1、 1 Dear shareholders,colleagues,customers,and partners:Fiscal year 2024 was a pivotal year for Microsoft.We entered our 50th year as a company and the second year of the AI platform shift.With these milestones,Ive found myself reflecting on how Microsoft has remained a consequential company decade a

2、fter decade in an industry with no franchise value.And I realize that its becausetime and time again,when tech paradigms have shiftedwe have seized the opportunity to reinvent ourselves to stay relevant to our customers,our partners,and our employees.And thats what we are doing again today.Microsoft

3、 has been a platform and tools company from the start.We were founded in 1975 with a belief in creating technology that would enable others to create their own.And,nearly 50 years later,this belief remains at the heart of our mission to empower every person and every organization on the planet to ac

4、hieve more.This year,we moved from talking about AI to helping our customers translate it into real outcomesone person,one organization,one institution,and one country at a time.We have made remarkable progress on this front across every industry.For example:Coles is generating 1.6 billion daily AI

5、predictions across 850 Australian stores,ensuring every shopper finds what they need.Unilever is performing thousands of simulations with AI in the time it would take to run tens of laboratory experiments,as it accelerates its product development.Developers at Ita,Brazils largest private bank,are co

6、ding more efficiently using our AI pair programmer,GitHub Copilot.Khan Academy is making tutoring more accessible for students and helping teachers plan more creative lessons,using our small language model Phi.Aquafarmers in Indonesia are improving their yields,thanks to an app built with the Azure

7、OpenAI Service,as well as Azure IoT.In Kenya,street vendors now have access to credit for the first time,thanks to M-Kopa,a social enterprise using Azure ML to do its forecasting.And enterprise customers and their employees around the world,from Amgen and Disney,to Finastra and Vodafone,are using Mi

8、crosoft 365 Copilot to become more creative and productive.Financially,the year was also marked by record performance.We delivered over$245 billion in annual revenue,up 16 percent year-over-year,and over$109 billion in operating income,up 24 percent.Going forward,we are focused on three priorities:F

9、irst,prioritizing fundamentals,with security above all else.We launched the Secure Future Initiative(SFI)this year,bringing together every part of our organization to advance cybersecurity protection.Second,driving trustworthy AI innovation across our entire portfolio while continuing to scale our c

10、loud business.And,finally,managing our cost structure dynamically to generate durable,long-term operating leverage.All three priorities are critical to our ability to continue thriving as a company as we raise the bar on our operational excellence,with a focus on continuous improvement across everyt

11、hing we do.AGE OF AI If we go back 70 years to the beginning of modern computing,our industry has had two dreams:First,can computers understand us instead of us having to understand computers?And second,as we digitize more of the worldincluding people,places,and thingscan computers help us reason,pl

12、an,and act more effectively using all that information?Over the past year,we have had breakthroughs on both fronts.The core underlying force behind these breakthroughs is scaling laws.Just like Moores Law drove the information revolution,the scaling laws of deep neural networks(DNN)and transformers

13、are driving todays AI revolution.Up until the DNN inflection point,progress in compute was keeping up with Moores Lawdoubling every two years.But we have now started to see progress in AI performance double roughly every six months.There are three capabilities coming together because of these scalin

14、g laws.First,we have a new natural user interface that is multimodal.It supports speech,images,and videosboth as input and output.We have memory that retains important context,recalling both our personal knowledge and data across devices,apps,and the web.And,finally,we have new 2 reasoning and plann

15、ing capabilities that help us understand complex context,complete end-to-end tasks on our behalf,and reduce our cognitive load.This new world is being defined by a rich tapestry of AI agents,which can take action on our behalf,including personal agents across work and life,business process agents,an

16、d cross-organizational ones.These agents will be able to work in concert as a new input to help make small businesses more productive,make multinationals more competitive,make the public sector more efficient,and improve health and education outcomes broadly.Microsoft has built three leading platfor

17、ms to help our customers maximize their opportunity in this emerging agentic era:Copilot,which you can think of as the new UI for AIthe human interface for this agentic world;the Copilot stack,which brings together infrastructure,data,and app services to help customers build their own copilots and a

18、gents for their own business processes;and a new category of Copilot devices that are purpose-built for this new era,including the Copilot+PCs we introduced this year.OUR OPPORTUNITY The innovation we have driven over the past year matters only if we translate it into enduring value for our customer

19、s.Thats why,across our tech stack,we are focused on helping people and organizations realize the benefits of AI.Infrastructure This year,we expanded our cloud and AI capacity,announcing new investments across five continents.These are long-term assets to drive new growth for the next decade and beyo

20、nd,and ensure communities around the world have access to the compute they need to drive economic growth in this new era.Our cloud now also offers top performance for AI training and inference and the most diverse selection of AI accelerators,including the latest from AMD and NVIDIA,as well as our o

21、wn first-party silicon,Azure Maia,which we introduced last November.More broadly,we continued to see sustained revenue growth from migrations as customers turn to Azure.Azure Arc is helping customers streamline their transition,as they secure,develop,and operate workloads with Azure services anywher

22、e.We have 36,000 Arc customers,up 90 percent year-over-year.And we remain the hyperscale cloud of choice for SAP and Oracle workloads.Data&AI AI models are now key building blocks for every application.And with Azure AI,we are building out the app server for the AI age,providing access to the most d

23、iverse selection of models to meet customers unique cost,latency,and design considerations.We offer leading frontier models,thanks to our strategic partnership with OpenAI.With Phi-3,which we announced in April,we offer a family of powerful,small language models.And,with Models as a service,we provi

24、de API access to third-party models,including the latest from Cohere,Meta,and Mistral.In total,we have over 60,000 Azure AI customers,up nearly 60 percent year-over-year.This year,we also announced a partnership with G42,which will run its AI applications and services on our cloud,as we collaborate

25、to bring our latest AI technologies to the United Arab Emirates and other countries.AI does not get created without data.At the data layer,we are fundamentally rethinking what it means to be an analytics database or an operational data store in the world of AI.Our Microsoft Intelligent Data Platform

26、 provides customers with the broadest capabilities spanning databases,analytics,business intelligence,and governancealong with seamless integration with all our AI services.And Microsoft Fabric,our AI-powered,next-generation data platform we made generally available this year,now has over 14,000 pai

27、d customers who can go from data,to insights,to actionall within the same unified SaaS solution.Digital&app innovation From GitHub to Visual Studio,we have the most comprehensive developer tools.GitHub Copilot had a breakout year,as it became standard issue for developers in every industry.We now ha

28、ve more than 1.8 million paid subscribers and over 77,000 enterprise customers,up 180 percent year-over-year.They are realizing productivity gains of up to 55 percent while 3 staying in their flow and bringing the joy back to coding.This year,we also introduced Copilot Workspace,a Copilot-native dev

29、eloper environment,which helps any developer go from idea,to code,to softwareall in natural language.We are also integrating generative AI across Power Platform,enabling anyone to use natural language to create apps,automate workflows,or build a website.In total,we now have 48 million monthly active

30、 users of Power Platform,up 40 percent year-over-year.Modern work Microsoft 365 Copilot is becoming a daily habit for knowledge workers,transforming their work,workflow,and work artifacts.Adoption has been faster than any other new Microsoft 365 suite.And employees at nearly 60 percent of the Fortun

31、e 500 now use Copilot to complete tasks faster,hold more effective meetings,and automate business workflows and processes.In fact,internal and external studies show as much as a 70 percent improvement in productivity using generative AI for specific work tasks.And early Microsoft 365 Copilot users w

32、ere 29 percent faster in a series of general tasks like searching,writing,and summarizing.And were going further,bringing the Web plus Work plus Pages together as the new AI design system for knowledge work.With Pages,which we just announced last month,you can take any information from the web or yo

33、ur work and turn it into a multiplayer,AI-powered canvas.You can ideate with AI and then easily share what you create for collaboration with other people.And with Copilot Studio,customers can extend Copilot with agents and build their own agents that proactively respond to data and events from their

34、 own first-and third-party business data.To date,50,000 organizations have used it.And,just this week,we announced new capabilities that will make it possible for customers to build autonomous agents using Copilot Studio.Microsoft Teams remains essential to how hundreds of millions of people meet,ca

35、ll,chat,collaborate,and do business.This year,we rolled out to all customers a new version that is up to two times faster while using 50 percent less memory.And Teams Premium surpassed 3 million seats,up nearly 400 percent year-over-year,as organizations chose it for advanced features like end-to-en

36、d encryption and real-time translation.Business applications Were using this AI moment to redefine our role in business applications,too.Dynamics 365 once again took share,as organizations use our AI-powered apps to transform their marketing,sales,service,finance,and supply chain functions.And we ar

37、e expanding our total addressable market by integrating Copilot into third-party systems as well.Our new Dynamics 365 Contact Center infuses generative AI throughout the contact center workflow in a customers existing CRM.We are also extending Copilot to specific industries,including healthcare.With

38、 DAX Copilot,more than 400 healthcare organizations are increasing physician productivity and reducing burnout.On average,clinicians save more than five minutes per patient encounter.And 77 percent say it also improves documentation quality.Security As I mentioned earlier,security underpins every la

39、yer of our tech stack.We are doubling down on our Secure Future Initiative,as we implement our principles of secure by design,secure by default,and secure operations.And we are focused on making continuous progress across the six pillars of the initiative:protect tenants and isolate production syste

40、ms;protect identities and secrets;protect networks;protect engineering systems;monitor and detect threats;and accelerate response and remediation.As part of this commitment,all Microsoft employees now have security as a“core priority,”holding each one of us accountable for building secure products a

