Microsoft Corporation

Microsoft Corporation MSFT-USA
09 Sep 21 Public Information Book

Contents
Overview
05 Overview
Sales & Earnings
11 Sales & Earnings
Valuation
19 Valuation
Profitability
23 Profitability
Statement Analysis
29 Statement Analysis
M&A
33 M&A
Company Overview
35 Supply Chain
There was an error processing this document. It has been excluded from the final PDF.
36 Event Calendar
StreetAccount
38 Insider transaction: Microsoft EVP, CFO Amy Hood discloses sale of 60K shares (3-Sep) ($301.14, 0.00)
39 StreetAccount Summary: The Economist print edition
40 StreetAccount Summary: The Economist print edition
41 Microsoft warns cloud computing customers of exposed databases - Reuters ($299.09, 0.00)
42 Barron's Summary
Transcripts
45 Microsoft Corp.(MSFT-US), Q4 2021 Earnings Call, 27-July-2021 5:30 PM ET
Investor Slides
65 Microsoft Corp. Q3 2021 Earnings Call
Management & Board
88 Management and Board
Broker Research
92 Comprehensive Technical and Fundamental Analysis for MSFT. This reports includes The Investment Rate, a
macroeconomic leading indicator, and Market Analysis. (Stock Traders Daily) 11 pages
103 MSFT: Forensic Stock Earnings & Valuation (New Constructs, LLC) 6 pages
Overview
Microsoft Corporation (MSFT-US) $300.21 Next Rpt Date: 27 Oct '21 Report as of 09 Sep '21
Profile
Sector Industry Mkt Cap (B) EV (B) Sales (B)

Technology Services Packaged Software $2,286 $2,214 $168.1
Microsoft Corp. engages in the development and support of software, services, devices, and solutions. It operates through the
following business segments: Productivity and Business Processes; Intelligent Cloud; and More Personal Computing. The
Productivity and Business Processes segment comprises products and services in the portfolio of productivity, communication, and
information services of the company spanning a variety of devices and platform. The Intelligent Cloud segment refers to the public,
private, and hybrid serve products and cloud services of the company which can power modern business. The More Personal
Computing segment encompasses products and services geared towards the interests of end users, developers, and IT
professionals across all devices. The firm also offers operating systems; cross-device productivity applications; server applications;
business solution applications; desktop and server management tools; software development tools; video games; personal
computers, tablets; gaming and entertainment consoles; other intelligent devices; and related accessories. The company was
founded by Paul Gardner Allen and William Henry Gates III in 1975 and is headquartered in Redmond, WA.
$300.21
YTD 35.0%
3M 18.9%
1Y 48.1%
Beta 1.02
FY1 PE 34.2x
Key Items
Trading Information Valuation 5Y Trend Current vs. Ind vs. Bmrk
Current Price $300.21 P/E (LTM) 37.3 0.9 1.9
52 Wk Range $196.25 - 305.84 P/E (NTM) 33.3 0.9 1.8
Avg Daily Vol (3m) 21.80 (M)
P/Sales 13.6 1.5 6.9
Short Int (% of Float) 0.6%
P/Bk 15.9 1.6 5.9
P/CF 29.7 1.0 2.7
Key Statistics EV/EBITDA 27.3 0.8 1.9
Mkt Value (B) $2,286
EV/Sales 13.1 1.5 5.4
Ent Value (B) $2,214
Basic Shares (M) 7,515 Profitability (%) 10Y Trend LTM Ind Bmrk
Dividend (Ann) $2.24 Gross Margin 68.9 55.2 26.4
Div Yld 0.7% EBITDA Margin 48.5 27.6 17.3
EBIT Margin 41.6 19.5 11.1
Estimates Net Margin 36.5 16.0 8.2

EPS (FY0) $7.97 ROE 47.1 18.5 11.1
EPS (FY1) $8.77
EPS (FY2) $10.06 Growth (%) 10Y Trend LTM Ind Bmrk
Coverage 34 Analysts Sales 17.5 16.5 10.6
Target Price $328.34 EBITDA 24.1 25.2 21.5
LT Growth Rate 14.8%
EBIT 32.0 33.2 33.2
Avg Rating Buy (1.13)
EPS (Dil) 39.9 44.1 52.8
© 2021 FactSet Research Systems, Inc.

Dividend Focus
MSFT-USA Bmrk Ex-Date Amount LTM Divs LTM Div Yld (%)
Indicated Ann Dividend 2.24 4.67 18-Aug-2021 0.56 2.75 0.95
Dividend Yield 0.7% 1.3% 19-May-2021 0.56 2.7 1.11
1 Yr Div Growth 9.8% 3.2% 17-Feb-2021 0.56 2.65 1.09
3 Yr Div Growth 33.3% - 18-Nov-2020 0.56 2.6 1.23
5 Yr Div Growth 55.6% - 19-Aug-2020 0.51 2.04 0.97
Div Increases in 5 Yrs 4 - 20-May-2020 0.51 1.99 1.07
Payout Ratio 27.8% 35.3% 19-Feb-2020 0.51 2.4 1.28
Coverage 3.6x - 20-Nov-2019 0.51 1.89 1.26
Event Calendar
Upcoming Events EPS Sales

Date Time (EST) Description Actual Mean Actual Mean
27 Oct '21 - Q1 2022 Earnings Release (Projected)
… - 2.06 - 43,757
27 Jan '22 - Q2 2022 Earnings Release (Projected)

… - 2.22 - 48,908
28 Apr '22 - Q3 2022 Earnings Release (Projected)

… - 2.12 - 47,260
21 Jul '22 - Q4 2022 Earnings Release (Projected)

… - 2.33 - 51,416
Past Events EPS Sales

Date Time (EST) Description Actual Mean Actual Mean
27 Jul '21 05:30 PM Q4 2021 Earnings Call 2.17 1.92 46,152 44,260
09 Jun '21 04:15 PM Morgan Stanley Sustainable Futures

… Conference
07 Jun '21 11:45 AM Evercore TMT Conference
25 May '21 02:10 PM J.P. Morgan Global Virtual Technology,

… Media and Communications Conference
17 May '21 - RSA Conference

27 Apr '21 05:30 PM Q3 2021 Earnings Call 1.95 1.78 41,706 41,036
12 Apr '21 11:00 AM Acquisition of Nuance Communications,

