Microsoft Corporation Third-Quarter Fiscal Year 2010 Results - April 22, 2010This presentation contains statements that are forward-looking. These statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially because of factors in this presentation or discussed in today’s press release, in the management's discussion and analysis section of the company’s most recent Form 10-K, Forms 10-Q or in other reports and filings with the Securities and Exchange Commission. We undertake no duty to update or revise any forward-looking statements, whether as a results of new information, future events, or otherwiseAgenda Quarterly Overview & Third-Quarter Results Business Segment Financial Overview Outlook AppendixAgenda Quarterly Overview & Third-Quarter Results Business Segment Financial Overview Outlook AppendixQuarterly Overview Record revenue for third quarter Revenue growth driven by strong Windows 7 demand Continued cost management EPS growth of 36% Y/Y Record cash flow from operations Strong product pipeline into 2010 and beyond Windows 7 demand and solid. execution led to record performanceFinancial Summary — FY10 Q3 Adjusted revenue: $14.8 billion Se Ne MOMS MU ume Liie an Mtoe) el rTM aoarl} Payee umm mello ee ole Cm 1s Se VRC me ME Sok ]|Ce)A) GAAP operating income: $5.2 billion Seren auc set ries CU GAAP diluted earnings per share: $0.45 * 36% growth over the comparable period last year Operating cash flow of $7.4 billion $3.1 billion of cash returned to investorsFY10 Q3 Metrics Unearned revenue PC unit growth OEM license unit growth OEM premium mix Consumer premium mix Business premium mix Xbox 360 console sales $12.3B 25% - 27% 30% 72% 44% 28% 1.5MAgenda © Quarterly Overview & Third-Quarter Results © Business Segment Financial Overview © Outlook © AppendixWindows & Windows Live Division Q3 Summary Cer} Some eer L Consumer PCs ~30% ieee eee ot pay EJs eS coMecae ae ecetd ¢ OEMrevenue grew 29%, OEM = 2 Meme eM cum ete Rr ome lcad Sy 7 A c 5 Py ees Car, oh iol eerste on eae sty ei ESE esa sMe iN less) Ce enol Petes e en ciesmCCyCr) v Cate 1) iron eee Strong Windows 7 demand drives solid performance Sa ee eeyWindows OEM Revenue Bridge FY10Q3. FY10 YTD fo) clei) 7a YV Drivers (% ) ieee ain PC Market Pay es Segment Mix -9% my Windows Attach and en ae Inventory Upsell and Channel Dynamics 5% 2% Other OEM Revenue Adjustments 79 ah Te OEM Revenue Growth ray) 13%Server & Tools Revenue Q3 Summary CEM Mens Mon recur Pema Me ese cs SPAM enema air eae nr eaet ea 2 Q3 System Center Server eeu CNe oO umePUArUr| Windows Server premium mix Sea a RTM Visual Studio 2010 and SQL Server 2008 R2 EE PSPC e eee wey $3.5 2% YIY arr Strong Server & Tools product pipelineOnline Services Division Revenue ORE elay Oa eae Venn Meee ieN outperformed market SER OY $0.51 $0.50 $0.49 Sanne SMe a nOSs nT) zn er Peon ur ts Sere AUS a A RUS nya amcel Cn] ais clearance for Yahoo! partnership Co! Oa co a cg ro ete Mee AIA UL xSm OR AeA LOLA ALE EL)Microsoft Business Division Revenue Q3 Summary GAAP revenue down 6%; eer eaten ake Promsca Restate Eire a Lema ra Lane [OU RZ Nara coun ecto) Tan icola em elie ara ns od Oe Macaca mers Puede Le Moe A) Odie 2010 released to manufacturing Lehr ardent Tl Me ci. ) Pree eel e101 Relic L VAD to be recognized in Q2 FY11 iC CAT e Raney ao CG er) Rab (nA itera Office 2010 and SharePoint 2010 available in OF Pe ee oe eS)Entertainment & Devices