productivity and Business Processes segment.Beginning in fiscal year 2025,the information that our chief operating

263、decision maker is regularly provided and reviews for purposes of allocating resources and assessing performance reflects these segment changes.Prior period segment information has been recast to conform to the way we internally manage and monitor our business during fiscal year 2025.Additional infor

264、mation on our reportable segments is contained in Note 17 Segment Information and Geographic Data of the 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 resour

265、ces.We disclose metrics to enable investors to evaluate progress against our ambitions,provide transparency into performance trends,and reflect the continued evolution of our products and services.Our commercial and other business metrics are fundamentally connected based on how customers use our pr

266、oducts and services.The metrics are disclosed in the MD&A or the Notes to Financial Statements(Part I,Item 1 of this Form 10-Q).Financial metrics are calculated based on financial results prepared in accordance with accounting principles generally accepted in the United States of America(“GAAP”),and

267、 growth comparisons relate to the corresponding period of last fiscal year.In the first quarter of fiscal year 2025,we made updates to our metrics in connection with the segment changes described above.These changes align our metrics with how we manage and monitor certain businesses.The key change w

268、as bringing the commercial components of Microsoft 365 together and creating a new Microsoft 365 Commercial cloud revenue growth metric.Other changes include combining Windows OEM and Devices into a single revenue growth metric that brings revenue from PC market-driven businesses together,as well as

269、 elevating our cloud revenue growth metrics to align to our strategic focus on cloud growth.CommercialOur commercial business primarily consists of Server products and cloud services,Microsoft 365 Commercial products and cloud services,the commercial portion of LinkedIn,Enterprise and partner servic

270、es,and Dynamics products and cloud services.Our commercial metrics allow management and investors to assess the overall health of our commercial business and include leading indicators of future performance.Commercial remaining performance obligation Commercial portion of revenue allocated to remain

271、ing performance obligations,which includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods Microsoft Cloud revenue and revenue growth Revenue from Microsoft 365 Commercial cloud,Azure and other cloud services,the commercial portion of LinkedIn,and Dynam

272、ics 365 Microsoft Cloud gross margin percentage Gross margin percentage for our Microsoft Cloud business PART IItem 2 35Productivity and Business Processes and Intelligent CloudMetrics related to our Productivity and Business Processes and Intelligent Cloud segments assess the health of our core bus

273、inesses within these segments.The metrics primarily reflect growth across our cloud services.Microsoft 365 Commercial cloud revenue growth Revenue from Microsoft 365 Commercial subscriptions,comprising Microsoft 365 Commercial,Enterprise Mobility+Security,the cloud portion of WindowsCommercial,the p

274、er-user portion of Power BI,Exchange,SharePoint,Microsoft Teams,Microsoft 365 Security and Compliance,Microsoft Viva,and Microsoft 365 Copilot Microsoft 365 Commercial seat growth The number of Microsoft 365 Commercial seats at end of period where seats are paid users covered by a Microsoft 365 Comm

275、ercial subscription Microsoft 365 Consumer cloud revenue growth Revenue from Microsoft 365 Consumer subscriptions and other consumer services Microsoft 365 Consumer subscribers The number of Microsoft 365 Consumer subscribers at end of period LinkedIn revenue growth Revenue from LinkedIn,including T

276、alent Solutions,Marketing Solutions,Premium Subscriptions,and Sales Solutions Dynamics 365 revenue growth Revenue from Dynamics 365,including a set of intelligent,cloud-based applications across ERP,CRM,Power Apps,and Power Automate Azure and other cloud services revenue growth Revenue from Azure an

277、d other cloud services,including cloud and AI consumption-based services,GitHub cloud services,Nuance Healthcare cloud services,virtual desktop offerings,and other cloud services More Personal ComputingMetrics related to our More Personal Computing segment assess the performance of our key consumer