… Inc by Microsoft Corp Call
12 Apr '21 - GPU Technology Conference

Enterprise Value
Fiscal Date Jun '21 Mar '21 Dec '20 Sep '20 Jun '20
Basic Market Capitalization 2,036,897.1 1,776,291.2 1,678,381.3 1,590,936.1 1,540,774.2
Diluted Market Capitalization 27,090.0 29,707.0 28,024.9 26,501.6 25,642.3
ITM Convertible Debt - - - - -
ITM Convertible Preferred - - - - -
Stock Compensation 27,090.0 29,707.0 28,024.9 26,501.6 25,642.3
Fully Diluted Market Capitalization 2,063,987.1 1,805,998.2 1,706,406.2 1,617,437.7 1,566,416.5
ST Debt Total 8,072.0 8,051.0 5,387.0 6,497.0 3,749.0
Net LT Debt Total 50,074.0 50,007.0 55,136.0 57,055.0 59,578.0
Total Debt 58,146.0 58,058.0 60,523.0 63,552.0 63,327.0
Market Capitalization 2,063,987.1 1,805,998.2 1,706,406.2 1,617,437.7 1,566,416.5
+ Total Debt 58,146.0 58,058.0 60,523.0 63,552.0 63,327.0
- ITM Convertible Debt - - - - -
- Cash Equivalents 130,334.0 125,407.0 131,968.0 137,977.0 136,527.0
+ Total Preferred - - - - -
- ITM Convertible Preferred - - - - -
- Invest. in Unconsold. Subs. - 0.0 0.0 0.0 0.0
+ Non-Controlling Interest 0.0 0.0 0.0 0.0 0.0
+ Pension Liabilities - - - - -
Enterprise Value 1,991,799.1 1,738,649.2 1,634,961.2 1,543,012.7 1,493,216.5
All figures in millions of USD. Source: FactSet Equity Capital Structure, FactSet DCS, FactSet Fundamentals
Key Estimates
Earnings Jun '21 Jun '22E Jun '23E Jun '21 Sep '21E Dec '21E Mar '22E
EPS - GAAP 8.05 8.66 9.86 2.17 2.05 2.21 2.09
Growth (%) 39.8 7.6 13.8 48.6 12.4 8.8 3.0
EPS - Non GAAP 7.97 8.77 10.06 2.17 2.06 2.22 2.12
Growth (%) 38.4 10.1 14.6 48.6 13.3 9.1 8.9
Income Statement (B) Jun '21 Jun '22E Jun '23E Jun '21 Sep '21E Dec '21E Mar '22E
Sales 168.1 191.4 216.3 46.2 43.8 48.9 47.3
Growth (%) 17.5 13.9 13.0 21.3 17.8 13.5 13.3
EBITDA 81.6 94.6 109.2 22.4 22.6 24.3 23.6
Growth (%) 24.1 15.9 15.5 32.7 21.8 17.6 18.2
Operating Income 69.9 78.7 89.0 19.1 18.6 20.0 19.1
Growth (%) 32.0 12.6 13.0 42.4 16.9 11.6 12.0
Net Income 60.7 66.2 74.9 16.5 15.6 16.7 16.0
Growth (%) 37.0 9.1 13.1 46.9 12.6 8.3 7.9
Per Share Jun '21 Jun '22E Jun '23E Jun '21 Sep '21E Dec '21E Mar '22E
Dividends per Share 2.24 2.40 2.63 0.56 0.61 0.61 0.61
Cash Flow per Share 10.09 10.96 12.40 2.81 3.06 2.46 3.03
Free Cash Flow per Share 7.30 8.44 8.76 2.00 2.25 1.87 2.01
Book Value per Share 18.85 24.73 27.42 18.86 21.28 23.85 26.27

Corporate Information
Management (6 of 65) Board (6 of 11)

Chairman & Chief Executive Officer Chairman & Chief Executive Officer
Satya Nadella, 54 Satya Nadella, 54
President & Chief Legal Officer Lead Independent Director
Bradford L. Smith, 62 John Wendell Thompson, 71
COO & VP-Experiences & Devices Group Independent Director
Kirk Koenigsbauer, 53 John W. Stanton, 65
Chief Financial Officer & Executive Vice President Independent Director
Amy E. Hood, 49 Teri L. List-Stoll, 58
Chief Technology Officer & Executive VP Independent Director
James Kevin Scott, 49 Charlie Scharf, 56
Executive Vice President Independent Director
Jean-Philippe Courtois, 60 Sandra E. Peterson, 62
One Microsoft Way Michael Spencer Fiscal Year June

Redmond, Washington Investor Relations Contact Exchange NASDAQ
98052-6399 +(425)706.4400 ISIN US5949181045
United States microsoft.com CUSIP 594918104
Employees (2021) 181,000 SEDOL 2588173
Ownership Summary
FLOAT 98.5%
Shares Out 7,514,890,000
Short Interest 41,985,400
INSIDER 1.5%
Inst. Ownership 72.2%
North American 59.4%
Non-North American 12.8%
Inst Ownership as % of Float 73.3%
Top 10 Inst. Holders 28.0%
NET POSITION CHANGE -17,563,468

Total (5182) 5,428,329,984
New (243) 20,375,600
Increase (2255) 214,656,000
Decrease (2040) -232,902,000
Soldout (191) -19,693,500

Top Holders - Institutions and Insiders
Institutions Position (000) % O/S % Port 3M Chg (000) Mkt Value (USD)
The Vanguard Group, Inc. 579,354 7.7 3.6 -1,424 174,467,000,000
BlackRock Fund Advisors 325,588 4.3 3.2 -17,562 98,047,400,000
SSgA Funds Management, Inc. 294,825 3.9 4.3 -4,301 88,783,600,000
Fidelity Management & Research Co. LLC 199,597 2.7 4.1 -6,030 60,106,600,000
T. Rowe Price Associates, Inc. (Inves... 192,409 2.6 4.8 14,909 57,942,000,000
Geode Capital Management LLC 123,322 1.6 4.1 5,524 37,137,200,000
Capital Research & Management Co. (Wo... 110,830 1.5 3.5 389 33,375,400,000
Capital Research & Management Co. (Gl... 94,577 1.3 4.7 -929 28,480,800,000
Capital Research & Management Co. (In... 92,898 1.2 5.9 902 27,975,300,000
Northern Trust Investments, Inc.(Inve... 88,584 1.2 4.3 -2,631 26,676,200,000
Norges Bank Investment Management 79,813 1.1 2.4 0 24,034,700,000
Wellington Management Co. LLP 63,965 0.9 2.7 -1,547 19,262,400,000
Insiders Position (000) % O/S % Port 3M Chg (000) Mkt Value (USD)
GATES WILLIAM H III 103,418 1.4 97.2 0 31,143,200,000
Wellcome Trust Ltd. (Direct Investments) 2,909 0.0 7.2 9 875,947,000
NADELLA SATYA 1,669 0.0 99.6 -269 502,716,000
COURTOIS JEAN PHILIPPE 895 0.0 100.0 -6 269,427,000
Investmentaktiengesellschaft fur lang... 784 0.0 8.8 2 235,943,000

Sales & Earnings
Segments Snapshot - Quarterly (B)
Jun '21 YoY % % of Sales Sep '21E YoY % 3Y Trend

Sales 46.2 21.3 100.0 43.8 17.8
Intelligent Cloud 17.4 29.9 37.6 16.4 26.5
Productivity and Business Processes 14.7 25.0 31.8 14.6 18.6
More Personal Computing 14.1 9.1 30.5 12.7 7.4
Corporate and Other 0.0 - 0.0 0.0 -
Office Consumer - - - - -
Office Commercial - - - - -
Dynamic - - - - -
LinkedIn - - - - -
Estimate Growth - Quarterly
Sep '20 Sep '21E Growth (YoY%)

1.82 2.06 13.27%
Sep '20 Sep '21E Growth (YoY%)

