MICROSOFT CORP
For the period ended Sep 30, 2024. Filed Oct 30, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Oct 30, 2024
MSFT$530.61-1.0%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-04-25.
0000950170-24-048288
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-10-30.
0000950170-24-118967
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 182 previous paragraphs and 142 current paragraphs.
82 unchanged; 35 reworded; 25 added; 59 removed; 6 previous and 0 current paragraphs rearranged.
Tables are not compared: 11 previous and 10 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (25)
Current report
Microsoft is a technology company committed to making digital technology and artificial intelligence (“AI”) available broadly and doing so responsibly, with a mission to empower every person and every organization on the planet to achieve more. We create platforms and tools, powered by AI, that deliver innovative solutions that meet the evolving needs of our customers.
Current report
Microsoft Cloud revenue increased 22% to $38.9 billion.
Current report
Microsoft 365 Consumer products and cloud services revenue increased 5% driven by Microsoft 365 Consumer cloud revenue growth of 6%.
Current report
Dynamics products and cloud services revenue increased 14% driven by Dynamics 365 revenue growth of 18%.
Current report
Server products and cloud services revenue increased 23% driven by Azure and other cloud services revenue growth of 33%.
Current report
Windows OEM and Devices revenue increased 2%.
Current report
Search and news advertising revenue excluding traffic acquisition costs increased 18%.
Current report
In August 2024, we announced changes to the composition of our segments. These changes align our segments with how we currently manage our business, most notably bringing the commercial components of Microsoft 365 together in the Productivity and Business Processes segment. Beginning in fiscal year 2025, the information that our chief operating decision maker is regularly provided and reviews for purposes of allocating resources and assessing performance reflects these segment changes. Prior period segment information has been recast to conform to the way we internally manage and monitor our business during fiscal year 2025.
Current report
In the first quarter of fiscal year 2025, we made updates to our metrics in connection with the segment changes described above. These changes align our metrics with how we manage and monitor certain businesses. The key change was bringing the commercial components of Microsoft 365 together and creating a new Microsoft 365 Commercial cloud revenue growth metric. Other changes include combining Windows OEM and Devices into a single revenue growth metric that brings revenue from PC market-driven businesses together, as well as elevating our cloud revenue growth metrics to align to our strategic focus on cloud growth.
Current report
Gross margin percentage decreased driven by Intelligent Cloud.
Current report
Microsoft Cloud gross margin percentage decreased to 71% driven by scaling our AI infrastructure.
Current report
Operating income increased $3.7 billion or 14% driven by growth in Productivity and Business Processes and Intelligent Cloud.
Current report
Productivity and Business Processes
Current report
Microsoft 365 Consumer products and cloud services revenue increased $84 million or 5%. Microsoft 365 Consumer cloud revenue grew 6% with Microsoft 365 Consumer subscriber growth of 10% to 84.4 million.
Current report
Operating income increased $2.2 billion or 16%.
Current report
Operating expenses increased $101 million or 2% primarily driven by investments in commercial sales and cloud engineering.
Current report
Intelligent Cloud
Current report
Revenue increased $4.1 billion or 20%.
Current report
Gross margin increased $2.0 billion or 15% driven by growth in Azure. Gross margin percentage decreased driven by scaling our AI infrastructure.
Current report
Revenue increased $1.9 billion or 17%.
Current report
Windows and Devices revenue decreased slightly. Windows OEM and Devices revenue increased 2% driven by growth in Windows OEM, offset in part by a decline in Devices.
Current report
Operating income decreased $157 million or 4%.
Current report
Gross margin increased $984 million or 16% driven by growth in Gaming, with 12 points of net impact from the Activision Blizzard acquisition. Gross margin percentage was relatively unchanged as improvement in Gaming and Search and news advertising was offset by sales mix shift to those businesses.
Current report
General and administrative expenses increased $199 million or 14% driven by Gaming, with 11 points of growth from the Activision Blizzard acquisition.