278、businesses.Windows OEM and Devices revenue growth Revenue from sales of Windows Pro and non-Pro licenses sold through the OEM channel and sales of first-party Devices,including Surface,HoloLens,and PC accessories Xbox content and services revenue growth Revenue from Xbox content and services,compris

279、ing first-and third-party content(including games and in-game content),Xbox Game Pass and other subscriptions,Xbox Cloud Gaming,advertising,third-party disc royalties,and other cloud services Search and news advertising revenue(ex TAC)growth Revenue from search and news advertising excluding traffic

280、 acquisition costs(“TAC”)paid to Bing Ads network publishers and news partners SUMMARY RESULTS OF OPERATIONS(In millions,except percentages and per share amounts)Three Months EndedMarch 31,PercentageChange Nine Months EndedMarch 31,PercentageChange 2025 2024 2025 2024 Revenue$70,066$61,858 13%$205,2

281、83$180,395 14%Gross margin 48,147 43,353 11%141,466 125,965 12%Operating income 32,000 27,581 16%94,205 81,508 16%Net income 25,824 21,939 18%74,599 66,100 13%Diluted earnings per share 3.46 2.94 18%9.99 8.85 13%PART IItem 2 36Three Months Ended March 31,2025 Compared with Three Months Ended March 3

282、1,2024Revenue increased$8.2 billion or 13%with growth across each of our segments.Intelligent Cloud revenue increased driven by Azure.Productivity and Business Processes revenue increased driven by Microsoft 365 Commercial cloud.More Personal Computing revenue increased driven by Search and news adv

283、ertising.Cost of revenue increased$3.4 billion or 18%driven by growth in Microsoft Cloud.Gross margin increased$4.8 billion or 11%with growth across each of our segments.Gross margin percentage decreased driven by Intelligent Cloud.Microsoft Cloud gross margin percentage decreased to 69%driven by th

284、e impact of scaling our AI infrastructure.Operating expenses increased$375 million or 2%driven by investments in cloud and AI engineering.Operating income increased$4.4 billion or 16%with growth across each of our segments.Revenue,gross margin,and operating income included an unfavorable foreign cur

285、rency impact of 2%,2%,and 3%,respectively.Cost of goods sold included a favorable foreign currency impact of 2%.Nine Months Ended March 31,2025 Compared with Nine Months Ended March 31,2024Revenue increased$24.9 billion or 14%with growth across each of our segments.Intelligent Cloud revenue increase

286、d driven by Azure.Productivity and Business Processes revenue increased driven by Microsoft 365 Commercial cloud.More Personal Computing revenue increased driven by Gaming and Search and news advertising.Cost of revenue increased$9.4 billion or 17%driven by growth in Microsoft Cloud.Gross margin inc

287、reased$15.5 billion or 12%with growth across each of our segments.Gross margin percentage decreased slightly driven by Intelligent Cloud,offset in part by More Personal Computing.Microsoft Cloud gross margin percentage decreased to 70%driven by the impact of scaling our AI infrastructure.Operating e

288、xpenses increased$2.8 billion or 6%driven by investments in cloud and AI engineering and the impact of the Activision Blizzard acquisition.Operating income increased$12.7 billion or 16%with growth across each of our segments.SEGMENT RESULTS OF OPERATIONS(In millions,except percentages)Three Months E

289、ndedMarch 31,PercentageChange Nine Months EndedMarch 31,PercentageChange 2025 2024 2025 2024 Revenue Productivity and Business Processes$29,944$27,113 10%$87,698$78,193 12%Intelligent Cloud 26,751 22,141 21%76,387 63,679 20%More Personal Computing 13,371 12,604 6%41,198 38,523 7%Total$70,066$61,858

290、13%$205,283$180,395 14%Operating Income Productivity and Business Processes$17,379$15,143 15%$50,780$43,955 16%Intelligent Cloud 11,095 9,515 17%32,449 27,978 16%More Personal Computing 3,526 2,923 21%10,976 9,575 15%Total$32,000$27,581 16%$94,205$81,508 16%PART IItem 2 37Reportable SegmentsThree Mo