41、nd services.We are continuously applying what we are learning and translating it into security innovation for our customers.A great example is Copilot for Security,which we made generally available this year.It brings together LLMs with domain-specific 4 skills informed by our threat intelligence an

42、d 78 trillion daily security signals to provide security teams with actionable insights.Devices&creativity This year,we introduced an entirely new category of Windows PCs engineered to unleash the power of distributed AI across the cloud and edge.Copilot+PCs are the fastest,most AI-ready Windows PCs

43、 ever built.They include a new system architecture designed to deliver best-in-class performance and breakthrough AI experiences.And we are working across our entire ecosystem to bring these to life,including with AMD,Intel,and Qualcomm,along with our OEM partners.Professional social network LinkedI

44、n continues to see accelerated member growth and record engagement.We surpassed 1 billion members for the first time this year,as we combine our unique data with this new generation of AI to transform how people learn,sell,and get hired.LinkedIn Marketing Solutions continues to be a leader in B2B di

45、gital advertising,helping companies deliver the right message,to the right audience,on a safe and trusted platform.And when it comes to our subscription businesses,Premium signups increased 51 percent,and we are adding even more value to our members and customers with new AI tools and skilling oppor

46、tunities.Search,ads,and news With Copilot,were taking the first steps toward creating an AI companion,one thats always by your side,helping you feel smarter and more supported through natural conversations.The refreshed Copilot app we introduced earlier this month delivers a more intuitive design wi

47、th more digestible,speedy,and fluent answers.It now adapts to you with a warm tone and a distinct style,providing not only information but encouragement,feedback,and advice as you navigate lifes everyday challengesno matter how big or small.And were adding advanced capabilities like Voice and Vision

48、 that make it both more useful and more natural.We also continue to apply generative AI to pioneer new approaches to how people search and browse.Microsoft Bing and Edge both took share again this year.And we introduced Copilot Pro,providing access to the latest models for quick answers and higher-q

49、uality image creation,and access to Copilot for Microsoft 365 Personal and Family subscribers.Thousands of news and entertainment publishers trust us to reach new audiences with Microsoft Start.And we are also helping advertisers increase their ROI.Copilot in Microsoft Ad Platform helps marketers cr

50、eate campaigns and troubleshoot using natural language.Gaming We are bringing great games to more people on more devices.With our acquisition of Activision Blizzard King,which closed October 2023,weve added hundreds of millions of players to our ecosystem.We now have 20 franchises that have generate

51、d over$1 billion in lifetime revenuefrom Candy Crush,Diablo,and Halo,to Warcraft,Elder Scrolls,and Gears of War.And with Xbox cloud gaming,we continue to innovate to offer players more ways to experience the games they lovewhere,when,and how they want.Finally,we brought four of our fan-favorite titl

52、es to Nintendo Switch and Sony PlayStation for the first time,as we continue to extend our content to new platforms.OUR MISSION Although we have made outstanding progress over the past year,we cannot take our permission to innovatelet alone operatefor granted.It is something we must earn.We always s

53、ay Microsoft will do well only if the world around us does well.And thats why we are focused on four enduring commitments.They keep us grounded,serving as a guide as we make decisions,pushing us to ask critical questions to ensure the technology we create benefits everyone on the planet,as well as t

54、he planet itself.5 How can we expand opportunity?We are democratizing access to AI and the skills needed to harness its potential,ensuring that every person,organization,and community can benefit from the opportunities AI brings.This year,we partnered with 375,000 nonprofits globally,providing$4.7 b

55、illion in donated and discounted technologyto help them build capacity,drive efficiencies,innovate,and increase their impact as they take on the worlds greatest challenges.Together with our partners,we also made significant strides in skilling.We have trained and certified 14.1 million people across

56、 202 countries in digital skills as of June 2024.Over 80 percent of the learners were from groups furthest from opportunity in the digital economy.And our work doesnt stop there.We must do more to accelerate the equitable adoption of AI and narrow the digital divide.Thats why weve launched new AI sk

57、illing initiatives in partnership with governments,educational institutions,industry,and civil societyto help millions of people learn to use generative AI,develop AI tools,and lead AI adoption.This includes people from underserved communities,with a focus on young people,women,rural communities,and

58、 the Global South,as well as employees of social impact organizations.How can we earn trust?We recognize that trust is earned,not given.And we remain committed to earning trust every day,spanning cybersecurity,trustworthy AI,privacy,and digital safety.Our Secure Future Initiative advances how we des

59、ign,build,test,and operate our technology to ensure we deliver solutions that meet the highest possible standard of security.Our first SFI Progress Report highlights updates spanning culture,governance,technology,and operations,but we recognize that our work on security is never complete.We must and

60、 will do more.Our promise is to continually learn,improve,and adapt to the evolving needs of an increasingly complex security landscape.We are focused on building AI that is trustworthy,meaning that it is secure,safe,and private.Our responsible AI practices,grounded in our foundational AI principles

61、,help ensure we do this from the beginning.And were building on this commitment by introducing new product capabilities across our tech stack,ensuring that both our customers and developers are safeguarded at every level.Ultimately,these commitments and capabilities are key to fulfilling our mission

62、.The world is looking to us to help defend and protect them,and we take that responsibility seriously.In May,we published our first AI Transparency Report,which outlines how we build generative applications responsibly and support our customers.We also released Goals and Governance:Goals and Lessons

63、 for AI,which draws lessons from other globally governed technologies like civil aviation and nuclear power.Through our Accelerating Foundation Models Research program,weve made grants to hundreds of projects in AI safety and alignment research,AI-driven scientific discovery,and beneficial applicati

64、ons of AI.And we launched our Global Perspectives Responsible AI Fellowship program,designed to center the voices of AI experts from the Global South and enable us to better understand AIs impact on developing countries.As we drive AI innovation,we continue to respond to a changing privacy landscape

65、.We provide tools to help our customers protect their privacy and control their data,and we have published several resources outlining our approach to privacy and AI for our consumer,commercial,and public sector customers.Finally,we continue our work to create safe experiences online and protect cus

66、tomers from illegal and harmful content and conduct.To bolster our efforts to prevent child sexual exploitation and abuse risks,we have made new commitments to safety by design in our AI services,joined the Tech Coalitions Lantern Program,and proposed concrete actions that US policymakers can take t

67、o protect the public through regulatory and policy measures.How can we protect fundamental rights?We are committed to protecting fundamental rightsextending the benefits of technology while mitigating its potential harms.For us,this means promoting responsible business practices,expanding connectivi

68、ty and accessibility,protecting democracy,and advancing a fair and inclusive society.Over the past year,as regulators increasingly required greater transparency and process consistency across corporate supply chains and human rights efforts,we ensured compliance with reporting and due diligence dire

69、ctives.Going forward,6 well continue to respect global human rights and laws and take steps to mitigate the impact of our operations and our technology on the people in our value chain.As we build and deploy more AI solutions,connectivity and accessibility are foundational.Since 2017,weve extended a

70、ccess to affordable high-speed internet to over 100 million people,including nearly 40 million in Africa.And we remain focused on building inclusive,accessible AI that empowers people across the spectrum of disability.More than 4 billion people will vote this year in their respective elections,makin

71、g it the biggest election year in history.At the Munich Security Conference in February,we came together with others across the tech sector and pledged to help prevent deceptive AI content from interfering with global elections.As part of this pledge,we have worked to empower campaigns,candidates,el

72、ection officials,and voters to understand the risks of deceptive AI in elections and to take steps to protect themselves and democracies.To date,weve conducted deepfake trainings in over 20 countries.And our corresponding public awareness campaign has reached over 355 million people.Lastly,we contin

73、ued investing in both strategic national partnerships and community-based projects that leverage data and insights to enable changes that advance racial equity and fairness in the criminal legal system.How can we advance sustainability?Finally,we are on a journey to build a more sustainable future,f

74、rom addressing our own environmental footprint to empowering our customers and the world with the technology needed to meet the climate challenge.Over the past year,we have seen how AI can catalyze environmental progress in remarkable waysfrom increasing the capacity of transmission lines to deliver

75、 renewable power,to the discovery of new materials to support energy production and storage,to empowering the workforce with sustainability skills.But we also recognize the resource intensity of the infrastructure needed to yield these benefits,which is why were advancing the sustainability of AI,fr

76、om design to construction to operations,all while working to improve the efficiency of these technologies.Were also investing in innovation through Microsofts Climate Innovation Fund and our AI for Good Lab,advancing research and advocating for policies that can drive global impact.In our latest Env

77、ironmental Sustainability Report,we shared progress toward our 2030 commitments.Were on track in several areas.Where were not yet on track,were mobilizing to accelerate our progress toward becoming carbon negative,water positive,and zero waste,as well as to protect and preserve ecosystems.When it co

78、mes to our carbon footprint,we continue to support clean electricity infrastructure through long-term investments to bring more power onto the grids where we operate.Since setting our carbon negative target,we have contracted over 34 gigawatts of renewable energy,including projects in 24 countries.I

79、n our efforts to become water positive,we provided more than 1.5 million people with access to clean water and sanitation,achieving our water access target.Our journey to zero waste includes reducing waste at our campuses and datacenters and advancing circularity for cloud hardware,packaging,and dev

80、ices.Our most recent report showed we had a reuse and recycle rate of 89.4 percent for servers and components across all cloud hardware.Finally,AI gives new opportunity for ecosystem and biodiversity management with solutions like AI-assisted bioacoustics.And were expanding collaboration with local

81、communities to build and operate datacenters in ways that address local challenges and create greater benefits.This work is guided by our Sustainability Standards for new construction and our Datacenter Community Pledge.Learn more about our progress and learnings as we pursue our commitments in our