37.2 43.8 17.8%

EPS - Consensus Outlook - Annual & Quarterly
FY Ending Guidance # of Ests Mean Low High Std Dev 3 Mo. Rev
Jun '21 - - 7.97 - - -
Jun '22E - 34 8.77 7.87 9.89 0.37
Jun '23E - 32 10.06 8.16 11.69 0.68
Jun '24E - 8 11.43 9.24 12.95 1.10
Latest 12 Mo. - - 2.17 2.17 2.17 -
Next 12 Mo. - - 9.02 7.93 10.24 -
FQ Ending Guidance # of Ests Mean Low High Std Dev 3 Mo. Rev
Jun '21 - - 2.17 - - -
Sep '21E - 29 2.06 1.83 2.17 0.06
Dec '21E - 30 2.22 2.00 2.40 0.10
Mar '22E - 30 2.12 1.94 2.30 0.08
Jun '22E - 30 2.33 1.96 2.55 0.12
Sep '22E - 18 2.32 1.89 2.50 0.15
Dec '22E - 19 2.55 2.10 2.83 0.19
Mar '23E - 18 2.41 2.01 2.69 0.17
Jun '23E - 18 2.63 2.16 2.97 0.21
Segments LT Estimates - Annual (B)
Actuals 10Y Trend Jun '21 Jun '22E Jun '23E Jun '24E Jun '25E
Sales 168.1 191.4 216.3 240.8 -
Intelligent Cloud 60.1 72.6 86.1 102.8 -
More Personal Computing 54.1 55.9 58.4 58.7 -
Productivity and Business Processes 53.9 61.9 69.5 75.3 -
Corporate and Other 0.0 0.0 0.0 - -
Dynamic - - - - -
LinkedIn - - - - -
Growth (%) 10Y Trend Jun '21 Jun '22E Jun '23E Jun '24E Jun '25E
Sales 17.5 13.9 13.0 11.3 -
Intelligent Cloud 24.2 20.9 18.5 19.4 -
More Personal Computing 12.1 3.3 4.6 0.5 -
Productivity and Business Processes 16.2 14.8 12.3 8.3 -
Corporate and Other - - - - -
Dynamic - - - - -
LinkedIn - - - - -

Guidance History
Estimate Table
Sales (B)
FY Ending Jun '16 Jun '17 Jun '18 Jun '19 Jun '20 Jun '21 Jun '22E Jun '23E Jun '24E
Q1 (Sep) 21.7 22.3 24.5 29.1 33.1 37.2 43.8 49.5 52.4
Q2 (Dec) 25.7 26.1 28.9 32.5 36.9 43.1 48.9 55.2 58.7
Q3 (Mar) 22.1 23.6 26.8 30.6 35.0 41.7 47.3 53.2 56.4
Q4 (Jun) 22.6 24.7 30.1 33.7 38.0 46.2 51.4 57.7 59.5
Fiscal Year 92.1 96.7 110.4 125.8 143.0 168.1 191.4 216.3 240.8
EV/Sales (x) 3.8 5.1 6.5 7.9 10.6 12.0 11.7 10.3 9.3
CY Ending Dec '16 Dec '17 Dec '18 Dec '19 Dec '20 Dec '21 Dec '22E Dec '23E Dec '24E
Cal. Year 94.5 103.6 118.2 134.3 155.9 179.9 204.0 228.3 -
EV/Sales (x) 4.8 5.9 6.3 8.7 10.6 12.4 11.0 9.8 -
Growth (YoY%)
Q1 (Sep) -6.6 3.1 9.9 18.5 13.7 12.4 17.8 13.2 5.7
Q2 (Dec) -2.9 1.5 10.9 12.3 13.7 16.7 13.5 12.8 6.3
Q3 (Mar) 1.6 6.7 13.8 14.0 14.6 19.1 13.3 12.7 5.8
Q4 (Jun) 2.1 9.1 21.8 12.1 12.8 21.3 11.4 12.2 3.2
Fiscal Year -1.6 5.0 14.1 14.0 13.6 17.5 13.9 13.0 11.3
Cal. Year 2.0 9.6 14.1 13.7 16.0 15.4 13.4 11.9 -

Sales - Consensus Trend - Annual (B)
Sales - Broker Detail - Sep '21E (B)
Consensus Guidance # of Brokers

43.8 - 27
Top 14 Brokers Research Estimate Bottom 13 Brokers Research Estimate

Daiwa Securities Co. Ltd. 07/30/2021 44.8 Wolfe Research 07/28/2021 43.8
Invest Heroes 09/03/2021 44.7 William Blair 07/28/2021 43.8
Oppenheimer 07/28/2021 44.3 Hanwha Securities 07/28/2021 43.8
BMO Capital Markets 07/28/2021 44.1 Wedbush Securities 08/19/2021 43.7
Atlantic Equities 07/28/2021 44.1 Griffin Securities 07/30/2021 43.6
Stifel Nicolaus 07/28/2021 44.0 Evercore ISI 07/14/2021 42.0
Rosenblatt Securities 07/29/2021 44.0 Cross Research 07/16/2021 41.5
Cowen & Company 07/28/2021 44.0 Global Equities Research 06/18/2021 41.5
RBC Capital Markets 08/20/2021 43.9 Credit Suisse - -
Jefferies 09/07/2021 43.9 Restricted - -
Piper Sandler Companies 07/28/2021 43.8 Restricted - -
Restricted 07/28/2021 43.8 Bernstein Research - -
Mizuho Securities USA 08/19/2021 43.8 Restricted - -
KeyBanc Capital Markets 07/28/2021 43.8

Sales - Broker Revisions - Sep '21E (B)
Consensus Guidance 1M Revision 1W Revision

43.8 - 0.1% 0.1%
Estimate Table
EPS
Q1 (Sep) 0.67 0.76 0.84 1.14 1.38 1.82 2.06 2.32 2.40
Q2 (Dec) 0.78 0.83 0.96 1.10 1.51 2.03 2.22 2.55 2.59
Q3 (Mar) 0.62 0.73 0.95 1.14 1.40 1.95 2.12 2.41 2.55
Q4 (Jun) 0.69 0.98 1.13 1.37 1.46 2.17 2.33 2.63 2.73
Fiscal Year 2.79 3.31 3.88 4.75 5.76 7.97 8.77 10.06 11.43
P/E (x) 18.3 20.8 25.4 28.2 35.3 34.0 34.2 29.8 26.3
Cal. Year 3.06 3.60 4.32 5.25 6.88 8.38 9.42 10.74 -
P/E (x) 20.3 23.8 23.5 30.0 32.3 35.8 31.9 28.0 -
Growth (YoY%)
Q1 (Sep) 24.1 13.4 10.5 35.7 21.1 31.9 13.3 12.7 3.6
Q2 (Dec) 9.9 6.4 15.7 14.6 37.3 34.4 9.1 15.1 1.4
Q3 (Mar) 1.6 17.7 30.1 20.0 22.8 39.3 8.9 13.7 5.4
Q4 (Jun) 11.3 42.0 15.3 21.2 6.6 48.6 7.2 13.3 3.6
Fiscal Year 6.1 18.6 17.2 22.4 21.3 38.4 10.1 14.6 13.6
Cal. Year 12.9 17.7 20.0 21.6 31.1 21.7 12.5 13.9 -

EPS - Consensus Trend - Annual
EPS - Broker Detail - Sep '21E
Consensus Guidance # of Brokers