Current report
The Organisation for Economic Co-operation and Development (“OECD”) published its model rules “Tax Challenges Arising From the Digitalisation of the Economy - Global Anti-Base Erosion Model Rules (Pillar Two)” which established a global minimum corporate tax rate of 15% for certain multinational enterprises. Many countries have implemented or are in the process of implementing the Pillar Two legislation, which applies to Microsoft beginning in fiscal year 2025. While we do not currently estimate a material impact to our consolidated financial statements, we continue to monitor the impact as countries implement legislation and the OECD provides additional guidance.
Removed paragraphs (59)
Previous report
Microsoft is a technology company whose mission is to empower every person and every organization on the planet to achieve more. We strive to create local opportunity, growth, and impact in every country around the world. We are creating the platforms and tools, powered by artificial intelligence (“AI”), that deliver better, faster, and more effective solutions to support small and large business competitiveness, improve educational and health outcomes, grow public-sector efficiency, and empower human ingenuity.
Previous report
Microsoft Cloud revenue increased 23% to $35.1 billion.
Previous report
Office Consumer products and cloud services revenue increased 4% and Microsoft 365 Consumer subscribers grew to 80.8 million.
Previous report
Dynamics products and cloud services revenue increased 19% driven by Dynamics 365 growth of 23%.
Previous report
Server products and cloud services revenue increased 24% driven by Azure and other cloud services growth of 31%.
Previous report
Windows revenue increased 11% with Windows original equipment manufacturer licensing (“Windows OEM”) revenue growth of 11% and Windows Commercial products and cloud services revenue growth of 13%.
Previous report
Devices revenue decreased 17%.
Previous report
Search and news advertising revenue excluding traffic acquisition costs increased 12%.
Previous report
On October 13, 2023, we completed our acquisition of Activision Blizzard for a total purchase price of $75.4 billion, 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 7 – Business Combinations of the Notes to the Financial Statements (Part I, Item 1 of this Form 10-Q) for further discussion.
Previous report
In the first quarter of fiscal year 2024, we made updates to the presentation and method of calculation for certain metrics, revising our Microsoft Cloud revenue metric to include revenue growth and expanding our Microsoft 365 Consumer subscribers metric to include Microsoft 365 Basic subscribers, aligning with how we manage our business.
Previous report
Adjusted gross margin, operating income, net income, and diluted earnings per share (“EPS”) are non-GAAP financial measures. Prior year non-GAAP financial measures exclude the impact of a $1.2 billion charge in the second quarter of fiscal year 2023 (“Q2 charge”), which included employee severance expenses, impairment charges resulting from changes to our hardware portfolio, and costs related to lease consolidation activities. Refer to the Non-GAAP Financial Measures section below for a reconciliation of our financial results reported in accordance with GAAP to non-GAAP financial results.
Previous report
Gross margin increased $6.6 billion or 18% driven by growth across each of our segments.
Previous report
Gross margin percentage increased slightly. Excluding the impact of the prior year change in accounting estimate for the useful lives of our server and network equipment, gross margin percentage increased 1 point driven by improvement in More Personal Computing.
Previous report
Microsoft Cloud gross margin percentage decreased slightly to 72%. Excluding the impact of the change in accounting estimate, Microsoft Cloud gross margin percentage increased slightly driven by improvements in Azure and Office 365 Commercial, inclusive of scaling our AI infrastructure, offset in part by sales mix shift to Azure.
Previous report
Cost of revenue increased $5.4 billion or 11% driven by growth in Microsoft Cloud and Gaming, offset in part by a decline in Devices.
Previous report
Gross margin increased $19.3 billion or 18% driven by growth across each of our segments.
Previous report
Gross margin percentage increased. Excluding the impact of the change in accounting estimate, gross margin percentage increased 2 points driven by improvement in More Personal Computing.
Previous report
Microsoft Cloud gross margin percentage of 72% was relatively unchanged. Excluding the impact of the change in accounting estimate, Microsoft Cloud gross margin percentage increased 1 point driven by improvements in Azure and Office 365 Commercial, inclusive of scaling our AI infrastructure, offset in part by sales mix shift to Azure.