82、annual Impact Summary.OUR CULTURE Just as our culture has been critical in getting us to this point,it will be critical to our success going forward.At Microsoft,we think of our culture as being both input and output.To pursue new concepts,we need new capability.To build new capability,we need a cul

83、ture that allows us to grow that capability long before it is conventional wisdom.For us,that means 7 constantly exercising our growth mindset and confronting our fixed mindseteach one of us,every day.It is the only way we will succeed.Our growth mindset culture helps us in our continuous pursuit of

84、 high performance.It doesnt matter what we said about our culture 10 years ago or even last year if we arent practicing it todayby anticipating the unmet and unarticulated needs of customers;by working together as One Microsoft to deliver the best end-to-end solutions and services;and by actively se

85、eking diversity and embracing inclusionto ensure our workforce represents the planet we serve and the products we build always meet our customers needs.In our latest Diversity&Inclusion Report,we share the ways our longstanding commitment to diversity and inclusion endures,and what were learning as

86、we continue to hire,develop,and grow a global workforce that best supports each other and our customers.This is how we thriveas individuals,as teams,and as an organization.And,when we thrive,we can help our customers and the world thrive too.Giving also remains core to our culture.This year,more tha

87、n 106,000 employees gave$250 million(including company match)to nearly 35,000 nonprofits in 111 countries.And our employees volunteered over 1 million hours to causes they care about.I am deeply grateful for my colleagues dedication to making a difference.Together,we can continue to empower everyone

88、 around the world.*In closing,this is a consequential time for our company,our industry,and the world.Ultimately,our mission requires that we translate technology into empowerment for everyone,into real-world impact.At the end of the day,thats what really matters.Nearly two years later,I cant stop t

89、hinking about the Indian farmer I met in January 2023.He was able to apply for complex government farm subsidies using just his voice,thanks to an app built with GPT 3.5.It was remarkable.A frontier model developed on the West Coast of the US just months earlier was being used to directly improve th

90、e lives of rural farmers on the other side of the globe.That rate of diffusion was unlike anything I had seen in my career.And the pace has only increased.Earlier this year,I was in Thailand,where I met developers using Phi-3 to optimize their operations just days after the small language model was

91、released.To me,that represents the true democratization of expertise.Where the internet era put information at our fingertips,AI is putting expertise at our fingertips.Impact like this is why we are in this industry,and it is what gives all of us at Microsoft deep meaning in our work.It is why we ar

92、e investing in our fundamentals,in our people,and in continued innovationso that we can help others achieve more for the long term.It is not an exaggeration to say that what each of us does right now with the unique opportunity we have been given will shape the future.And I look forward to seeing ho

93、w all of us use Microsoft as a platform to make a differenceone customer,one community,one country at a time.Satya Nadella Chairman and Chief Executive Officer October 18,2024 8 ISSUER PURCHASES OF EQUITY SECURITIES,DIVIDENDS,AND STOCK PERFORMANCE MARKET AND STOCKHOLDERS Our common stock is traded o

94、n the NASDAQ Stock Market under the symbol MSFT.On July 25,2024,there were 81,346 registered holders of record of our common stock.SHARE REPURCHASES AND DIVIDENDS Share Repurchases On September 18,2019,our Board of Directors approved a share repurchase program authorizing up to$40.0 billion in share

95、 repurchases.This share repurchase program commenced in February 2020 and was completed in November 2021.On September 14,2021,our Board of Directors approved a share repurchase program authorizing up to$60.0 billion in share repurchases.This share repurchase program commenced in November 2021,follow

96、ing completion of the program approved on September 18,2019,has no expiration date,and may be terminated at any time.As of June 30,2024,$10.3 billion remained of this$60.0 billion share repurchase program.We repurchased the following shares of common stock under the share repurchase programs:(In mil

97、lions)Shares Amount Shares Amount Shares Amount Year Ended June 30,2024 2023 2022 First Quarter 11$3,560 17$4,600 21$6,200 Second Quarter 7 2,800 20 4,600 20 6,233 Third Quarter 7 2,800 18 4,600 26 7,800 Fourth Quarter 7 2,800 14 4,600 28 7,800 Total 32$11,960 69$18,400 95$28,033 All repurchases wer

98、e made using cash resources.Shares repurchased during the first quarter of fiscal year 2022 were under the share repurchase program approved on September 18,2019.Shares repurchased during the second quarter of fiscal year 2022 were under the share repurchase programs approved on September 18,2019 an

99、d September 14,2021.All other shares repurchased were under the share repurchase program approved on September 14,2021.The above table excludes shares repurchased to settle employee tax withholding related to the vesting of stock awards of$5.3 billion,$3.8 billion,and$4.7 billion for fiscal years 20

100、24,2023,and 2022,respectively.Dividends Our Board of Directors declared the following dividends:Declaration Date Record Date Payment Date Dividend Per Share Amount Fiscal Year 2024 (In millions)September 19,2023 November 16,2023 December 14,2023$0.75$5,574 November 28,2023 February 15,2024 March 14,

101、2024 0.75 5,573 March 12,2024 May 16,2024 June 13,2024 0.75 5,574 June 12,2024 August 15,2024 September 12,2024 0.75 5,575 Total$3.00$22,296 Fiscal Year 2023 September 20,2022 November 17,2022 December 8,2022$0.68$5,066 November 29,2022 February 16,2023 March 9,2023 0.68 5,059 March 14,2023 May 18,2

102、023 June 8,2023 0.68 5,054 June 13,2023 August 17,2023 September 14,2023 0.68 5,051 Total$2.72$20,230 The dividend declared on June 12,2024 was included in other current liabilities as of June 30,2024.9 STOCK PERFORMANCE COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*Among Microsoft Corporation,the S&

103、P 500 Index and the NASDAQ Computer Index 6/19 6/20 6/21 6/22 6/23 6/24 Microsoft Corporation 100.00 153.80 206.72 197.60 264.54 349.91 S&P 500 100.00 107.51 151.36 135.29 161.80 201.54 NASDAQ Computer 100.00 147.90 222.50 173.91 228.85 331.25 *$100 invested on 6/30/19 in stock or index,including re

104、investment of dividends.Fiscal year ending June 30.10 Note About Forward-Looking Statements This 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

105、Litigation 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:“Business”and“Managements Discussion and Analysis of Financial Condition and Re

106、sults of Operations”.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 result,”and similar expressions.Forwa

107、rd-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 materially in“Risk Factors,”“Managements Dis

108、cussion and Analysis of Financial Condition and Results of Operations,”and“Quantitative and Qualitative Disclosures About Market Risk”in our fiscal year 2024 Form 10-K.Readers are cautioned not to place undue reliance on forward-looking statements,which speak only as of the date they are made.We und

109、ertake no obligation to update or revise publicly any forward-looking statements,whether because of new information,future events,or otherwise.BUSINESS GENERAL Embracing Our Future Microsoft is a technology company committed to making digital technology and artificial intelligence(“AI”)available bro

110、adly 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 solutions that meet the evolving needs of our customers.From infrastructure and data,to business applications

111、and collaboration,we provide unique,differentiated value to customers.We strive to create local opportunity,growth,and impact in every country around the world.We have entered a new age of AI that will fundamentally transform productivity for every individual,organization,and industry on earth,while

112、 helping us address some of our most pressing challenges.Microsofts AI offerings,including Copilot and our Copilot stack,are already orchestrating a new era of AI transformation,driving better business outcomes across every role and industry.As a company,we believe we can be the democratizing force

113、for this new generation of technology and the opportunity it will help unlock for every country,community,and individual.We believe AI should be as empowering across communities as it is powerful,and were committed to ensuring it is responsibly designed and built with safety and security from the ou

114、tset.What We Offer Founded in 1975,we develop and support software,services,devices,and solutions that deliver new value for customers and help people and businesses realize their full potential.We offer an array of services,including cloud-based solutions that provide customers with software,servic

115、es,platforms,and content,and we provide solution support and consulting services.We also deliver relevant online advertising to a global audience.Our products include operating systems,cross-device productivity and collaboration applications,server applications,business solution applications,desktop

116、 and server management tools,software development tools,and video games.We also design and sell devices,including PCs,tablets,gaming and entertainment consoles,other intelligent devices,and related accessories.11 The Ambitions That Drive Us To achieve our vision,our research and development efforts

117、focus on three interconnected ambitions:Reinvent productivity and business processes.Build the intelligent cloud and intelligent edge platform.Create more personal computing.Reinvent Productivity and Business Processes At Microsoft,we provide technology and resources to help our customers create a s

118、ecure,productive work environment.Our family of products plays a key role in the ways the world works,learns,and connects.Our growth depends on securely delivering continuous innovation and advancing our leading productivity and collaboration tools and services,including Microsoft 365,LinkedIn,and D

119、ynamics 365.Microsoft 365 is an AI first platform that brings together Office,Windows,Copilot,and Enterprise Mobility+Security to help organizations empower their employees.Copilot for Microsoft 365 combines AI with business data in the Microsoft Graph and Microsoft 365 applications.Microsoft Teams

120、is a comprehensive platform for communication and collaboration,with meetings,calling,chat,file collaboration,and the ability to bring all of the applications teams use into a single place.Microsoft Viva is an employee experience platform that brings together communications,knowledge,learning,resour

121、ces,and insights.Together,the Microsoft Cloud,Dynamics 365,Microsoft Teams,and our AI offerings bring a new era of collaborative applications for every role and business function to get insights and business impact faster.Dynamics 365 is a portfolio of intelligent business applications that delivers