2.06 - 29
Top 15 Brokers Research Estimate Bottom 14 Brokers Research Estimate

Daiwa Securities Co. Ltd. 07/30/2021 2.16 Wolfe Research 07/28/2021 2.05
Rosenblatt Securities 07/29/2021 2.11 Restricted 08/02/2021 2.05
Oppenheimer 07/28/2021 2.10 Wedbush Securities 08/19/2021 2.05
Cleveland Research Company
… 07/30/2021 2.08 Jefferies 09/07/2021 2.05
BMO Capital Markets 07/28/2021 2.08 Atlantic Equities 07/28/2021 2.04
Stifel Nicolaus 07/28/2021 2.08 RBC Capital Markets 08/20/2021 2.03
Cross Research 07/28/2021 2.08 Griffin Securities 07/30/2021 2.01
Evercore ISI 07/28/2021 2.08 Global Equities Research 06/18/2021 1.83
Cowen & Company 07/28/2021 2.07 Restricted - -
Restricted 07/28/2021 2.06 Credit Suisse - -
Piper Sandler Companies 07/28/2021 2.06 Restricted - -
Mizuho Securities USA 08/19/2021 2.06 Restricted - -
Restricted 07/28/2021 2.05 Bernstein Research - -
William Blair 07/28/2021 2.05 Restricted - -
KeyBanc Capital Markets 07/28/2021 2.05

EPS - Broker Revisions - Sep '21E
Consensus Guidance 1M Revision 1W Revision

2.06 - 0.0% 0.0%

Valuation
Valuation Summary
Valuation 5Y Trend Current 5Y High 5Y Low 5Y Avg vs. Ind vs. Bmrk
P/E LTM 37.3 68.5 23.1 36.4 0.9 1.6
P/E NTM 33.3 35.2 18.7 25.8 0.9 1.5
P/Sales 13.6 14.5 5.3 8.7 1.5 4.7
P/Sales NTM 11.5 11.8 4.5 7.4 1.5 4.4
P/Bk 15.9 17.1 6.0 10.5 1.6 3.7
P/Bk NTM 11.9 12.4 5.6 8.5 1.4 2.9
P/CF 29.7 32.0 12.8 20.7 1.0 1.8
P/CF NTM 26.7 27.5 12.5 19.2 0.9 1.6
EV/EBITDA 27.3 29.6 14.1 19.6 0.8 1.5
EV/EBITDA NTM 22.3 23.6 10.3 15.6 0.9 1.5
EV/Sales 13.1 14.1 4.4 8.2 1.5 3.8
EV/Sales NTM 11.3 11.6 3.9 7.0 1.5 3.7
Valuation Peers Analysis
Microsoft IBM Oracle SAP (SAP- Broadcom salesforce com

(MSFT) (IBM) (ORCL) DE) (AVGO) (CRM)
P/E LTM 37.3 23.4 19.7 24.9 36.7 105.1
P/E NTM 33.3 12.0 18.7 22.4 16.2 59.5
PEG NTM 2.3 1.1 1.5 6.3 0.7 3.2
P/Sales 13.6 1.7 6.7 5.4 8.0 10.6
P/Bk 15.9 5.7 48.1 4.5 8.5 4.6
P/CF 29.7 7.1 16.6 20.3 15.6 35.8
EV/EBITDA 27.3 11.8 15.6 18.4 16.8 52.6
EV/Sales 13.1 2.4 7.2 5.7 8.8 11.1
Div Yld 0.7 4.7 1.4 1.5 2.9 0.0

Price to Earnings
Price to Earnings - NTM

Valuation Multiples
Financial Valuation Ratios Jun '20A Jun '21A Jun '22E Jun '23E Jun '24E Jun '25E
EV/Sales 15.53 13.21 11.60 10.27 9.22 -
EV/EBITDA 34.03 27.48 23.49 20.34 17.95 -
EV/EBIT 41.94 31.77 28.22 24.96 21.96 -
EBITDA/Interest Expense 25.19 34.45 - - - -
EBIT/Interest Expense 20.44 29.80 - - - -
EBITDA-CapEx/Interest Expense 19.23 25.66 - - - -
Total Debt/EBITDA 1.26 1.02 - - - -
Total Debt/EV 0.04 0.04 0.03 0.03 - -
Price to Earnings 52.25 37.39 34.32 29.94 26.34 -
Financial Summary Jun '20A Jun '21A Jun '22E Jun '23E Jun '24E Jun '25E
Revenue 143.01 168.09 191.43 216.29 240.77 -
Gross Income 96.94 115.86 130.30 146.59 159.54 -
EBITDA 65,259.0 80,816.0 94,550.8 109,181.8 123,720.4 -
EBIT 52.96 69.92 78.70 88.97 101.14 -
Net Income 44,281.0 61,271.0 66,173.2 74,868.1 84,652.1 -

Profitability
Profitability Ratios
Profitability (%) 10Y Trend Jun '16 Jun '17 Jun '18 Jun '19 Jun '20 Jun '21
Gross Margin 61.3 61.7 64.6 65.8 67.8 68.9
Operating Margin 24.4 27.4 31.7 34.0 37.0 41.6
Pretax Margin 23.3 25.9 33.1 34.8 37.1 42.3
Net Margin 19.8 23.7 15.0 31.3 31.0 36.5
ROA 9.1 9.8 6.6 14.4 15.1 19.3
ROE 22.1 29.4 21.4 42.4 40.1 47.1
ROTC 17.1 17.1 21.1 23.7 27.2 32.9
ROIC 15.2 16.1 10.5 22.7 23.6 30.0
Efficiency 10Y Trend Jun '16 Jun '17 Jun '18 Jun '19 Jun '20 Jun '21
Revenue/Employee (000) 742.9 720.9 841.0 871.5 877.4 928.7
Net Income/Employee (000) 147.4 171.0 126.5 272.5 271.7 338.5
Receivables Turnover (x) 4.7 4.7 4.8 4.5 4.6 4.8
Days of Sales Outstanding 78.0 77.7 76.6 81.4 78.5 76.1
Inventory Turnover (x) 12.7 15.4 16.1 18.2 23.3 23.1
Days of Inventory on Hand 28.7 23.6 22.7 20.1 15.7 15.8
Payables Turnover (x) 4.8 4.8 4.9 4.7 4.2 3.8
Days of Payables Outstanding 76.6 76.4 74.0 77.6 87.1 95.4
Total Asset Turnover (x) 0.4 0.4 0.4 0.4 0.5 0.5
Working Capital Turnover (x) 1.1 0.9 1.0 1.2 1.3 1.8
Profitability Peer Analysis - Annual

Gross Margin (%) 68.9 47.3 77.2 72.1 46.7 67.3
Operating Margin (%) 41.6 13.1 39.0 26.3 18.2 2.1
Net Margin (%) 36.5 7.5 34.0 18.8 12.4 19.2
ROA (%) 19.3 3.6 11.2 8.7 4.1 6.7
ROE (%) 47.1 26.6 158.8 17.0 12.1 10.8
Revenue/Employee (000) 928.7 196.2 306.7 266.9 1,138 375.4
Receivables Turnover (x) 4.8 3.4 6.5 3.6 8.6 2.9
Inventory Turnover (x) 23.1 22.4 52.3 - 13.6 -
Payables Turnover (x) 3.8 8.0 13.3 5.5 15.2 3.1