291、nths Ended March 31,2025 Compared with Three Months Ended March 31,2024Productivity and Business ProcessesRevenue increased$2.8 billion or 10%.Microsoft 365 Commercial products and cloud services revenue increased$2.2 billion or 11%.Microsoft 365 Commercial cloud revenue grew 12%with Microsoft 365 C

292、ommercial seat growth of 7%driven by small and medium business and frontline worker offerings,as well as growth in revenue per user.Microsoft 365 Commercial products revenue grew 5%driven by the Windows Commercial on-premises components of Microsoft 365 suite sales and an increase in Office transact

293、ional purchasing.Microsoft 365 Consumer products and cloud services revenue increased$173 million or 10%.Microsoft 365 Consumer cloud revenue grew 10%driven by Microsoft 365 Consumer subscriber growth of 9%to 87.7 million,as well as growth in revenue per user from the price increase announced in Jan

294、uary 2025,offset in part by continued mix shift to Microsoft 365 Basic.LinkedIn revenue increased$298 million or 7%with growth across all lines of business.Dynamics products and cloud services revenue increased$189 million or 11%driven by growth in Dynamics 365,offset in part by a decline in Dynamic

295、s on-premises products.Dynamics 365 revenue grew 16%with growth across all workloads.Operating income increased$2.2 billion or 15%.Gross margin increased$2.3 billion or 10%driven by growth in Microsoft 365 Commercial cloud.Gross margin percentage was relatively unchanged inclusive of the impact of s

296、caling our AI infrastructure.Operating expenses increased$53 million or 1%primarily driven by investments in cloud and AI engineering.Revenue,gross margin,and operating income each included an unfavorable foreign currency impact of 3%.Intelligent CloudRevenue increased$4.6 billion or 21%.Server prod

297、ucts and cloud services revenue increased$4.5 billion or 22%driven by Azure and other cloud services.Azure and other cloud services revenue grew 33%driven by demand for our portfolio of services,including 16 points from our AI services.Server products revenue decreased 6%primarily driven by a decrea

298、se in transactional purchasing with continued customer shift to cloud offerings.Enterprise and partner services revenue increased$85 million or 5%driven by growth in Enterprise Support Services,offset in part by a decline in Industry Solutions.Operating income increased$1.6 billion or 17%.Gross marg

299、in increased$1.9 billion or 13%driven by growth in Azure.Gross margin percentage decreased driven by the impact of scaling our AI infrastructure.Operating expenses increased$302 million or 6%driven by investments in cloud and AI engineering.More Personal ComputingRevenue increased$767 million or 6%.

300、Windows and Devices revenue increased$46 million or 1%.Windows OEM and Devices revenue increased 3%driven by growth in Windows OEM,with inventory levels remaining elevated due to tariff uncertainty.Gaming revenue increased$270 million or 5%driven by growth in Xbox content and services.Xbox content a

301、nd services revenue increased 8%driven by growth in Xbox Game Pass,Call of Duty,and Minecraft.Xbox hardware revenue decreased 6%.PART IItem 2 38Search and news advertising revenue increased$449 million or 15%.Search and news advertising revenue excluding traffic acquisition costs increased 21%driven

302、 by higher revenue per search and higher search volume.Operating income increased$603 million or 21%.Gross margin increased$623 million or 9%driven by growth in Search and news advertising and Gaming.Gross margin percentage increased driven by improvement in Search and news advertising and Gaming.Op

303、erating expenses increased$20 million or 1%.Gross margin and operating income both included an unfavorable foreign currency impact of 2%.Nine Months Ended March 31,2025 Compared with Nine Months Ended March 31,2024Productivity and Business ProcessesRevenue increased$9.5 billion or 12%.Microsoft 365

304、Commercial products and cloud services revenue increased$7.4 billion or 13%.Microsoft 365 Commercial cloud revenue grew 14%driven by seat growth and growth in revenue per user.Microsoft 365 Commercial products revenue grew 7%driven by the Windows Commercial on-premises components of Microsoft 365 su