122、 operational efficiency and breakthrough customer experiences.Our role-based extensions of Microsoft Copilot Copilot for Sales,Copilot for Service,and Copilot for Finance bring together the power of Copilot for Microsoft 365 with role-specific insights and workflow assistance to streamline business

123、processes.Copilot Studio allows customers to customize Copilot for Microsoft 365 or build their own Copilot.Microsoft Power Platform helps domain experts drive productivity gains with low-code/no-code tools,robotic process automation,virtual agents,and business intelligence.Copilot Pro is a consumer

124、 subscription service that offers faster and more powerful AI assistance in Microsoft 365 apps and on the web.LinkedIn combines our unique data with this new generation of AI to transform the way professionals learn,sell,market,and get hired.Build the Intelligent Cloud and Intelligent Edge Platform

125、Digital transformation and adoption of AI continues to revolutionize more business workstreams for organizations in every sector across the globe.For enterprises,digital technology empowers employees,optimizes operations,engages customers,and in some cases,changes the very core of products and servi

126、ces.We continue to invest in high performance and sustainable computing to meet the growing demand for fast access to Microsoft services provided by our network of cloud computing and AI infrastructure and datacenters.Our cloud business benefits from three economies of scale:datacenters that deploy

127、computational resources at significantly lower cost per unit than smaller ones;datacenters that coordinate and aggregate diverse customer,geographic,and application demand patterns,improving the utilization of computing,storage,and network resources;and multi-tenancy locations that lower application

128、 maintenance labor costs.The Microsoft Cloud provides the best integration across the technology stack while offering openness,improving time to value,reducing costs,and increasing agility.As the foundation of the Microsoft Cloud,Azure uniquely offers hybrid consistency,developer productivity,data a

129、nd AI capabilities,and trusted security and compliance.We offer supercomputing power for AI at scale to run large workloads,complemented by our rapidly expanding portfolio of AI cloud services and hardware,which includes custom-built silicon and strong partnerships with chip manufacturers.We have in

130、troduced purpose-built cloud infrastructure for AI workloads including a custom AI accelerator,Azure Maia,and a custom in-house central processing unit,Azure Cobalt.Our AI platform,Azure AI,is helping organizations transform,bringing intelligence and insights to the hands of their employees and cust

131、omers to solve their most pressing challenges.We offer a wide selection of industry-leading frontier and open models,including from partners,as well as state-of-the-art tooling,and AI-optimized infrastructure,delivering the Copilot stack for Microsoft,enterprises,and developers.Organizations large a

132、nd small are deploying Azure AI solutions to achieve more at scale,more easily,with the proper enterprise-level responsible AI and safety and security protections.12 Azure AI Studio provides a full lifecycle toolchain customers can use to ground these models on their own data,create prompt workflows

133、,and help ensure they are deployed and used safely.GitHub Copilot is at the forefront of AI-powered software development,giving developers a tool to write code easier and faster.From GitHub to Visual Studio,we provide a developer tool chain for everyone,no matter the technical experience,across all

134、platforms.We have a long-term partnership with OpenAI,a leading AI research and deployment company.We deploy OpenAIs models across our consumer and enterprise products.As OpenAIs exclusive cloud provider,Azure powers all of OpenAIs workloads.We have also increased our investments in the development

135、and deployment of specialized supercomputing systems to accelerate OpenAIs research.Our hybrid infrastructure offers integrated,end-to-end security,compliance,identity,and management capabilities to support the real-world needs and evolving regulatory requirements of commercial customers and enterpr

136、ises.Our industry clouds bring together capabilities across the entire Microsoft Cloud,along with industry-specific customizations.Azure Arc simplifies governance and management by delivering a consistent multi-cloud and on-premises management platform.The Microsoft Intelligent Data Platform fully i

137、ntegrates databases,analytics,and governance.Microsoft Fabric is an end-to-end,unified analytics platform that brings together all the data and analytics tools that organizations need.Nuance is a leader in conversational AI and ambient intelligence across industries,including healthcare,financial se

138、rvices,retail,and telecommunications.Microsoft and Nuance enable organizations to accelerate their business goals with security-focused,cloud-based solutions infused with AI.As the rate and pace of cyberthreats continue to accelerate,security is a top priority for every organization.Microsoft offers

139、 customers integrated products addressing security,compliance,identity,management,and privacy across customers multi-cloud,application,and device assets.With Copilot for Security,Microsoft offers an AI cybersecurity product that enables security professionals to respond to cyberthreats quickly.Windo

140、ws 365 enables users to stream a full Windows experience from the Microsoft Cloud to any device.Create More Personal Computing We strive to make computing more personal,enabling users to interact with technology in more intuitive,engaging,and dynamic ways.Windows 11 offers innovations focused on per

141、formance,productivity,and creativity,including Copilot in Windows.Windows 11 security and privacy features include operating system security,application security,and user and identity security.Dev Home is an open-source experience in Windows to help developer productivity.We are committed to designi

142、ng and marketing first-party devices to help drive innovation,create new device categories,and stimulate demand in the Windows ecosystem.The Surface family includes Surface Pro,Surface Laptop,and other Surface products.Copilot+PCs are a new class of Windows 11 PCs that are powered by a neural proces

143、sing unit.These PCs use on-device AI for enhanced performance and features.Copilot is an AI assistant that helps users navigate the web,answer questions,and create content.Microsoft Edge is our fast and secure browser that helps protect users data and offers enhanced browsing capabilities including

144、quick access to AI-powered tools,apps,and more.The AI-powered Bing search engine with Copilot delivers better search,more complete answers,and the ability to generate content.Microsoft is expanding how billions of people globally access and play video games on PC,console,mobile,and cloud.We put game

145、 development front and center,backed by innovative hardware,experiences,and a subscription service,Xbox Game Pass,that allows those games to reach more players across more devices.Activision Blizzard,Inc.(“Activision Blizzard”),a leader in game development and an interactive entertainment content pu

146、blisher,joined Microsoft in October 2023.Our Future Opportunity We are focused on helping customers use the breadth and depth of the Microsoft Cloud to get the most value out of their digital spend while leading the AI platform wave across our solution areas.We continue to develop complete,intellige

147、nt 13 solutions for our customers that empower people to be productive and collaborate,while safeguarding businesses and simplifying IT management.Our goal is to lead the industry in several distinct areas of technology over the long term,which we expect will translate to sustained growth.We are inv

148、esting significant resources in:Transforming the workplace to deliver new modern,modular business applications,drive deeper insights,and improve how people communicate,collaborate,learn,work,and interact with one another.Building and running cloud-based services in ways that utilize ubiquitous compu

149、ting to unleash new experiences and opportunities for businesses and individuals.Applying AI and ambient intelligence to drive insights,revolutionize many types of work and business processes,and provide substantive productivity gains using natural methods of communication.Tackling security from all

150、 angles with our integrated,end-to-end solutions spanning security,compliance,identity,and management,across all clouds and platforms.Inventing new gaming experiences that bring people together around their shared love for games on any devices and pushing the boundaries of innovation with console an

151、d PC gaming.Using Windows to fuel our cloud business,grow our share of the PC market,and drive increased engagement with our services like Microsoft Edge,Bing,Microsoft Teams,Microsoft 365 Consumer,Xbox Game Pass,and more.Our future growth depends on our ability to transcend current product category

152、 definitions,business models,and sales motions.Corporate Social Responsibility Commitment to Sustainability Microsofts approach to addressing climate change starts with the sustainability of our own business.In 2020,we committed to being a carbon negative,water positive,and zero waste company by 203

153、0.Since announcing that commitment,we have seen major changes both in the technology sector and in our understanding of what it will take to meet our climate goals.New technologies,including generative AI,hold promise for new innovations that can help address the climate crisis.At the same time,the

154、infrastructure and electricity needed for these technologies create new challenges for meeting sustainability commitments across the tech sector.In May 2024,we released our Environmental Sustainability Report which looked back at our progress in several areas during fiscal year 2023.In four areas we

155、 are on track,and in each of these we see progress that has the potential to have global impact beyond our own sustainability work.These are:Reducing our direct operational emissions(Scope 1 and 2).Accelerating carbon removal.Designing for circularity to minimize waste and reusing cloud hardware.Imp

156、roving biodiversity and protecting more land than we use.At the same time,there are two areas where were not yet on track,and in each of these we are intensively engaged in work to identify and pursue additional breakthroughs.These are:Reducing our indirect emissions(Scope 3).Reducing our water use

157、and replenishing more water than we consume in our datacenter operations.Even amid the challenges,we remain optimistic.Were encouraged by ongoing progress across our campuses and datacenters,and throughout our value chain.Addressing Racial Injustice and Inequity In June 2020,we outlined a series of

158、multi-year commitments designed to address the racial injustice and inequity experienced by racial and ethnic minorities in the United States,including Black and African American communities.We 14 remain committed to addressing racial injustice and inequity and helping improve lived experiences at M

159、icrosoft,in employees communities,and beyond.In fiscal year 2024,we continued to collaborate with partners and worked within neighborhoods and communities to advance projects and programs.We grew our Nonprofit Tech Acceleration for Black and African American Communities program,to help more than 3,0

160、00 local organizations in nearly 1,900 Black and African American communities use technical solutions to modernize and streamline operations.We also expanded our Technology Education and Learning Support(“TEALS”)program to reach nearly 550 high schools across 21 racial equity expansion regions with

161、the support of nearly 1,500 volunteers,12%of whom identify as Black or African American.We have committed$150 million in Minority Depository Institutions and funds supporting Black and African American-owned small businesses.These commitments drive sustained impact by directly enabling an increase o