Credit Ratios
Liquidity Analysis 10Y Trend Jun '16 Jun '17 Jun '18 Jun '19 Jun '20 Jun '21
Current Ratio 2.35 2.48 2.90 2.53 2.52 2.08
Quick Ratio 2.31 2.44 2.86 2.50 2.49 2.05
Cash Ratio 1.91 2.06 2.29 1.93 1.89 1.47
Credit Analysis 10Y Trend Jun '16 Jun '17 Jun '18 Jun '19 Jun '20 Jun '21
Interest Coverage (EBITDA) 21.4 14.5 16.4 20.2 25.2 34.4
Interest Coverage (EBIT) 16.6 11.0 12.5 15.9 20.4 29.8
Fixed Chg Coverage 16.6 11.0 12.5 15.9 20.4 29.8
CFO/Int Exp 26.8 17.8 16.1 19.4 23.4 32.7
Total Debt/EBITDA 2.0 2.7 1.8 1.5 1.1 0.9
Net Debt/EBITDA -2.2 -1.4 -1.0 -0.9 -0.8 -0.6
Net Debt/(EBITDA-CapEx) -3.3 -1.8 -1.4 -1.2 -1.1 -0.8
LT Debt/EBITDA 1.5 2.4 1.8 1.5 1.2 0.9
Total Debt/Total Equity 74.6 122.5 105.8 84.5 69.4 57.9
Total Debt/Total Capital 42.7 55.1 51.4 45.8 41.0 36.7
Total Debt/Total Assets 27.7 36.8 33.8 30.2 27.3 24.7
Net Debt/FFO -1.7 -1.2 -2.0 -1.0 -0.9 -0.6
LT Debt/FFO 1.2 2.1 3.5 1.6 1.2 0.9
FCF/Total Debt 0.5 0.4 0.4 0.4 0.6 0.7
CFO/Total Debt 0.6 0.4 0.5 0.6 0.7 0.9
Altman Z-Score (Original) - Annual (M)

Jun '17 Jun '18 Jun '19 Jun '20 Jun '21
(Working Capital 95,324.0 111,174.0 106,132.0 109,605.0 95,749.0
/ Total Assets) 241,086.0 258,848.0 286,556.0 301,311.0 333,779.0
= 1.2 * X1 0.4745 0.5154 0.4444 0.4365 0.3442
+ (Retained Earnings 2,648.0 13,682.0 24,150.0 34,566.0 57,055.0
/ Total Assets) 241,086.0 258,848.0 286,556.0 301,311.0 333,779.0
= 1.4 * X2 0.0154 0.0740 0.1180 0.1606 0.2393
+ (EBIT 24,468.0 34,873.0 42,618.0 52,959.0 69,916.0
/ Total Assets) 241,086.0 258,848.0 286,556.0 301,311.0 333,779.0
= 3.3 * X3 0.3349 0.4446 0.4908 0.5800 0.6912
+ (Market Value of Equity 531,312.0 757,640.0 1,026,510.0 1,543,310.0 2,040,300.0
/ Total Liabilities) 168,692.0 176,130.0 184,226.0 183,007.0 191,791.0
= 0.6 * X4 1.8898 2.5810 3.3432 5.0598 6.3829
+ (Revenue 89,395.0 110,175.0 125,502.0 143,015.0 168,088.0
/ Total Assets) 241,086.0 258,848.0 286,556.0 301,311.0 333,779.0
= 0.999 * X5 0.3704 0.4252 0.4375 0.4742 0.5031
Z-Score 3.08 4.04 4.83 6.71 8.16

CDS Curve
Debt Capital Structure Summary
EBITDA (30 Jun '21) EBITDA (31 Mar '21)

80,816.00LTM 76,074.00LTM
30 Jun '21 /EBITDA 31 Mar '21 /EBITDA

ST Debt Total 8,072.00 0.10 8,051.00 0.11
Current Portion of LTD 8,072.00 - 8,051.00 -
Revolving Credit 0.00 0.00 0.00 0.00
Term Loans 0.00 0.00 0.00 0.00
Notes/Bonds 63,909.70 0.79 63,866.80 0.84
Senior Unsec. 63,909.70 - 63,866.80 -
Other -5,763.70 -0.07 -5,808.77 -0.08
Adjustments -5,763.70 - -5,808.77 -
LT Debt Total 58,146.00 0.72 58,058.00 0.76
Current Portion of LTD -8,072.00 - -8,051.00 -
Net LT Debt Total 50,074.00 0.62 50,007.00 0.66
Total Debt 58,146.00 0.72 58,058.00 0.76

Debt Seniority Breakdown - Annual (M)
Credit Peer Analysis - Annual

Interest Coverage (EBIT) 29.8 7.3 6.3 20.4 2.5 3.6
Fixed Chg Coverage 29.8 7.3 6.3 20.4 2.2 3.6
CFO/Int Exp 32.7 13.7 6.4 20.4 6.8 44.7
Total Debt/EBITDA 0.9 3.8 4.5 1.7 3.6 0.9
Net Debt/EBITDA -0.6 3.2 2.2 0.9 3.0 -1.7
LT Debt/EBITDA 0.9 3.5 4.2 1.5 3.6 1.8
Total Debt/Total Equity 57.9 322.7 1,661.1 52.0 174.4 15.4
Total Debt/Total Capital 36.7 76.3 94.3 34.2 63.6 13.4
Total Debt/Total Assets 24.7 42.6 66.4 26.4 54.9 9.7

DuPont Analysis - Annual
Jun '14 Jun '15 Jun '16 Jun '17 Jun '18 Jun '19 Jun '20 Jun '21 LTM
Asset Turnover 0.55 0.53 0.46 0.41 0.44 0.46 0.49 0.53 0.53
x Operating Margin 32.0 29.6 24.4 27.4 31.7 34.0 37.0 41.6 41.6
x Interest Burden 1.00 0.67 0.96 0.95 1.05 1.03 1.00 1.02 1.02
x Tax Burden 0.79 0.66 0.85 0.92 0.45 0.90 0.83 0.86 0.86
= ROA 14.0 7.0 9.1 9.8 6.6 14.4 15.1 19.3 19.3
x Equity Leverage 1.87 2.05 2.43 3.01 3.22 2.95 2.66 2.44 2.44
= ROE 26.2 14.4 22.1 29.4 21.4 42.4 40.1 47.1 47.1
x Earnings Retention 57.4 16.2 31.4 42.4 21.1 63.6 64.6 72.2 72.2
= Reinvestment Rate 15.6 2.7 7.6 13.0 5.0 27.5 26.4 34.4 34.4
DuPont Peer Analysis - Annual

Asset Turnover 0.5 0.5 0.3 0.5 0.3 0.4
x Operating Margin 41.6 13.1 39.0 26.3 18.2 2.1
x Interest Burden 1.0 0.5 0.8 1.0 0.6 5.6
x Tax Burden 0.9 1.2 1.0 0.7 1.2 1.6
= ROA 19.3 3.6 11.2 8.7 4.1 6.7
x Equity Leverage 2.4 7.4 14.2 2.0 2.9 1.6
= ROE 47.1 26.6 158.8 17.0 12.1 10.8
x Earnings Retention 72.2 -4.4 77.1 57.5 -105.5 100.0
= Reinvestment Rate 34.4 -1.4 123.4 10.9 -11.7 10.8