Previous report
Operating expenses increased $2.1 billion or 5% driven by Gaming, with 7 points of growth from the Activision Blizzard acquisition, offset in part by 2 points of favorable impact from the prior year Q2 charge.
Previous report
Operating income increased $17.2 billion or 27%, including a favorable foreign currency impact of 2%, driven by growth across each of our segments.
Previous report
Prior year gross margin, operating income, net income, and diluted EPS were negatively impacted by the Q2 charge, which resulted in decreases of $152 million, $1.2 billion, $946 million, and $0.13, respectively.
Previous report
Revenue increased $2.1 billion or 12%.
Previous report
Office Consumer products and cloud services revenue increased $63 million or 4%. Microsoft 365 Consumer subscribers grew 14% to 80.8 million.
Previous report
Operating income increased $1.5 billion or 17%.
Previous report
Operating expenses increased $57 million or 1%.
Previous report
Revenue increased $4.6 billion or 21%.
Previous report
Server products and cloud services revenue increased $4.8 billion or 24% driven by Azure and other cloud services. Azure and other cloud services revenue grew 31% driven by growth in our consumption-based services. Server products revenue increased 6% driven by continued demand for our hybrid solutions, including Windows Server and SQL Server running in multi-cloud environments.
Previous report
Operating income increased $3.0 billion or 32%.
Previous report
Windows revenue increased $601 million or 11% driven by growth in Windows Commercial and Windows OEM. Windows Commercial products and cloud services revenue increased 13% driven by demand for Microsoft 365. Windows OEM revenue increased 11%.
Previous report
Devices revenue decreased $215 million or 17%.
Previous report
Operating income increased $688 million or 16%.
Previous report
Gross margin increased $2.0 billion or 27% driven by growth in Gaming, with 13 points of net impact from the Activision Blizzard acquisition, as well as growth in Windows. Gross margin percentage increased driven by sales mix shift to higher margin businesses.
Previous report
Operating expenses increased $1.3 billion or 41% driven by Gaming, with 43 points of growth from the Activision Blizzard acquisition.
Previous report
Revenue increased $6.4 billion or 13%.
Previous report
Office Consumer products and cloud services revenue increased $181 million or 4% with continued growth in Microsoft 365 Consumer subscribers.
Previous report
LinkedIn revenue increased $1.0 billion or 9% driven by growth across all lines of business – Talent Solutions, Premium Subscriptions, Marketing Solutions, and Sales Solutions.
Previous report
Dynamics products and cloud services revenue increased $811 million or 21% driven by Dynamics 365. Dynamics 365 revenue grew 26% driven by growth across all workloads.
Previous report
Gross margin increased $5.2 billion or 13% driven by growth in Office 365 Commercial. Gross margin percentage was relatively unchanged. Excluding the impact of the change in accounting estimate, gross margin percentage increased slightly driven by improvement in Office 365 Commercial.
Previous report
Operating expenses decreased $97 million or 1% primarily driven by 2 points of favorable impact from the prior year Q2 charge.
Previous report
Revenue increased $12.9 billion or 20%.
Showing the first 40 of 59 passages. Open the source sections for the rest.
Reworded paragraphs (35)
Previous wording
Highlights from the third quarter of fiscal year 2024 compared with the third quarter of fiscal year 2023 included:
Current wording
Highlights from the first quarter of fiscal year 2025 compared with the first quarter of fiscal year 2024 included:
Previous wording
Office Commercial products and cloud services revenue increased 13% driven by Office 365 Commercial growth of 15%.
Current wording
Microsoft 365 Commercial products and cloud services revenue increased 13% driven by Microsoft 365 Commercial cloud revenue growth of 15%.
Previous wording
Xbox content and services revenue increased 62% driven by 61 points of net impact from the Activision Blizzard Inc. (“Activision Blizzard”) acquisition. The net impact reflects the change of Activision Blizzard content from third-party to first-party.