162、f funds into local communities,improving diverse,small-business access to capital,and increasing skill development.We continue to partner with diverse-owned banking partners and asset managers to catalyze growth and industry participation.Additionally,we enriched our supplier pipeline,achieving our

163、goal to spend$500 million with double the number of Black-and African American-owned suppliers.We have also provided 162 low-or no-interest loans to our small to medium-sized partners through our Partner Capital Fund.We also continue to make progress toward our overall commitment to double the numbe

164、r of Black and African American and Hispanic and Latinx leaders in the U.S.by 2025.Investing in Digital Skills Microsofts Skills for Jobs initiative aims to support a more skills-based labor market,with greater flexibility and accessible learning paths to develop the right skills needed for the most

165、 in-demand jobs.This initiative brings together classes,Career Essentials Certificates,and other resources from LinkedIn,GitHub,and Microsoft Learn,and is built on data insights drawn from LinkedIns Economic Graph.Our goal was to train and certify 10 million learners by 2025.As of May 2024,we have s

166、urpassed that goal,training and certifying 12.6 million learners.We also launched a campaign in the United States in 2021 to help skill and recruit 250,000 people into the nations cybersecurity workforce by 2025,representing half of the countrys workforce shortage.To that end,we are making curriculu

167、m available free of charge to all of the nations higher education institutions,providing training for new and existing faculty,and providing scholarships and supplemental resources to 25,000 students.The cyber skills initiative has expanded to 27 additional countries that show elevated cyberthreat r

168、isks coupled with significant gaps in their cybersecurity workforces,where weve partnered with nonprofits and other educational institutions to train the next generation of cybersecurity workers.Generative AI is creating unparalleled opportunities to empower workers globally,but only if everyone has

169、 the skills to use it.In June 2023,we launched an AI Skills initiative to help everyone learn how to harness the power of AI.This includes a new LinkedIn learning pathway offering new coursework on learning the foundations of generative AI.We also launched a new global grant challenge to uncover new

170、 ways of training workers on generative AI and provide greater access to digital learning events and resources.Additionally,we extended our reach in rural communities,including through our TechSpark initiative in the United States.As of June 2024,weve helped more than 2.5 million people in 92%of the

171、 worlds countries learn how to use AI.HUMAN CAPITAL RESOURCES Microsoft aims to recruit,develop,and retain world-changing talent from a diversity of backgrounds.To foster their and our success,we seek to create an environment where people can thrive and do their best work.We strive to maximize the p

172、otential of our human capital resources by creating a respectful,rewarding,and inclusive work environment that enables our global employees to create products and services that further our mission.Microsofts culture is grounded in growth mindset.This means everyone is on a continuous journey to lear

173、n and grow,operating as one company instead of multiple siloed businesses.Our culture also embeds the security of customers and Microsoft as a priority for every employee and across all of our organizations.As of June 30,2024,we employed approximately 228,000 people on a full-time basis,126,000 in t

174、he U.S.and 102,000 internationally.Of the total employed people,86,000 were in operations,including product support and consulting services,datacenter operations,and manufacturing and distribution;81,000 were in product research and development;45,000 were in sales and marketing;and 16,000 were in g

175、eneral and administration.Certain employees are subject to collective bargaining agreements.15 We design our programs to attract,reward,and retain top talent,enable our employees continual growth,and reinforce our culture and values.Our total compensation opportunity is highly differentiated and mar

176、ket competitive.Our intended result is a global performance and development approach that fosters our culture,drives company performance,and competitive compensation that ensures equitable pay by role while supporting pay for performance.Diversity and inclusion are core to our business.As reported i

177、n our Global Diversity and Inclusion Reports,we monitor pay equity and career progress across multiple dimensions.We encourage every person at Microsoft to play an active role in creating an inclusive environment.We have invested significantly in employee wellbeing and offer a differentiated benefit

178、s package which includes many physical,emotional,and financial wellness programs.Our Occupational Health and Safety program helps to protect employees safety while they are working.We also have introduced Hybrid Workplace Flexibility guidance to better support leaders,managers,and employees in hybri

179、d work scenarios.We believe providing employees with access to continual learning enables them to drive impact for the company.We provide individuals and teams with access to first and third-party content resources across professions,disciplines,and roles,and offer skilling opportunities to support

180、employees growth while driving organizations needs.Our employee listening systems enable us to gather feedback directly from our workforce to inform our programs and employee needs globally,giving us real-time insights into ways we can support our employees.As a company,we will continue to leverage

181、data and research to inform decision making,balancing the needs of the business,team,and individual.OPERATING SEGMENTS We operate our business and report our financial performance using three segments:Productivity and Business Processes,Intelligent Cloud,and More Personal Computing.Our segments prov

182、ide management with a comprehensive financial view of our key businesses.The segments enable the alignment of strategies and objectives across the development,sales,marketing,and services organizations,and they provide a framework for timely and rational allocation of resources within businesses.Add

183、itional information on our operating segments and geographic and product information is contained in Note 19 Segment Information and Geographic Data of the Notes to Financial Statements.Our reportable segments are described below.Productivity and Business Processes Our Productivity and Business Proc

184、esses 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:Office Commercial(Office 365 subscriptions,the Office 365 portion of Microsoft 365 Commercial subscript

185、ions,and Office licensed on-premises),comprising Office,Exchange,SharePoint,Microsoft Teams,Office 365 Security and Compliance,Microsoft Viva,and Copilot for Microsoft 365.Office Consumer,including Microsoft 365 Consumer and Copilot Pro subscriptions,Office licensed on-premises,and other Office serv

186、ices.LinkedIn,including Talent Solutions,Marketing Solutions,Premium Subscriptions,and Sales Solutions.Dynamics business solutions,including Dynamics 365,comprising a set of intelligent,cloud-based applications across ERP,CRM,Power Apps,and Power Automate;and on-premises ERP and CRM applications.Off

187、ice Commercial Office Commercial is designed to increase personal,team,and organizational productivity through a range of products and services.Growth depends on our ability to reach new users in new markets such as frontline workers,small and medium businesses,and growth markets,as well as add valu

188、e to our core product and service offerings to span AI and productivity categories such as communication,collaboration,analytics,security,and compliance.Office Commercial revenue is mainly affected by a combination of continued installed base growth and average revenue per user expansion,as well as

189、the continued shift from Office licensed on-premises to Office 365.16 Office Consumer Office Consumer is designed to increase personal productivity and creativity through a range of products and services.Growth depends on our ability to reach new users,add value to our core product set with new feat

190、ures including AI tools,and continue to expand our product and service offerings into new markets.Office Consumer revenue is mainly affected by the percentage of customers that buy Office with their new devices and the continued shift from Office licensed on-premises to Microsoft 365 Consumer subscr

191、iptions.Office Consumer Services revenue is mainly affected by the demand for communication and storage through Skype,O,and OneDrive,which is largely driven by subscriptions,advertising,and the sale of minutes.LinkedIn LinkedIn connects the worlds professionals to make them more productive and succe

192、ssful and transforms the way companies hire,market,sell,and learn.Our vision is to create economic opportunity for every member of the global workforce through the ongoing development of the worlds first Economic Graph,a digital representation of the global economy.In addition to LinkedIns free serv

193、ices,LinkedIn offers monetized solutions designed to offer AI-enabled insights and productivity:Talent Solutions,Marketing Solutions,Premium Subscriptions,and Sales Solutions.Talent Solutions provide insights for workforce planning and tools to hire,nurture,and develop talent.Talent Solutions also i

194、ncludes Learning Solutions,which help businesses close critical skills gaps in times where companies are having to do more with existing talent.Marketing Solutions help companies reach,engage,and convert their audiences at scale.Premium Subscriptions enable professionals to manage their professional

195、 identity,grow their network,find jobs,access knowledge,and connect with talent through additional services like premium search.Sales Solutions help companies strengthen customer relationships,empower teams with digital selling tools,and acquire new opportunities.Growth will depend on our ability to

196、 increase the number of LinkedIn members and our ability to continue offering insight and AI-enabled services that provide value for our members and increase their engagement.LinkedIn revenue is mainly affected by demand from enterprises and professionals for subscriptions to Talent Solutions,Sales

197、Solutions,and Premium Subscriptions offerings,as well as member engagement and the quality of the sponsored content delivered to those members to drive Marketing Solutions.Dynamics Dynamics provides cloud-based and on-premises business solutions for financial management,enterprise resource planning(

198、“ERP”),customer relationship management(“CRM”),and supply chain management,as well as other low code application development platforms and AI offerings,for small and medium businesses,large organizations,and divisions of global enterprises.Dynamics revenue is driven by the number of users licensed a

199、nd applications consumed,expansion of average revenue per user,and the continued shift to Dynamics 365,a unified set of cloud-based intelligent business applications,including our low code development platforms,such as Power Apps and Power Automate.Competition Competitors to Office include software

200、and global application vendors,such as Apple,Cisco Systems,Google,Meta,Proofpoint,Slack,Symantec,Zoom,and numerous web-based and mobile application competitors as well as local application developers.Apple distributes versions of its pre-installed application software,such as email and calendar prod

201、ucts,through its PCs,tablets,and phones.Cisco Systems is using its position in enterprise communications equipment to grow its unified communications business.Google provides a hosted messaging and productivity suite.Meta offers communication tools to enable productivity and engagement within organi

202、zations.Proofpoint and Symantec provide security solutions across email security,information protection,and governance.Slack provides teamwork and collaboration software.Zoom offers videoconferencing and cloud phone solutions.Web-based offerings competing with individual applications have also posit

203、ioned themselves as alternatives to our products and services.We compete by providing powerful,flexible,secure,integrated industry-specific,and easy-to-use productivity and collaboration tools and services that create comprehensive solutions and work well with technologies our customers already have