Statement Analysis
Financial Statement
Jun '17 Jun '18 Jun '19 Jun '20 Jun '21 10Y Trend 5Y CAGR 10Y CAGR
Sales/Revenues 89.4 110.2 125.5 143.0 168.1 14.7% 9.2%
COGS incl. D&A 34.2 39.0 42.9 46.1 52.2 9.8% 12.9%
Gross Inc 55.2 71.2 82.6 96.9 115.9 17.4% 7.9%
SG&A 30.7 36.3 40.0 44.0 45.9 8.0% 5.4%
Other Oper Expense 0.0 0.0 0.0 0.0 0.0 - -
EBIT(Operating Income) 24.5 34.9 42.6 53.0 69.9 27.6% 9.9%
Nonop Inc (Exp) - Net 4.2 4.6 3.2 2.5 2.5 2.5% 6.3%
Interest Expense 2.2 2.7 2.7 2.6 2.3 13.5% 23.0%
Unusual Exp (Inc) - Net 3.3 0.2 -0.6 -0.1 -1.0 - -
Pretax Income 23.1 36.5 43.7 53.0 71.1 29.2% 9.7%
Income Taxes 1.9 19.9 4.4 8.8 9.8 27.2% 7.2%
Minority Interest 0.0 0.0 0.0 0.0 0.0 - -
Net Income 21.2 16.6 39.2 44.3 61.3 29.5% 10.2%
EPS (recurring) 2.999 2.147 5.007 5.752 7.957 28.6% 11.4%
EPS (diluted) 2.710 2.130 5.060 5.764 8.054 30.8% 11.6%
EBITDA 32.3 44.8 54.2 65.3 80.8 24.9% 10.5%
Income Statement Growth - Annual

MSFT Ind

Financial Statement
Curr Assets 159.9 169.7 175.6 181.9 184.4 5.7% 9.4%
Cash & ST Inv 133.0 133.8 133.8 136.5 130.3 2.9% 9.5%
Accounts Receivable 19.8 26.5 29.5 32.0 38.0 15.8% 9.8%
Inventories 2.2 2.7 2.1 1.9 2.6 3.2% 6.7%
Other Current Assets 4.9 6.8 10.1 11.5 13.4 17.8% 8.8%
Curr Liabilities 64.5 58.5 69.4 72.3 88.7 8.4% 11.9%
STD & Curr Port LT Debt 10.2 5.6 7.3 5.9 10.8 -3.5% -
Accounts Payable 7.4 8.6 9.4 12.5 15.2 17.1% 13.7%
Income Tax Payable 0.7 2.1 5.7 2.1 2.2 30.2% 14.1%
Other Current Liabilities 46.2 42.2 47.0 51.7 60.5 9.2% 9.7%
Total Debt 88.7 87.5 86.5 82.1 82.3 8.9% 21.3%
Total Assets 241.1 258.8 286.6 301.3 333.8 11.5% 11.9%
Total Liabilities 168.7 176.1 184.2 183.0 191.8 9.5% 14.0%
Shrhldrs Equity 72.4 82.7 102.3 118.3 142.0 14.5% 9.5%
BVPS 9.392 10.775 13.389 15.626 18.884 15.4% 10.7%
Use of Cash
Cash and Liabilities Jun '16 Jun '17 Jun '18 Jun '19 Jun '20 Jun '21
Cash and Short Term Investments 113.2 133.0 133.8 133.8 136.5 130.3
Share Repurchase -16.0 -11.8 -10.7 -19.5 -23.0 -27.4
Dividends -11.0 -11.8 -12.7 -13.8 -15.1 -16.5
Debt Servicing -4.0 -10.1 -12.8 -6.7 -8.1 -6.1
Net Change in Reporting Period Cash (FX adjusted) 0.9 1.2 4.3 -0.6 2.2 0.6
Cash Flow Increases/Decreases 10.2 -5.2 39.6 38.4 47.3 49.0
Cash Received (Paid) from Debt Activity 17.0 29.2 -12.9 -6.7 -8.1 -6.1
Dividends Paid -11.0 -11.8 -12.7 -13.8 -15.1 -16.5
Cash Received (Paid) from Change in Equity -15.3 -11.0 -9.7 -18.4 -21.6 -25.7

Financial Statement
Net Income 21,204 16,571 39,240 44,281 61,271 29.5% 10.2%
Deprec & Amort 8,778 10,261 11,682 12,300 10,900 10.5% 14.7%
Other Funds 11,169 1,728 3,860 5,566 5,655 -13.5% 3.3%
Changes in Wk Cap 1,652 20,467 3,866 -1,483 -936 - -
Operating Cash Flow 39,507 43,884 52,185 60,675 76,740 18.2% 11.0%
Cap Ex -8,129 -11,632 -13,925 -15,441 -20,622 - -
Other Investing, Total -38,652 5,571 -1,848 3,218 -6,955 - -
Investing Cash Flow -46,781 -6,061 -15,773 -12,223 -27,577 - -
Free Cash Flow 31,378 32,252 38,260 45,234 56,118 17.6% 8.6%
FCF/Share 4.006 4.138 4.935 5.888 7.376 18.8% 9.9%
FCF Yield (%) 5.8 4.2 3.7 2.9 2.7 -14.9% -13.1%
% of Net Income 148.0 194.6 97.5 102.2 91.6 -9.2% -1.5%
Cash Divs Pd -11,845 -12,699 -13,811 -15,137 -16,521 - -
Change in Capital Stock -11,016 -9,719 -18,401 -21,625 -25,692 - -
Iss/Red Debt 31,459 -10,201 -4,000 -5,518 -3,750 - -
Financing Cash Flow 8,408 -33,590 -36,887 -46,031 -48,486 - -
Net Change in Cash 1,153 4,283 -590 2,220 648 -6.7% -16.9%

M&A
Takeover Defense
Bullet Proof Rating
1.25
0 10
Strengths Weaknesses
The ability of shareholders to call special meetings is limited to 15% Annually elected directors
shareholders
No poison pill in force
Action can be taken by written consent only if unanimous
All vacancies on board are filled by remaining directors, including
vacancies as a result of removal or an enlargement of the board
Board is authorized to adopt, amend or repeal bylaws without
shareholder approval
Cumulative voting is prohibited
Blank check preferred stock
More
State Takeover Laws
Statute Source Covered

Freezeout (5 year) with Fair Price Requirement Chapter 23B.19 of the Washington Business Corporation Act Yes
Poison Pill Endorsement Chapter 23B.06.240 of the Washington Business Corporation Act Yes
Yes
Takeover Defense Peer Analysis
Microsoft IBM Oracle SAP Broadcom salesforce com

(MSFT) (IBM) (ORCL) (SAP-DE) (AVGO) (CRM)
Bullet Proof Rating 1.2 1.8 0.2 - 1.2 1.2
Classified Board No No No - No No
S'holders Can't Call Meetings No No No - No No
No Action By Written Consent Yes Yes No - Yes Yes
Fair Price Provision No No No - No No
Supermajority for Mergers No No No - No No
Directors Removed w/ Cause No Yes No - No No
Supermajority to Remove No No No - No No
Poison Pill In Force No No No - No No