305、ite sales and an increase in Office transactional purchasing.Microsoft 365 Consumer products and cloud services revenue increased$399 million or 8%.Microsoft 365 Consumer cloud revenue grew 8%with continued growth in Microsoft 365 Consumer subscribers.LinkedIn revenue increased$1.1 billion or 9%with

306、 growth across all lines of business.Dynamics products and cloud services revenue increased$666 million or 13%driven by growth in Dynamics 365,offset in part by a decline in Dynamics on-premises products.Dynamics 365 revenue grew 18%with growth across all workloads.Operating income increased$6.8 bil

307、lion or 16%.Gross margin increased$7.4 billion or 12%driven by growth in Microsoft 365 Commercial cloud.Gross margin percentage decreased slightly driven by the impact of scaling our AI infrastructure.Operating expenses increased$544 million or 3%driven by investments in cloud and AI engineering and

308、 commercial sales.Intelligent CloudRevenue increased$12.7 billion or 20%.Server products and cloud services revenue increased$12.6 billion or 22%driven by Azure and other cloud services.Azure and other cloud services revenue grew 32%driven by demand for our portfolio of services,including 14 points

309、from our AI services.Server products revenue decreased 4%driven by a decrease in transactional purchasing.Enterprise and partner services revenue increased slightly driven by growth in Enterprise Support Services,offset in part by a decline in Industry Solutions.Operating income increased$4.5 billio

310、n or 16%.Gross margin increased$5.6 billion or 13%driven by growth in Azure.Gross margin percentage decreased driven by the impact of scaling our AI infrastructure.Operating expenses increased$1.2 billion or 8%driven by investments in cloud and AI engineering.More Personal ComputingRevenue increased

311、$2.7 billion or 7%.Windows and Devices revenue increased$184 million or 1%.Windows OEM and Devices revenue increased 3%driven by growth in Windows OEM,offset in part by a decline in Devices.PART IItem 2 39Gaming revenue increased$1.4 billion or 9%driven by growth in Xbox content and services,offset

312、in part by a decline in Xbox hardware.Xbox content and services revenue increased 18%driven by the impact of the Activision Blizzard acquisition and Xbox Game Pass.Xbox hardware revenue decreased 26%driven by lower volume of consoles sold.Search and news advertising revenue increased$1.0 billion or

313、11%.Search and news advertising revenue excluding traffic acquisition costs increased 20%driven by higher search volume and higher revenue per search.Operating income increased$1.4 billion or 15%.Gross margin increased$2.5 billion or 13%driven by growth in Gaming,including the impact of the Activisi

314、on Blizzard acquisition,and Search and news advertising.Gross margin percentage increased driven by sales mix shift to higher margin businesses and improvement in Search and news advertising and Gaming.Operating expenses increased$1.1 billion or 11%driven by the impact of the Activision Blizzard acq

315、uisition.OPERATING EXPENSESResearch and Development(In millions,except percentages)Three Months EndedMarch 31,PercentageChange Nine Months EndedMarch 31,PercentageChange 2025 2024 2025 2024 Research and development$8,198$7,653 7%$23,659$21,454 10%As a percent of revenue 12%12%0ppt 12%12%0ppt Researc

316、h and development expenses include payroll,employee benefits,stock-based compensation expense,and other headcount-related expenses associated with product development.Research and development expenses also include technology development costs,including AI training and other infrastructure costs,thir

317、d-party development and programming costs,and the amortization of purchased software code and services content.Three Months Ended March 31,2025 Compared with Three Months Ended March 31,2024Research and development expenses increased$545 million or 7%driven by investments in cloud and AI engineering

318、.Nine Months Ended March 31,2025 Compared with Nine Months Ended March 31,2024Research and development expenses increased$2.2 billion or 10%driven by investments in cloud and AI engineering and the impact of the Activision Blizzard acquisition.Sales and Marketing(In millions,except percentages)Three