Current wording
Xbox content and services revenue increased 61% driven by 53 points of net impact from the Activision Blizzard Inc. (“Activision Blizzard”) acquisition. The net impact reflects the change of Activision Blizzard content from third-party to first-party.
Previous wording
Our international operations provide a significant portion of our total revenue and expenses. Many of these revenue and expenses are denominated in currencies other than the U.S. dollar. As a result, changes in foreign exchange rates may significantly affect revenue and expenses. Fluctuations in the U.S. dollar relative to certain foreign currencies did not have a material impact on reported revenue and expenses from our international operations for the three and nine months ended March 31, 2024.
Current wording
Our international operations provide a significant portion of our total revenue and expenses. Many of these revenue and expenses are denominated in currencies other than the U.S. dollar. As a result, changes in foreign exchange rates may significantly affect revenue and expenses. Fluctuations in the U.S. dollar relative to certain foreign currencies did not have a material impact on reported revenue and expenses from our international operations in the first quarter of fiscal year 2025.
Previous wording
Our revenue fluctuates quarterly and is generally higher in the second and fourth quarters of our fiscal year. Second quarter revenue is driven by corporate year-end spending trends in our major markets and holiday season spending by consumers, and fourth quarter revenue is driven by the volume of multi-year on-premises contracts executed during the period.
Current wording
Our revenue fluctuates quarterly and is generally higher in the fourth quarter of our fiscal year. Fourth quarter revenue is driven by a higher volume of multi-year contracts executed during the period.
Previous wording
Our commercial business primarily consists of Server products and cloud services, Office Commercial, Windows Commercial, the commercial portion of LinkedIn, Enterprise and partner services, and Dynamics. Our commercial metrics allow management and investors to assess the overall health of our commercial business and include leading indicators of future performance.
Current wording
Our commercial business primarily consists of Server products and cloud services, Microsoft 365 Commercial products and cloud services, the commercial portion of LinkedIn, Enterprise and partner services, and Dynamics products and cloud services. Our commercial metrics allow management and investors to assess the overall health of our commercial business and include leading indicators of future performance.
Previous wording
Metrics related to our Productivity and Business Processes and Intelligent Cloud segments assess the health of our core businesses within these segments. The metrics reflect our cloud and on-premises product strategies and trends.
Current wording
Metrics related to our Productivity and Business Processes and Intelligent Cloud segments assess the health of our core businesses within these segments. The metrics primarily reflect growth across our cloud services.
Previous wording
Metrics related to our More Personal Computing segment assess the performance of key lines of business within this segment. These metrics provide strategic product insights which allow us to assess the performance across our commercial and consumer businesses. As we have diversity of target audiences and sales motions within the Windows business, we monitor metrics that are reflective of those varying motions.
Current wording
Metrics related to our More Personal Computing segment assess the performance of our key consumer businesses.
Previous wording
Revenue increased $24.7 billion or 16% driven by growth across each of our segments. Intelligent Cloud revenue increased driven by Azure. Productivity and Business Processes revenue increased driven by Office 365 Commercial. More Personal Computing revenue increased driven by Gaming.
Current wording
Revenue increased $9.1 billion or 16% driven by growth across each of our segments. Intelligent Cloud revenue increased driven by Azure. Productivity and Business Processes revenue increased driven by Microsoft 365 Commercial cloud. More Personal Computing revenue increased driven by Gaming.
Previous wording
Cost of revenue increased $2.4 billion or 15% driven by growth in Microsoft Cloud and Gaming.
Current wording
Cost of revenue increased $3.8 billion or 23% driven by growth in Microsoft Cloud and Gaming.
Previous wording
Operating income increased $5.3 billion or 21%.
Current wording
Gross margin increased $5.3 billion or 13% driven by growth across each of our segments.
Previous wording
Operating expenses increased $1.4 billion or 10% driven by Gaming, with 9 points of growth from the Activision Blizzard acquisition.
Current wording
Operating expenses increased $1.6 billion or 12% driven by Gaming, with 9 points of growth from the Activision Blizzard acquisition, and investments in cloud engineering.