Company Overview
Supply Chain
There was an error processing this document. It has been excluded from the
final PDF.
Upcoming Events
EPS Sales
Date Time Type Description Actual Mean Surprise(%) Actual Mean Surprise(%)
27 Oct '21 - Q1 2022 Earnings Release (Projected) - 2.06 - - 43,757 -
27 Jan '22 - Q2 2022 Earnings Release (Projected) - 2.22 - - 48,908 -
28 Apr '22 - Q3 2022 Earnings Release (Projected) - 2.12 - - 47,260 -
21 Jul '22 - Q4 2022 Earnings Release (Projected) - 2.33 - - 51,416 -
Past Events
EPS Sales
Date Time Type Description Actual Mean Surprise(%) Actual Mean Surprise(%)
27 Jul '21 05:30 PM Q4 2021 Earnings Call 2.17 1.92 13.1 46,152 44,260 4.27
09 Jun '21 04:15 PM Morgan Stanley Sustainable Futures Conference
07 Jun '21 11:45 AM Evercore TMT Conference
25 May '21 02:10 PM J.P. Morgan Global Virtual Technology, Media and Communications Conference
17 May '21 - RSA Conference
27 Apr '21 05:30 PM Q3 2021 Earnings Call 1.95 1.78 9.47 41,706 41,036 1.63
12 Apr '21 11:00 AM Acquisition of Nuance Communications, Inc by Microsoft Corp Call
12 Apr '21 - GPU Technology Conference
10 Mar '21 03:30 PM Jefferies Enterprise Communications Summit
01 Mar '21 05:45 PM Morgan Stanley Technology, Media and Telecom Conference
24 Feb '21 12:30 PM Advantech Connect Online Partner Conference
10 Feb '21 03:40 PM Goldman Sachs Technology & Internet Virtual Conference
26 Jan '21 05:30 PM Q2 2021 Earnings Call 2.03 1.64 23.8 43,076 40,225 7.09
13 Jan '21 09:00 AM Consumer Electronics Show
09 Dec '20 12:30 PM Barclays Global Technology, Media and Telecommunications Conference
08 Dec '20 01:55 PM UBS Global TMT Conference
02 Dec '20 01:00 PM Credit Suisse Technology Conference
02 Dec '20 11:20 AM Wells Fargo TMT Summit
02 Dec '20 11:00 AM Annual General Meeting
12 Nov '20 01:00 PM Jefferies Interactive Entertainment Virtual Conference
30 Oct '20 - BioNJ C-Suite Summit
27 Oct '20 05:30 PM Q1 2021 Earnings Call 1.82 1.54 17.9 37,154 35,759 3.90
19 Oct '20 - The Premier Dev Conference
14 Oct '20 02:55 PM Digital Design Technology Symposium
15 Sep '20 01:10 PM Deutsche Bank Technology Conference
14 Sep '20 06:30 PM Jefferies Virtual Software Conference
10 Sep '20 02:30 PM Rackspace Technology Solution Summit - Panel
10 Sep '20 12:00 PM Rackspace Technology Solution Summit
10 Sep '20 10:00 AM Rackspace Technology Virtual Solutions Summit
1
© 2021 Factset Research Systems Inc.
StreetAccount
Insider transaction: Microsoft EVP, CFO Amy Hood discloses sale of 60K shares (3-Sep) ($301.14, 0.00)
Saturday, September 04, 2021 01:30:52 PM (GMT)
Hood beneficially owns 463K shares of common stock following the transaction.
Reference Links:
Reference Link: Form 4
Industries: Software & Programming

Primary Identifiers: MSFT-US
Related Identifiers: MSFT-US
Subjects: Insider Transactions (Form 4), Ownership
StreetAccount Summary: The Economist print edition
Thursday, September 02, 2021 05:30:08 PM (GMT)
Some notable articles in this week's print edition of The Economist:
Cover Story
The dangers of illiberalism
Discusses the threats of liberalism specifically in America following recent decisions made by the
Supreme Court as classical liberalism is called on to push for equitable process
Leaders:
American engagement with the Taliban
Following the recent removal of American presence in Afghanistan, the United States will have to
decide how to engage with the Taliban without having a physical presence
Delta variant putting pressure on global economies
The spreading of the Delta variant has slowed economic growth while raising inflation as
policymakers must decide the best way to combat the virus despite the apparent lack of care from
consumers compared to earlier in the pandemic (GPS, NKE)
Chinese firms struggling to repay debts
As Chinese firms have some of the highest levels of debt in the world, the Chinese government is
calling for better ways to restructure debt which could improve the efficiency of capital allocation in
the country (2799.HK, 3333.HK)
Business:
The future state of business meetings
With the Delta variant continuing to spread, more businesses have had to postpone office
reopening plans which has meant video calls/meetings will not be going anywhere as employees
push for hybrid meeting formats to remain (ZM, MSFT, FB, JPM, NOKIA.FH)
Rivian preparing for IPO
The high level of competition in the electric vehicle market looks set to continue as Rivian, a
maker of EVs, is seeking a valuation of over $70B and already preparing for business after the
firm's IPO (+RIVIAN, TSLA, AMZN, F, GOEV, ARVL)
Databricks growing in momentum and popularity
Databricks, a software maker, is pursuing plans for an IPO to rival the valuation of Snowflake
which could price the firm out of a potential rumored acquisition from Microsoft as the artificial
intelligence/business intelligence market becomes more saturated and competitive (SNOW,
ORCL, MSFT,CMCSA, ABN.NA, HM.B.SS, AMZN, GOOGL)
Chinese crackdown on video game industry
The video game industry became the latest recipient of regulatory crackdown as the Chinese
government is trying to establish anti-addiction rules for children under the age of 18 which could
see Chinese and Western firms struggle for new customers (700.HK, NTES, AAPL)
Finance and Economics:
Vietnamese economy seeing growth despite the pandemic
Despite the widespread effects of the pandemic, the economy of Vietnam grew in part due to
integration with global manufacturing as the World Bank predicts even greater growth in 2021 if the
country remains open to trade and investment (NKE, 005930.KS, VIC.VN, VHM.VN, +VINFAST)
Industries: Unspecified, Auto & Truck Manufacturers, Auto & Truck Parts, Footwear, Misc. Financial Services, Money
Center Banks, Regional Banks, Broadcasting & Cable TV, REIT, Retail (Apparel), Retail (Internet & Catalog),
Communications Equipment, Computer Hardware, Computer & Internet Services, Semiconductors, Software &
Programming
Primary Identifiers: 005930-KR, 2799-HK, 3333-HK, 700-HK, AAPL-US, ABN-NL, AMZN-US, ARVL-US, CMCSA-US,
F-US, FB-US, GOEV-US, GOOGL-US, GPS-US, HM.B-SE, JPM-US, MSFT-US, NKE-US, NOKIA-FI, NTES-US,
ORCL-US, SNOW-US, TSLA-US, VHM-VN, VIC-VN, ZM-US, 0FMGXN-E, 0KSNWW-E
Related Identifiers: 005930-KR, 2799-HK, 3333-HK, 700-HK, AAPL-US, ABN-NL, AMZN-US, ARVL-US, CMCSA-US, F-
US, FB-US, GOEV-US, GOOGL-US, GPS-US, HM.B-SE, JPM-US, MSFT-US, NKE-US, NOKIA-FI, NTES-US, ORCL-
US, SNOW-US, TSLA-US, VHM-VN, VIC-VN, ZM-US, 0FMGXN-E, 0KSNWW-E
Subjects: Media Summaries, Economist Summary
StreetAccount Summary: The Economist print edition
Thursday, August 26, 2021 06:19:25 PM (GMT)
Some notable articles in this week's print edition of The Economist:
Cover Story
Calamity in Afghanistan presents opportunity for global jihadism
Discusses the rise in global jihadism and the countries or parts of the world most susceptible
following the recent removal of American forces in Afghanistan
Leaders:
Reappointment of Fed Chairman Jerome Powell
President Biden must decide if Fed Chairman Powell should be reappointed following recent surges
in inflation, however a new appointment could lead to speculation that the White House wants to
influence the Federal Reserve
Britain called on to improve relationships with European neighbors
Security threats across Europe including Russian expansionism are gaining attention and Britain
improving relationships with EU counterparts could help in stopping those threats
Business:
Apple called on to adapt in new era of technology industry
Threats to global supply chain from geopolitical tensions and pressure from antitrust lobbyists have
put Apple's CEO Tim Cook under the spotlight as the firm must look for ways to maintain value
amid the changes in the technology industry (AAPL, GOOGL, AMZN, FB, MSFT, BABA, 700.HK,
TSLA)
Indian government announce plans to raise GDP through state owned assets
India's Finance Minister Nirmala Sitharaman announced plans to increase GDP by leasing stakes
in assets to potential investors as opposed to the traditional method of outright sales of assets
(500325.IN, 500547.IN)
Amazon's leaked department store plans
Unconfirmed by the company, rumors have been circulating around plans made by Amazon to
create retail spaces to offer an omni-channel experience in an attempt to compete with the likes of
Target and Walmart (AMZN, WMT, TGT)
Finance and Economics:
Upcoming expiration of pandemic unemployment aid
The consequences of the expiration of pandemic unemployment aid are unknown as firms are still
struggling to fill vacancies which could be harmful to consumer spending when the aid expires
Industries: Unspecified, Oil & Gas Exploration & Production, Chemicals - Plastics & Rubber, Auto & Truck
Manufacturers, Retail (Internet & Catalog), Retail (Department & Discount), Computer Hardware, Computer & Internet
Services, Software & Programming
Primary Identifiers: 500325-IN, 500547-IN, 700-HK, AAPL-US, AMZN-US, BABA-US, FB-US, GOOGL-US, MSFT-US,
TGT-US, TSLA-US, WMT-US
Related Identifiers: 500325-IN, 500547-IN, 700-HK, AAPL-US, AMZN-US, BABA-US, FB-US, GOOGL-US, MSFT-US,
TGT-US, TSLA-US, WMT-US
Subjects: Media Summaries, Economist Summary
Microsoft warns cloud computing customers of exposed databases - Reuters ($299.09, 0.00)
Friday, August 27, 2021 12:23:06 AM (GMT)
Citing a copy of the email and a cyber security researcher, the article reports that the vulnerability is in Microsoft
Azure's Cosmos DB database, as a research team at security company Wiz discovered it was able to access
keys that control access to databases held by thousands of companies
The article adds that Microsoft emailed the customers today telling them to create new keys, as it cannot
change those keys by itself
In the email to customers, Microsoft confirmed that the vulnerability had been fixed and there was no indication
that external entities outside Wiz had access to the primary read-write key
The article cites Wiz Chief Technology Officer Ami Luttwak, who said that this is the worst cloud vulnerability
you can imagine, and that even customers who have not been notified by Microsoft could have had their keys
swiped by attackers, giving them access until those keys are changed
Reference Links:
Reuters
Wiz Blog Post
Industries: Software & Programming