204、 both on-premises or in the cloud.LinkedIn faces competition from online professional networks,recruiting companies,talent management companies,and larger companies that are focusing on talent management and human resource services;job boards;traditional recruiting firms;and companies that provide l

205、earning and development products and services.Marketing Solutions competes with online and offline outlets that generate revenue from advertisers and marketers,and Sales Solutions competes with online and offline outlets for companies with lead generation and customer intelligence and insights.17 Dy

206、namics competes with cloud-based and on-premises business solution providers such as Oracle,Salesforce,SAP,Service Now,UI Path,and WorkDay.Intelligent Cloud Our Intelligent Cloud segment consists of our public,private,and hybrid server products and cloud services that can power modern business and d

207、evelopers.This segment primarily comprises:Server products and cloud services,including Azure and other cloud services;SQL Server,Windows Server,Visual Studio,System Center,and related Client Access Licenses(“CALs”);and Nuance and GitHub.Enterprise and partner services,including Enterprise Support S

208、ervices,Industry Solutions,Nuance professional services,Microsoft Partner Network,and Learning Experience.Server Products and Cloud Services Azure is a comprehensive set of cloud services that offer developers,IT professionals,and enterprises freedom to build,deploy,and manage applications on any pl

209、atform or device.Customers can use Azure through our global network of datacenters for computing,networking,storage,mobile and web application services,AI,Internet of Things(“IoT”),cognitive services,and machine learning.Azure enables customers to devote more resources to development and use of appl

210、ications that benefit their organizations,rather than managing on-premises hardware and software.Azure revenue is mainly affected by infrastructure-as-a-service and platform-as-a-service consumption-based services,and per user-based services such as Enterprise Mobility+Security.Azure AI offerings pr

211、ovide a competitive advantage as companies seek ways to optimize and scale their business with machine learning.With Azures purpose-built,AI-optimized infrastructure,customers can use a variety of large language models and developer tools to create the next generation of AI apps and services.Our ser

212、ver products are designed to make IT professionals,developers,and their systems more productive and efficient.Server software is integrated server infrastructure and middleware designed to support software applications built on the Windows Server operating system.This includes the server platform,da

213、tabase,business intelligence,storage,management and operations,virtualization,service-oriented architecture platform,security,and identity software.We also license standalone and software development lifecycle tools for software architects,developers,testers,and project managers.Server products reve

214、nue is mainly affected by purchases through volume licensing programs,licenses sold to original equipment manufacturers(“OEM”),and retail packaged products.CALs provide access rights to certain server products,including SQL Server and Windows Server,and revenue is reported along with the associated

215、server product.Nuance and GitHub include both cloud and on-premises offerings.Nuance provides healthcare and enterprise AI solutions.GitHub provides a collaboration platform and code hosting service for developers.Enterprise and Partner Services Enterprise and Partner Services,including Enterprise S

216、upport Services,Industry Solutions,Nuance professional services,Microsoft Partner Network,and Learning Experience,assist customers in developing,deploying,and managing Microsoft server solutions,Microsoft desktop solutions,and Nuance conversational AI and ambient intelligent solutions,along with pro

217、viding training and certification to developers and IT professionals on various Microsoft products.Competition Azure faces diverse competition from companies such as Amazon,Broadcom,Google,IBM,Oracle,and open source offerings.Azures competitive advantage includes enabling a hybrid cloud,allowing dep

218、loyment of existing datacenters with our public cloud into a single,cohesive infrastructure,and the ability to run at a scale that meets the needs of businesses of all sizes and complexities.Our AI offerings compete with AI products from hyperscalers such as Amazon and Google,as well as products fro

219、m other emerging competitors,including Anthropic,OpenAI,Meta,and other open source offerings,many of which are also current or potential partners.Our Azure Security offerings include our cloud security solution and security information and event management solution,which compete with companies such

220、as Palo Alto Networks and Cisco.Our Enterprise Mobility+Security offerings also compete with products from a range of competitors including identity vendors,security solution vendors,and numerous other security point solution vendors.We believe our clouds global scale,18 coupled with our broad portf

221、olio of identity and security solutions,allows us to effectively solve complex cybersecurity challenges for our customers and differentiates us from the competition.Our server products face competition from a wide variety of server operating systems and applications offered by companies with a range

222、 of market approaches.Vertically integrated computer manufacturers such as Hewlett-Packard,IBM,and Oracle offer their own versions of the Unix operating system preinstalled on server hardware and nearly all computer manufacturers offer server hardware for the Linux operating system.We compete to pro

223、vide enterprise-wide computing and point solutions with numerous commercial software vendors that offer solutions and middleware technology platforms,software applications for connectivity,security,hosting,database,and e-business servers.IBM and Oracle lead a group of companies that compete with our

224、 enterprise-wide computing solutions.Commercial competitors for our server applications for PC-based distributed client-server environments include Broadcom,IBM,and Oracle.Our web application platform software competes with open source software such as Apache,Linux,MySQL,and PHP.In middleware,we com

225、pete against Java vendors.Our database,business intelligence,and data warehousing solutions offerings compete with products from Databricks,IBM,Oracle,SAP,Snowflake,and other companies.Our system management solutions compete with server management and server virtualization platform providers,such as

226、 BMC,Broadcom,Hewlett-Packard,and IBM.Our products for software developers compete against offerings from Adobe,IBM,Oracle,and other companies,and also against open source projects,including Eclipse(sponsored by IBM,Oracle,and SAP),PHP,and Ruby on Rails.We believe our server products provide custome

227、rs with advantages in performance,total costs of ownership,and productivity by delivering superior applications,development tools,compatibility with a broad base of hardware and software applications,security,and manageability.Our Enterprise and Partner Services business competes with a wide range o

228、f companies that provide strategy and business planning,application development,and infrastructure services,including multinational consulting firms and small niche businesses focused on specific technologies.More Personal Computing Our More Personal Computing segment consists of products and servic

229、es that put customers at the center of the experience with our technology.This segment primarily comprises:Windows,including Windows OEM licensing and other non-volume licensing of the Windows operating system;Windows Commercial,comprising volume licensing of the Windows operating system,Windows clo

230、ud services,and other Windows commercial offerings;patent licensing;and Windows Internet of Things.Devices,including Surface,HoloLens,and PC accessories.Gaming,including Xbox hardware and Xbox content and services,comprising first-party content(such as Activision Blizzard)and third-party content,inc

231、luding games and in-game content;Xbox Game Pass and other subscriptions;Xbox Cloud Gaming;advertising;third-party disc royalties;and other cloud services.Search and news advertising,comprising Bing(including Copilot),Microsoft News,Microsoft Edge,and third-party affiliates.Windows The Windows operat

232、ing system is designed to deliver a more personal computing experience for users by enabling consistency of experience,applications,and information across their devices.Windows OEM revenue is impacted significantly by the number of Windows operating system licenses purchased by OEMs,which they pre-i

233、nstall on the devices they sell.In addition to computing device market volume,Windows OEM revenue is impacted by:The mix of computing devices based on form factor and screen size.Differences in device market demand between developed markets and growth markets.Growth of the AI PC category Attachment

234、of Windows to devices shipped.Customer mix between consumer,small and medium businesses,and large enterprises.19 Changes in inventory levels in the OEM channel.Pricing changes and promotions,pricing variation that occurs when the mix of devices manufactured shifts from local and regional system buil

235、ders to large multinational OEMs,and different pricing of Windows versions licensed.Constraints in the supply chain of device components.Piracy.Windows Commercial revenue,which includes volume licensing of the Windows operating system and Windows cloud services such as Microsoft Defender for Endpoin

236、t,is affected mainly by the demand from commercial customers for Microsoft 365 and our advanced security offerings.Windows Commercial revenue often reflects the number of information workers in a licensed enterprise and is relatively independent of the number of PCs sold in a given year.Patent licen

237、sing includes our programs to license patents we own for use across a broad array of technology areas,including mobile devices and cloud offerings.Windows IoT extends the power of Windows and the cloud to intelligent systems by delivering specialized operating systems,tools,and services for use in e

238、mbedded devices.Devices We design and sell devices,such as Surface(including Copilot+PCs),HoloLens,and PC accessories.Our devices are designed to enable people and organizations to connect to the people and content that matter most using Windows and integrated Microsoft products and services.Surface

239、 is designed to help organizations,students,and consumers be more productive.Growth in Devices is dependent on total PC shipments,the ability to attract new customers,our product roadmap,and expanding into new categories.Gaming Our gaming platform is designed to provide a variety of entertainment th

240、rough a unique combination of content,community,and cloud services.Our game content is developed through a collection of first-party studios creating iconic and differentiated gaming experiences.We continue to invest in new gaming studios and content to expand our intellectual property roadmap and l

241、everage new content creators.These unique gaming experiences are the cornerstone of Xbox Game Pass,a subscription service and gaming community with access to a curated library of over 400 first-and third-party console and PC titles.The gamer remains at the heart of the Xbox ecosystem.We are identify

242、ing new opportunities to attract gamers across a variety of different end points through our first-and third-party content and business diversification across subscriptions,ads,and digital stores.Weve seen new devices from third-party manufacturers along with key PC and mobile end points that help u

243、s empower gamers to play in a way that is most convenient to them.We are focused on growing the platform and expanding to new ecosystems to engage as many gamers as possible.Xbox enables people to connect and share online gaming experiences that are accessible on Xbox consoles,Windows-enabled device