Previous wording
Gross margin increased $3.1 billion or 20% driven by growth in Azure. Gross margin percentage decreased slightly. Excluding the impact of the change in accounting estimate, gross margin percentage increased slightly primarily driven by improvement in Azure, inclusive of scaling our AI infrastructure, offset in part by sales mix shift to Azure.
Current wording
Revenue increased $3.1 billion or 12%.
Previous wording
Office Commercial products and cloud services revenue increased $1.4 billion or 13%. Office 365 Commercial revenue grew 15% with seat growth of 8%, driven by small and medium business and frontline worker offerings, as well as growth in revenue per user. Office Commercial products revenue declined 20% driven by continued customer shift to cloud offerings.
Current wording
Microsoft 365 Commercial products and cloud services revenue increased $2.4 billion or 13%. Microsoft 365 Commercial cloud revenue grew 15% with seat growth of 8% driven by small and medium business and frontline worker offerings, as well as growth in revenue per user. Microsoft 365 Commercial products revenue grew 2% driven by the on-premises components of Microsoft 365 suite sales, offset in part by continued shift from Office Commercial products to Microsoft 365 Commercial cloud.
Previous wording
LinkedIn revenue increased $354 million or 10% driven by growth across all lines of business – Talent Solutions, Premium Subscriptions, Marketing Solutions, and Sales Solutions.
Current wording
LinkedIn revenue increased $379 million or 10% driven by growth across all lines of business – Talent Solutions, Marketing Solutions, Premium Subscriptions, and Sales Solutions.
Previous wording
Dynamics products and cloud services revenue increased $257 million or 19% driven by Dynamics 365. Dynamics 365 revenue grew 23% driven by growth across all workloads.
Current wording
Dynamics products and cloud services revenue increased $223 million or 14% driven by growth in Dynamics 365, offset in part by a decline in Dynamics on-premises products. Dynamics 365 revenue grew 18% driven by growth across all workloads.
Previous wording
Revenue increased $2.3 billion or 17%.
Current wording
Gross margin increased $2.3 billion or 11% driven by growth in Microsoft 365 Commercial cloud. Gross margin percentage decreased slightly driven by scaling our AI infrastructure.
Previous wording
Server products and cloud services revenue increased $13.1 billion or 23% driven by Azure and other cloud services. Azure and other cloud services revenue grew 30% driven by growth in our consumption-based services. Server products revenue increased 4% driven by continued demand for our hybrid solutions, including Windows Server and SQL Server running in multi-cloud environments.
Current wording
Server products and cloud services revenue increased $4.1 billion or 23% driven by Azure and other cloud services. Azure and other cloud services revenue grew 33% driven by demand for our portfolio of services, including 12 points from our AI services. Server products revenue decreased 1% driven by lower transactional purchasing ahead of the Windows Server 2025 launch, as well as lower purchasing of licenses running in multi-cloud environments.
Previous wording
Enterprise and partner services revenue decreased $186 million or 9% on a strong prior year comparable for Enterprise Support Services.
Current wording
Enterprise and partner services revenue decreased $16 million or 1%.
Previous wording
Gross margin increased $1.6 billion or 11% driven by growth in Office 365 Commercial. Gross margin percentage decreased slightly. Excluding the impact of the change in accounting estimate, gross margin percentage increased slightly driven by improvement in Office 365 Commercial.
Current wording
Operating income increased $1.6 billion or 18%.
Previous wording
Operating expenses increased $49 million or 1% driven by investments in Azure.
Current wording
Operating expenses increased $372 million or 8% driven by investments in Azure.
Previous wording
Gaming revenue increased $1.8 billion or 51% driven by growth in Xbox content and services. Xbox content and services revenue increased 62% driven by 61 points of net impact from the Activision Blizzard acquisition. Xbox hardware revenue decreased 31% driven by lower volume of consoles sold.
Current wording
Gaming revenue increased $1.7 billion or 43% driven by growth in Xbox content and services. Xbox content and services revenue increased 61% driven by 53 points of net impact from the Activision Blizzard acquisition. Xbox hardware revenue decreased 29% driven by lower volume of consoles sold.