319、 Months EndedMarch 31,PercentageChange Nine Months EndedMarch 31,PercentageChange 2025 2024 2025 2024 Sales and marketing$6,212$6,207 0%$18,369$17,640 4%As a percent of revenue 9%10%(1)ppt 9%10%(1)ppt Sales and marketing expenses include payroll,employee benefits,stock-based compensation expense,and

320、 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 31,2025 Compared with Three Months Ended March 31,2024Sales and marketing expenses were relatively unchanged.PART I

321、Item 2 40Nine Months Ended March 31,2025 Compared with Nine Months Ended March 31,2024Sales and marketing expenses increased$729 million or 4%driven by the impact of the Activision Blizzard acquisition and investments in commercial sales.General and Administrative(In millions,except percentages)Thre

322、e Months EndedMarch 31,PercentageChange Nine Months EndedMarch 31,PercentageChange 2025 2024 2025 2024 General and administrative$1,737$1,912 (9)%$5,233$5,363 (2)%As a percent of revenue 2%3%(1)ppt 3%3%0ppt General and administrative expenses include payroll,employee benefits,stock-based compensatio

323、n expense,employee severance expense incurred as part of a corporate program,and other headcount-related expenses associated with finance,legal,facilities,certain human resources and other administrative personnel,certain taxes,and legal and other administrative fees.Three Months Ended March 31,2025

324、 Compared with Three Months Ended March 31,2024General and administrative expenses decreased$175 million or 9%primarily driven by Gaming.Nine Months Ended March 31,2025 Compared with Nine Months Ended March 31,2024General and administrative expenses decreased$130 million or 2%primarily driven by Gam

325、ing,offset in part by investments in corporate functions.OTHER INCOME(EXPENSE),NETThe components of other income(expense),net were as follows:(In millions)Three Months EndedMarch 31,Nine Months EndedMarch 31,2025 2024 2025 2024 Interest and dividends income$597$619$1,878$2,519 Interest expense (594)

326、(800)(1,770)(2,234)Net recognized gains(losses)on investments 111 (25)(286)(63)Net gains(losses)on derivatives 187 (24)(267)(198)Net gains(losses)on foreign currency remeasurements 89 (138)112 (203)Other,net (1,013)(486)(2,861)(792)Total$(623)$(854)$(3,194)$(971)We use derivative instruments to mana

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

328、(expense),net.Three Months Ended March 31,2025 Compared with Three Months Ended March 31,2024Interest and dividends income decreased primarily due to lower portfolio balances.Interest expense decreased primarily due to maturities of commercial paper,offset in part by higher finance lease interest ex

329、pense.Net recognized gains on investments increased primarily due to higher gains on equity investments in the current period.Net gains on derivatives increased primarily due to gains on equity derivatives in the current period as compared to losses in the prior period.Other,net primarily reflects n

330、et recognized losses on equity method investments,including OpenAI.PART IItem 2 41Nine Months Ended March 31,2025 Compared with Nine Months Ended March 31,2024Interest and dividends income decreased primarily due to lower portfolio balances.Interest expense decreased primarily due to maturities of c

331、ommercial paper,offset in part by higher finance lease interest expense.Net recognized losses on investments increased primarily due to higher impairments,offset in part by higher gains on equity investments in the current period.Net losses on derivatives increased primarily due to higher losses on

332、equity derivatives in the current period.Other,net primarily reflects net recognized losses on equity method investments,including OpenAI.INCOME TAXESEffective Tax RateOur effective tax rate was 18%for both the three months ended March 31,2025 and 2024,and 18%for both the nine months ended March 31,

333、2025 and 2024.Our effective tax rate for the three months ended March 31,2025 was primarily impacted by changes in the mix of our earnings and tax expenses between the U.S.and foreign countries.Our effective tax rate for the nine months ended March 31,2025 was primarily impacted by tax benefits from tax law changes in the prior fiscal year,including the delay of the effective date of final foreign