244、s,and other devices.Xbox is designed to benefit users by providing access to a network of certified applications and services and to benefit our developer and partner ecosystems by providing access to a large customer base.Xbox revenue is mainly affected by subscriptions and sales of first-and third

245、-party content,as well as advertising.Growth of our Gaming business is determined by the overall active user base through Xbox enabled content,availability of games,providing exclusive game content that gamers seek,the computational power and reliability of the devices used to access our content and

246、 services,and the ability to create new experiences.Search and News Advertising Our Search and news advertising business is designed to deliver relevant search,native,and display advertising to a global audience.Our Microsoft Edge browser and Bing search engine with Copilot are key tools to enable u

247、ser acquisition and engagement,while our technology platform enables accelerated delivery of digital advertising solutions.In addition to first-party tools,we have several partnerships with companies,such as Yahoo,through which we provide and monetize search offerings.Growth depends on our ability t

248、o attract new users,understand intent,and match intent with relevant content on advertising offerings.20 Competition Windows faces competition from various software products and from alternative platforms and devices,mainly from Apple and Google,and Microsoft Defender for Endpoint competes with Crow

249、dStrike on endpoint security solutions.We believe Windows competes effectively by giving customers choice,value,flexibility,security,an easy-to-use interface,and compatibility with a broad range of hardware and software applications,including those that enable productivity.Devices face competition f

250、rom various computer,tablet,and hardware manufacturers who offer a unique combination of high-quality industrial design and innovative technologies across various price points.These manufacturers,many of which are also current or potential partners and customers,include Apple and our Windows OEMs.Xb

251、ox and our cloud gaming services face competition from various online gaming ecosystems and game streaming services,including those operated by Amazon,Apple,Meta,and Tencent.We also compete with other providers of entertainment services such as video streaming platforms.Our gaming platform competes

252、with console platforms from Nintendo and Sony,both of which have a large,established base of customers.We believe our gaming platform is effectively positioned against,and uniquely differentiated from,competitive products and services based on significant innovation in hardware architecture,user int

253、erface,developer tools,online gaming and entertainment services,and continued strong content from our own first-party game franchises as well as other digital content offerings.Our Search and news advertising business competes with Google,OpenAI,and a wide array of websites,social platforms like Met

254、a,and portals that provide content and online offerings to end users.OPERATIONS We have regional operations service centers that support our operations,including customer contract and order processing,billing,credit and collections,customer lifecycle operations,information processing,and vendor mana

255、gement and logistics.The centers in Ireland and Romania support the African,European,and Middle East regions;the centers in India and Ireland support the Asia-Pacific region;and the centers in Arlington,Virginia,Atlanta,Georgia,Charlotte,North Carolina,Fargo,North Dakota,Fort Lauderdale,Florida,Redm

256、ond,Washington,Reno,Nevada,and San Jose,Costa Rica support the Americas regions.In addition to our operations centers,we also operate datacenters throughout each of these regions.We continue to identify and evaluate opportunities to expand our datacenter locations and increase our server capacity to

257、 meet the evolving needs of our customers,particularly 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 ar

258、e primarily manufactured by third-party contract manufacturers.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 f

259、ew qualified suppliers.Extended disruptions at these suppliers could impact our ability to manufacture devices on time to meet consumer demand.RESEARCH AND DEVELOPMENT Product and Service Development,and Intellectual Property We develop most of our products and services internally through the follow

260、ing engineering groups.Cloud and AI focuses on making IT professionals,developers,partners,independent software vendors,and their systems more productive and efficient through development of Azure AI platform and cloud infrastructure,server,database,CRM,ERP,software development tools and services,AI

261、 cognitive services,and other business process applications and services for enterprises.Strategic Missions and Technologies focuses on incubating technical products and support solutions with transformative potential for the future of cloud computing and continued company growth,such as quantum com

262、puting and advanced AI for science.Experiences and Devices focuses on delivering high value end-user experiences across our products,services,and devices,including Microsoft 365,Windows,Microsoft Teams,and the Surface line of devices.21 Microsoft AI focuses on delivering online experiences targeted

263、at consumers(including Bing,Copilot,Start/MSN,and other advertising-based services)and developing advanced AI models.Microsoft Security focuses on delivering a comprehensive portfolio of services that protect our customers digital infrastructure through cloud platform and application security,data p

264、rotection and governance,identity and network access,and device management.Technology and Research focuses on fundamental research,product and business incubations,and forward-looking AI innovations that span infrastructure,services,and applications.This engineering group includes Microsoft Research

265、,one of the worlds largest corporate research organizations,which focuses on fundamental research in AI,computer science,and a broad range of other disciplines.LinkedIn focuses on our services that transform the way professionals grow their network and find jobs and the way businesses hire,market,se

266、ll,and learn.Gaming focuses on developing hardware,content,and services across a large range of platforms to help grow our user base through game experiences and social interaction.Internal development allows us to maintain competitive advantages that come from product differentiation and closer tec

267、hnical control over our products and services.It also gives us the freedom to decide which modifications and enhancements are most important and when they should be implemented.We strive to obtain information as early as possible about changing usage patterns and hardware advances that may affect so

268、ftware and hardware design.Before releasing new software platforms,and as we make significant modifications to existing platforms,we provide application vendors with a range of resources and guidelines for development,training,and testing.Generally,we also create product documentation internally.We

269、protect our intellectual property investments in a variety of ways.We work actively in the U.S.and internationally to ensure the enforcement of copyright,trademark,trade secret,and other protections that apply to our software and hardware products,services,business plans,and branding.We are a leader

270、 among technology companies in pursuing patents and currently have a portfolio of over 63,000 U.S.and international patents issued and over 23,000 pending worldwide.While we employ much of our internally-developed intellectual property in our products and services,we also engage in outbound licensin

271、g of specific patented technologies that are incorporated into licensees products.From time to time,we enter into broader cross-license agreements with other technology companies covering entire groups of patents.We may also purchase or license technology that we incorporate into our products and se

272、rvices.At times,we make select intellectual property broadly available at no or low cost to achieve a strategic objective,such as promoting industry standards,advancing interoperability,supporting societal and/or environmental efforts,or attracting and enabling our external development community.Our

273、 engagement with open source software also causes us to license our intellectual property rights broadly in certain situations.While it may be necessary in the future to seek or renew licenses relating to various aspects of our products and services,we believe,based upon past experience and industry

274、 practice,such licenses generally can be obtained on commercially reasonable terms.We believe our continuing research and product development are not materially dependent on any single license or other agreement with a third party relating to the development of our products.Investing in the Future O

275、ur success is based on our ability to create new and compelling products,services,and experiences for our users,to initiate and embrace disruptive technology trends,to enter new geographic and product markets,and to drive broad adoption of our products and services.We invest in a range of emerging t

276、echnology trends and breakthroughs that we believe offer significant opportunities to deliver value to our customers and growth for the company.Based on our assessment of key technology trends,we maintain our long-term commitment to research and development across a wide spectrum of technologies,too

277、ls,and platforms spanning digital work and life experiences,cloud computing,AI,devices,and operating systems.While our main product research and development facilities are located in Redmond,Washington,we also operate research and development facilities in other parts of the U.S.and around the world

278、.This global approach helps us remain competitive in local markets and enables us to continue to attract top talent from across the world.We plan to continue to make significant investments in a broad range of product research and development activities,and as appropriate we will coordinate our rese

279、arch and development across operating segments and leverage the results across the company.This includes continuing to support fundamental research,which provides us with a unique perspective on future trends and contributes to our innovation.22 DISTRIBUTION,SALES,AND MARKETING We market and distrib

280、ute our products and services through the following channels:OEMs,direct,and distributors and resellers.Our sales organization performs a variety of functions,including working directly with commercial enterprises and public-sector organizations worldwide to identify and meet their technology and di

281、gital transformation requirements;managing OEM relationships;and supporting system integrators,independent software vendors,and other partners who engage directly with our customers to perform sales,consulting,and fulfillment functions for our products and services.OEMs We distribute our products an

282、d services through OEMs that pre-install our software on new devices and servers they sell.The largest component of the OEM business is the Windows operating system pre-installed on devices.OEMs also sell devices pre-installed with other Microsoft products and services,including applications such as

283、 Office and the capability to subscribe to Microsoft 365 Consumer.There are two broad categories of OEMs.The largest category of OEMs are direct OEMs as our relationship with them is managed through a direct agreement between Microsoft and the OEM.We have distribution agreements covering one or more

284、 of our products with virtually all the multinational OEMs,including Dell,Hewlett-Packard,Lenovo,and with many regional and local OEMs.The second broad category of OEMs are system builders consisting of lower-volume PC manufacturers,which source Microsoft software for pre-installation and local redi

285、stribution primarily through the Microsoft distributor channel rather than through a direct agreement or relationship with Microsoft.Direct Many organizations that license our products and services transact directly with us through Enterprise Agreements and Enterprise Services contracts,with sales s

286、upport from system integrators,independent software vendors,web agencies,and partners that advise organizations on licensing our products and services(“Enterprise Agreement Software Advisors”or“ESA”).Microsoft offers direct sales programs targeted to reach small,medium,and corporate customers,in add

287、ition to those offered through the reseller channel.A large network of partner advisors support many of these sales.We also sell commercial and consumer products and services directly to customers,such as cloud services,search,and gaming,through our digital marketplaces and online stores.Additionall

288、y,our Microsoft Experience Centers are designed to facilitate deeper engagement with our partners and customers across industries.Distributors and Resellers Organizations also license our products and services indirectly,primarily through licensing solution partners(“LSP”),distributors,value-added r