Previous wording
Search and news advertising revenue increased $98 million or 3%. Search and news advertising revenue excluding traffic acquisition costs increased 12% driven by higher search volume.
Current wording
Search and news advertising revenue increased $207 million or 7%. Search and news advertising revenue excluding traffic acquisition costs increased 18% driven by higher search volume and higher revenue per search.
Previous wording
Sales and marketing expenses increased $1.1 billion or 7% driven by Gaming, with 6 points of growth from the Activision Blizzard acquisition.
Current wording
Operating expenses increased $1.1 billion or 49% driven by Gaming, with 51 points of growth from the Activision Blizzard acquisition.
Previous wording
Sales and marketing expenses increased $457 million or 8% driven by Gaming, with 8 points of growth from the Activision Blizzard acquisition.
Current wording
Research and development expenses increased $885 million or 13% driven by Gaming, with 8 points of growth from the Activision Blizzard acquisition, and investments in cloud engineering.
Previous wording
Research and development expenses increased $669 million or 10% driven by Gaming, with 9 points of growth from the Activision Blizzard acquisition.
Current wording
Sales and marketing expenses increased $530 million or 10% driven by Gaming, with 9 points of growth from the Activision Blizzard acquisition, and investments in commercial sales.
Previous wording
Interest and dividends income decreased due to lower portfolio balances. Interest expense increased due to the issuance of commercial paper. Net recognized losses on investments increased primarily due to higher equity impairments and lower gains on equity investments. Net losses on derivatives decreased primarily due to lower losses on equity derivatives. Other, net primarily reflects net recognized losses on equity method investments.
Current wording
Interest and dividends income decreased primarily due to lower portfolio balances. Interest expense increased primarily due to higher finance lease interest expense. Net recognized gains on investments increased primarily due to gains on equity investments in the current period as compared to losses in the prior period. Net losses on derivatives increased primarily due to losses on equity derivatives in the current period as compared to gains in the prior period. Other, net primarily reflects net recognized losses on equity method investments, including OpenAI.
Previous wording
Our effective tax rate was 18% and 19% for the three months ended March 31, 2024 and 2023, respectively, and 18% and 19% for the nine months ended March 31, 2024 and 2023, respectively. The decrease in our effective tax rate for the three and nine months ended March 31, 2024 compared to the prior year was primarily due to increased tax benefits from stock-based compensation and tax benefits from tax law changes, including the impact from the issuance of Notice 2023-55 and Notice 2023-80 by the Internal Revenue Service (“IRS”) and U.S. Treasury Department. Notice 2023-55, issued in the first quarter of fiscal year 2024, delayed the effective date of final foreign tax credit regulations to fiscal year 2024 for Microsoft. Notice 2023-80, issued in the second quarter of fiscal year 2024, further delayed the effective date of final foreign tax credit regulations indefinitely.
Current wording
Our effective tax rate was 19% and 18% for the three months ended September 30, 2024 and 2023, respectively. The increase in our effective tax rate for the current quarter compared to the prior year was primarily due to tax benefits from tax law changes in the first quarter of fiscal year 2024, including the impact from the issuance of Notice 2023-55 by the Internal Revenue Service (“IRS”) and U.S. Treasury Department, which delayed the effective date of final foreign tax credit regulations to fiscal year 2024 for Microsoft. Notice 2023-80, issued in the second quarter of fiscal year 2024, further delayed the effective date of final foreign tax credit regulations indefinitely.
Previous wording
Our effective tax rate was lower than the U.S. federal statutory rate for the three and nine months ended March 31, 2024, primarily due to earnings taxed at lower rates in foreign jurisdictions resulting from producing and distributing our products and services through our foreign regional operations center in Ireland.
Current wording
Our effective tax rate was lower than the U.S. federal statutory rate for the three months ended September 30, 2024, primarily due to earnings taxed at lower rates in foreign jurisdictions resulting from producing and distributing our products and services through our foreign regional operations center in Ireland.