Division Revenue Q3 Summary Xbox 360 console units down 12% Es) ra ihe ecco Perot rol Software attach leads the industry BA SRA Pree) Continuing strenath in Xbox LIVE $1 ena NR eau decline (caused by difficult prior x ci year comparison to Halo Wars) Nene cI sean ee Windows Phone 7 available for Holiday 2010Agenda © Quarterly Overview & Third-Quarter Results © Business Segment Financial Overview © Outlook © AppendixSegment Revenue Q4 Wind & Rowe Te Dien Slightly outperform PC market Non-annuity track towards PC shipments; Microsoft Business Division ‘Annuity up low single digits Non-annuity in ine with hardware shipments; ee tealoo es Annuity up mid-single digits; Services up low single digits Online Services Division (excluding access) Roughly in line or better than online advertising market beet and Devices Roughly flat for the full year FY10 * Opex guidance to a range of $26.1B * Gross margin 1ppt favorable Y/Y Unearned revenue will likely return to normal seasol Capex guidance: < $2.0B a) esl 20)Agenda © Quarterly Overview & Third-Quarter Results © Business Segment Financial Overview © Outlook © AppendixReconciliation Slides and AppendixReconciliation of differences between GAAP and non-GAAP financial measures Our presentation of third quarter performance includes non-GAAP financial measures. The following tables provide a reconciliation between the GAAP and non-GAAP financial measures presented. The following slides includes reconciliations for: Se tose Rec Mout Rc Mesut Impact of Office 2010 deferred revenue on Microsoft Business Division cv Vi eememns cM aero le MMOL fe eerstoll oi) Office 2010 deferred revenue on Unearned Revenue Impact of Office 2010 deferred revenue on Microsoft Business Division: Consumer Revenue Impact of technology guarantee programs recognized/deferred revenue on Microsoft Operating Margin Tiere mem Ae Mm ome me A Lael mln toeReconciliation of GAAP and non-GAAP financial measures: Total Revenue Cer) Three Months Ended 3/31/2010] 3/31/2009 Cie) Bed Seco xt | Pecurmeer cea Ea Tener ec keacny Pras $14,808 PSK LReconciliation of GAAP and non-GAAP financial measures: Microsoft Business Division Revenue Cer) Three Months Ended 3/31/2010] 3/31/2009 fevers eco Peuac at aad Er) sles | Pecuc mene acute! Ea Ula ecm hey | OCU MSc Rm uF PrET PPE} aboveReconciliation of GAAP and non-GAAP financial measures: Unearned Revenue Cer) Three Months Ended 3/31/2010] 3/31/2009 GU Bee Bee Deduct: | Wiech Gece! ea 953 Prciciokece cra 305 | SUR SEES) Wier ocurewe nc) emu aa or i be Seamer Beet pete Pirin cee ee ae og teeReconciliation of GAAP and non-GAAP financial measures: Microsoft Business Division Consumer Revenue Cer) Three Months Ended 3/31/2010] 3/31/2009 eerste Pecimeon ura at) cXED aA) Add | Pecuc mene acute! Ea eed ee ne | eae ae sc) $795 ode SaReconciliation of GAAP and non-GAAP financial measures: Operating Margin nnn) oe EE GAAP MierosonRevenie a) | _S14503 | $19.48 | Bo Sr a erry ea a Microsoft Revenue, adjusted ete Sell a ees ony oy ec aca ene ree eee ey Prien nd Perks} Cee) Corn ee ee Pree ad fic) PSone echt BERR o la to Seon psu a hee ere area gc acReconciliation of GAAP and non-GAAP financial measures: Windows OEM Revenue Cea) Nim WelaL Um stale te) 3/31/2010] 3/31/2009 GAAP OEM Revenue SDR) 3 $9,409 Taieias | Peer a cans Dooea ara deferral | Cree ec neaicn) oso $10,625 PSRsMicresoft Your potential. Our passion." Pose 10)