289、esellers(“VAR”),and retailers.Although each type of reselling partner may reach organizations of all sizes,LSPs are primarily engaged with large organizations,distributors resell primarily to VARs,and VARs typically reach small and medium organizations.ESAs are also typically authorized as LSPs and

290、operate as resellers for our other volume licensing programs.Microsoft Cloud Solution Provider is our main partner program for reselling cloud services.We distribute our retail packaged products primarily through independent non-exclusive distributors,authorized replicators,resellers,and retail outl

291、ets.Individual consumers obtain these products primarily through retail outlets.We distribute our devices through third-party retailers.We have a network of field sales representatives and field support personnel that solicit orders from distributors and resellers and provide product training and sa

292、les support.Our Dynamics business solutions are also licensed to enterprises through a global network of channel partners providing vertical solutions and specialized services.LICENSING OPTIONS We offer options for organizations of varying sizes that want to purchase our cloud services and on-premis

293、e software.We license these organizations under volume licensing agreements to allow the customer to acquire multiple licenses of products and services instead of having to acquire separate licenses through retail channels.These volume licensing programs have varying programmatic requirements and be

294、nefits to best meet the needs of our customers.Software Assurance(“SA”)conveys rights to new software and upgrades for perpetual licenses released over the contract period.It also provides support,tools,training,and other licensing benefits to help customers deploy and use software efficiently.SA is

295、 required to be purchased with certain volume licensing agreements and is an optional purchase with others.23 Volume Licensing Programs Enterprise Agreement Enterprise Agreements offer large organizations a manageable volume licensing program that gives them the flexibility to buy cloud services and

296、 software licenses under one agreement.Enterprise Agreements are designed for medium or large organizations that want to license Microsoft products and services organization-wide over a three-year period.Organizations can elect to purchase perpetual licenses(covered with SA)and/or subscribe to cloud

297、 services.Microsoft Customer Agreement Microsoft Customer Agreements are simplified purchase agreements presented,accepted,and stored through a digital experience.Microsoft Customer Agreements are non-expiring agreements that are designed to support all customers over time,whether purchasing through

298、 a partner or directly from Microsoft.Microsoft Online Subscription Agreement Microsoft Online Subscription Agreements are designed for small and medium organizations that want to subscribe to,activate,provision,and maintain cloud services seamlessly and directly via the web.These agreements allow c

299、ustomers to acquire monthly or annual subscriptions for cloud-based services.24 Microsoft Products and Services Agreement Microsoft Products and Services Agreements are designed for medium and large organizations that want to license cloud services and on-premises software as needed,with no organiza

300、tion-wide commitment,under a single,non-expiring agreement.Organizations purchase perpetual licenses or subscribe to licenses.SA is optional for customers that purchase perpetual licenses.Open Value Open Value agreements are a simple,cost-effective way to acquire the latest Microsoft technology.Thes

301、e agreements are designed for small and medium organizations that want to license cloud services and on-premises software over a three-year period.Under Open Value agreements,organizations can elect to purchase perpetual licenses or subscribe to licenses and SA is included.Select Plus A Select Plus

302、agreement is designed for government and academic organizations to acquire on-premises licenses at any affiliate or department level,while realizing advantages as one organization.Organizations purchase perpetual licenses and SA is optional.Partner Programs The Microsoft Cloud Solution Provider Prog

303、ram offers customers an easy way to license the cloud services they need in combination with the value-added services offered by their systems integrator,managed services provider,or cloud reseller partner.Partners in this program can easily package their own products and services to directly provis

304、ion,manage,and support their customer subscriptions.The Microsoft Services Provider License Agreement allows hosting service providers and independent software vendors who want to license eligible Microsoft software products to provide hosted applications and software services to their end customers

305、.Partners license software over a three-year period and are billed monthly based on units licensed.The Independent Software Vendor Royalty Program enables partners to integrate Microsoft products into other applications and then license the unified business solution to their end users.CUSTOMERS Our

306、customers include individual consumers,small and medium organizations,large global enterprises,public-sector institutions,Internet service providers,application developers,and OEMs.Our practice is to ship our products promptly upon receipt of purchase orders from customers;consequently,backlog is no

307、t significant.GOVERNMENT REGULATION We are subject to a wide range of laws,regulations,and legal requirements in the U.S.and globally,including those that may apply to our products and online services offerings,and those that impose requirements related to user privacy,telecommunications,data storag

308、e and protection,advertising,and online content.How these laws and regulations apply to our business is often unclear,subject to change over time,and sometimes may be inconsistent from jurisdiction to jurisdiction.To comply with the accelerating global regulatory obligations,we established a regulat

309、ory governance framework and to create a repeatable system-focused approach to regulatory governance with an initial focus on four domains:Responsible AI,Privacy,Digital Safety,and Cybersecurity.The framework is designed to help us maintain customer trust and confidence in our products,remain in com

310、pliance with regulators around the globe,and effectively scale our capability to address the growing number of complex regulations.Through the framework,our legal and regulatory subject matter experts ingest regulations,develop standards and implementation guidance,and,when appropriate,work with our

311、 engineers to develop and implement products to monitor compliance.Our business teams,with legal support,manage the compliance programs and prepare external regulatory and commercial reporting,and our internal audit teams conduct reviews of our programs and processes.While we intended to create a un

312、ified approach to regulatory compliance,some of the programs and processes established pursuant to the framework are tailored to meet specific regulatory obligations,such as with the creation of independent compliance functions required by the European Union(“EU”)Digital 25 Markets Act and the EU Di

313、gital Services Act,which oversee,monitor,and assess the companys compliance with these acts.For a description of the risks we face related to regulatory matters,refer to Risk Factors in our fiscal year 2024 Form 10-K.AVAILABLE INFORMATION Our Internet address is .At our Investor Relations website, m

314、ake available free of charge a variety of information for investors.Our goal is to maintain the Investor Relations website as a portal through which investors can easily find or navigate to pertinent information about us,including:Our annual report on Form 10-K,quarterly reports on Form 10-Q,current

315、 reports on Form 8-K,and any amendments to those reports,as soon as reasonably practicable after we electronically file that material with or furnish it to the Securities and Exchange Commission(“SEC”)at www.sec.gov.Information on our business strategies,financial results,and metrics for investors.A

316、nnouncements of investor conferences,speeches,and events at which our executives talk about our product,service,and competitive strategies.Archives of these events are also available.Press releases on quarterly earnings,product and service announcements,legal developments,and international news.Corp

317、orate governance information including our articles of incorporation,bylaws,governance guidelines,committee charters,codes of conduct and ethics,global corporate social responsibility initiatives,and other governance-related policies.Other news and announcements that we may post from time to time th

318、at investors might find useful or interesting.Opportunities to sign up for email alerts to have information pushed in real time.We publish a variety of reports and resources related to our Corporate Social Responsibility programs and progress on our Reports Hub website, reports on sustainability,res

319、ponsible sourcing,accessibility,digital trust,and public policy engagement.The information found on these websites is not part of,or incorporated by reference into,this or any other report we file with,or furnish to,the SEC.In addition to these channels,we use social media to communicate to the publ

320、ic.It is possible that the information we post on social media could be deemed to be material to investors.We encourage investors,the media,and others interested in Microsoft to review the information we post on the social media channels listed on our Investor Relations website.26 MANAGEMENTS DISCUS

321、SION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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 pr

322、ovided as a supplement to,and should be read in conjunction with,our consolidated financial statements and the accompanying Notes to Financial Statements.This section generally discusses the results of our operations for the year ended June 30,2024 compared to the year ended June 30,2023.For a discu

323、ssion of the year ended June 30,2023 compared to the year ended June 30,2022,please refer to“Managements Discussion and Analysis of Financial Condition and Results of Operations”in our Annual Report on Form 10-K for the year ended June 30,2023.OVERVIEW Microsoft is a technology company committed to

324、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 solutions that meet the evolving needs

325、 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 designing and selling devices.Our most si

326、gnificant 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 fiscal year 2024 compared with fiscal year 2023

327、 included:Microsoft Cloud revenue increased 23%to$137.4 billion.Office Commercial products and cloud services revenue increased 14%driven by Office 365 Commercial growth of 16%.Office Consumer products and cloud services revenue increased 4%and Microsoft 365 Consumer subscribers grew to 82.5 million

328、.LinkedIn revenue increased 9%.Dynamics products and cloud services revenue increased 19%driven by Dynamics 365 growth of 24%.Server products and cloud services revenue increased 22%driven by Azure and other cloud services growth of 30%.Windows revenue increased 8%with Windows original equipment man

329、ufacturer licensing(“Windows OEM”)revenue growth of 7%and Windows Commercial products and cloud services revenue growth of 11%.Devices revenue decreased 15%.Xbox content and services revenue increased 50%driven by 44 points of net impact from the Activision Blizzard Inc.(“Activision Blizzard”)acquis

330、ition.The net impact reflects the change of Activision Blizzard content from third-party to first-party.Search and news advertising revenue excluding traffic acquisition costs increased 12%.On October 13,2023,we completed our acquisition of Activision Blizzard for a total purchase price of$75.4 bill

331、ion,consisting primarily of cash.The financial results of Activision Blizzard have been included in our consolidated financial statements since the date of the acquisition.Activision Blizzard is reported as part of our More Personal Computing segment.Refer to Note 8 Business Combinations of the Note

332、s to Financial Statements for further discussion.27 Industry Trends Our industry is dynamic and highly 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 th

333、e industry and our business.At Microsoft,we push the boundaries of what is possible through a broad range of research and development activities that seek to identify and address the changing demands of customers and users,industry trends,and competitive forces.Economic Conditions,Challenges,and Risks The markets for software,devices,and cloud-based services are dynamic and highly competitive.Our