Previous wording
Cash, cash equivalents, and short-term investments totaled $80.0 billion and $111.3 billion as of March 31, 2024 and June 30, 2023, respectively. Equity and other investments were $14.8 billion and $9.9 billion as of March 31, 2024 and June 30, 2023, respectively. Our short-term investments are primarily intended to facilitate liquidity and capital preservation. They consist predominantly of highly liquid investment-grade fixed-income securities, diversified among industries and individual issuers. The investments are predominantly U.S. dollar-denominated securities, but also include foreign currency-denominated securities to diversify risk. Our fixed-income investments are exposed to interest rate risk and credit risk. The credit risk and average maturity of our fixed-income portfolio are managed to achieve economic returns that correlate to certain fixed-income indices. The settlement risk related to these investments is insignificant given that the short-term investments held are primarily highly liquid investment-grade fixed-income securities.
Current wording
Cash, cash equivalents, and short-term investments totaled $78.4 billion and $75.5 billion as of September 30, 2024 and June 30, 2024, respectively. Equity and other investments were $15.8 billion and $14.6 billion as of September 30, 2024 and June 30, 2024, respectively. Our short-term investments are primarily intended to facilitate liquidity and capital preservation. They consist predominantly of highly liquid investment-grade fixed-income securities, diversified among industries and individual issuers. The investments are predominantly U.S. dollar-denominated securities, but also include foreign currency-denominated securities to diversify risk. Our fixed-income investments are exposed to interest rate risk and credit risk. The credit risk and average maturity of our fixed-income portfolio are managed to achieve economic returns that correlate to certain fixed-income indices. The settlement risk related to these investments is insignificant given that the short-term investments held are primarily highly liquid investment-grade fixed-income securities.
Previous wording
Cash from operations increased $22.5 billion to $81.4 billion for the nine months ended March 31, 2024, primarily due to an increase in cash received from customers and a decrease in cash paid to suppliers. Cash used in financing decreased $18.3 billion to $14.2 billion for the nine months ended March 31, 2024, primarily due to a $16.3 billion increase in proceeds from issuance of debt, net of repayments. Cash used in investing increased $68.6 billion to $82.1 billion for the nine months ended March 31, 2024, primarily due to a $66.5 billion increase in cash used for acquisitions of companies, net of cash acquired, and purchases of intangible and other assets.
Current wording
Cash from operations increased $3.6 billion to $34.2 billion for the three months ended September 30, 2024, primarily due to an increase in cash received from customers, offset in part by an increase in cash paid to suppliers and employees. Cash used in financing increased $31.3 billion to $16.6 billion for the three months ended September 30, 2024, primarily due to a $31.0 billion increase in cash used for repayments of debt, net of proceeds. Cash used in investing increased $15.7 billion to $15.2 billion for the three months ended September 30, 2024, primarily due to a $10.1 billion decrease in cash from net investment purchases, sales, and maturities and a $5.0 billion increase in additions to property and equipment.
Previous wording
As a result of the TCJA, we are required to pay a one-time transition tax on deferred foreign income not previously subject to U.S. income tax. Under the TCJA, the transition tax is payable in interest-free installments over eight years, with 8% due in each of the first five years, 15% in year six, 20% in year seven, and 25% in year eight. As of March 31, 2024, we had a remaining transition tax liability of $7.6 billion, of which $3.8 billion is short-term and payable in the first quarter of fiscal year 2025.
Current wording
As a result of the TCJA, we are required to pay a one-time transition tax on deferred foreign income not previously subject to U.S. income tax. Under the TCJA, the transition tax is payable in interest-free installments over eight years, with 8% due in each of the first five years, 15% in year six, 20% in year seven, and 25% in year eight. As of September 30, 2024, our eighth transition tax installment of $4.4 billion is short-term and payable in the first quarter of fiscal year 2026.
Previous wording
For the nine months ended March 31, 2024 and 2023, we repurchased 25 million shares and 55 million shares of our common stock for $9.2 billion and $13.8 billion, respectively, through our share repurchase program. All repurchases were made using cash resources. As of March 31, 2024, $13.1 billion remained of our $60 billion share repurchase program. Refer to Note 15 – Stockholders’ Equity of the Notes to Financial Statements (Part I, Item 1 of this Form 10-Q) for further discussion.
Current wording
For the three months ended September 30, 2024 and 2023, we repurchased 7 million shares and 11 million shares of our common stock for $2.8 billion and $3.6 billion, respectively, through our share repurchase program. All repurchases were made using cash resources. As of September 30, 2024, $7.5 billion remained of our $60 billion share repurchase program. Refer to Note 15 – Stockholders’ Equity of the Notes to Financial Statements (Part I, Item 1 of this Form 10-Q) for further discussion.
Previous wording
For the nine months ended March 31, 2024 and 2023, our Board of Directors declared quarterly dividends of $0.75 per share and $0.68 per share, totaling $16.7 billion and $15.2 billion, respectively. We intend to continue returning capital to shareholders in the form of dividends, subject to declaration by our Board of Directors. Refer to Note 15 – Stockholders’ Equity of the Notes to Financial Statements (Part I, Item 1 of this Form 10-Q) for further discussion.
Current wording
For the three months ended September 30, 2024 and 2023, our Board of Directors declared dividends totaling $6.2 billion and $5.6 billion, respectively. We intend to continue returning capital to shareholders in the form of dividends, subject to declaration by our Board of Directors. Refer to Note 15 – Stockholders’ Equity of the Notes to Financial Statements (Part I, Item 1 of this Form 10-Q) for further discussion.
Previous wording
Our consolidated financial statements and accompanying notes are prepared in accordance with GAAP. Preparing consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Critical accounting estimates are those estimates that involve a significant level of estimation uncertainty and could have a material impact on our financial condition or results of operations. We have critical accounting estimates in the areas of revenue recognition, impairment of investment securities, goodwill, research and development costs, legal and other contingencies, income taxes, inventories, and business combinations – valuation of intangible assets.
Current wording
Our consolidated financial statements and accompanying notes are prepared in accordance with GAAP. Preparing consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Critical accounting estimates are those estimates that involve a significant level of estimation uncertainty and could have a material impact on our financial condition or results of operations. We have critical accounting estimates in the areas of revenue recognition, impairment of investment securities, goodwill, research and development costs, legal and other contingencies, income taxes, and business combinations – valuation of intangible assets.
Rearranged previous paragraphs (6)
Previous report — wording carried elsewhere
Revenue increased $9.0 billion or 17% driven by growth across each of our segments. Intelligent Cloud revenue increased driven by Azure. More Personal Computing revenue increased driven by Gaming. Productivity and Business Processes revenue increased driven by Office 365 Commercial.
Previous report — wording carried elsewhere
Operating income increased $5.2 billion or 23% driven by growth across each of our segments.
Previous report — wording carried elsewhere
Office Commercial products and cloud services revenue increased $4.4 billion or 14%. Office 365 Commercial revenue grew 17% with seat growth of 8%, driven by small and medium business and frontline worker offerings, as well as growth in revenue per user. Office Commercial products revenue declined 18% driven by continued customer shift to cloud offerings.
Previous report — wording carried elsewhere
Revenue increased $5.3 billion or 13%.
Previous report — wording carried elsewhere
Gaming revenue increased $4.5 billion or 38% driven by growth in Xbox content and services. Xbox content and services revenue increased 47% driven by 40 points of net impact from the Activision Blizzard acquisition. Xbox hardware revenue decreased 7% driven by lower volume of consoles sold, offset in part by sales mix shift to higher-priced consoles.
Previous report — wording carried elsewhere
Interest and dividends income increased due to higher yields and higher portfolio balances. Interest expense increased due to the issuance of commercial paper. Net recognized losses on investments increased primarily due to higher equity impairments. Net losses on derivatives decreased primarily due to lower losses on equity and interest rate derivatives. Other, net primarily reflects net recognized losses on equity method investments.