Primary Identifiers: MSFT-US
Related Identifiers: MSFT-US
Subjects: Articles, Reports, Conjecture, Media Summaries, Published Reports
Barron's Summary
Saturday, August 21, 2021 06:53:29 PM (GMT)
The following summary highlights stories reported by Barron's that are likely to influence trading this week.
Cover:
With regulatory scrutiny of Big Tech increasing, Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL),
Amazon (AMZN), and Facebook (FB) face a perilous moment. Barron's doesn't expect that to last: the
tech giants have the best business models on the planet, and their stocks look relatively cheap. Even if
regulatory headwinds last for a while, investors should own them all. Together, the companies are a play
on the global economy's biggest trends, like digital transformation and cloud computing (link).
Features:
Stem (STEM): Barron's is positive on this power-storage provider as a play on Biden's renewable energy
push. Utilities are going to need high-capacity batteries to store the energy produced by wind turbines and
solar panels. Stem installs arrays of large batteries for utilities and industrial companies and sells the
AI/machine learning software to manage them. It could benefit if tax credits for installing battery storage
become available in a Biden green-energy plan. The small-cap ($2.8B market cap) stock looks
inexpensive at eight times estimated 2022 EV/sales, and has a strong balance sheet from its SPAC
market debut in April (link).
Jefferies (JEF): Barron's is positive on Jefferies, calling it a well-managed investment bank that is
increasingly taking on its bigger rivals. It has risen to sixth in merger advisory work so far in 2021 from
11th in 2018, and should continue to benefit from the pullback of European banks from U.S. capital
markets. The stock trades around $34, or 1.1 times tangible book value and 11 times forward earnings,
and yields 2.9%. Earnings consensus for 2022 looks too conservative given the bank's improving
franchise (link).
Given the potential emergence of additional new variants, it appears the Covid threat is here to stay. This
means the market for vaccines and booster shots could last for years. This helps justify the valuations of
companies like Moderna (MRNA) and BioNTech (BNTX), and supports the thesis of Pfizer (PFE) bulls
who say that stock should be getting more credit for the company's vaccine. It also means companies
like Roche (ROG.SW) and AstraZeneca (AZN.LN) that are working on Covid treatments have significant
opportunities. Investors should also be prepared for the possibility that the virus rages back in a new form
and halts the global economy in its tracks yet again (link).
Barron's discusses the Biden Administrations' regulatory efforts to take on Big Tech. On the antitrust side,
federal and state regulators have filed suit against Alphabet and Facebook, and further litigation against
Amazon.com and Apple is likely in the months ahead. Litigation will not resolve quickly -- most of the
current legislation could take four to six years, with appeals extending the process another five years or
so. Legal expenses could be in the hundreds of millions, but the stocks could remain mostly unscathed
during the process. On the legislative side, House lawmakers have advanced a package of six bills to a
potential floor vote. One that has broad support would increase funding for the FTC and DOJ antitrust
reviews and litigation efforts. The most severe and controversial bill threatens to break up Big Tech
companies, but it's a long shot at best (link).
Columns:
Technology Trader: Despite some unconventional SPAC investments and other quirks, Palantir (PLTR)
looks like "the single best bet on the future of complex data analytics".
Funds: ETFs to play the infrastructure boom.
The Trader: Stellar earnings prove a non-catalyst for Walmart's (WMT) stock.
The Trader: The chip shortage has parallels to the oil shortage of the 1970s.
Up and Down Wall Street: Facing conflicting factors, will the Fed pivot or punt on its bond-buying?
The Economy: Slowing demand might be a good thing for the moment.
The Trader: " Don't fear the taper."
Up and Down Wall Street: After Afghanistan, China and Iran become the chief U.S. foreign policy
concerns.
Income Investing: Two mortgage REITs with solid yields and potential upside: MFA Financial (MFA) and
Redwood Trust (RWT).
Striking Price: Investors with substantial profits may want to hedge against rising interest rates by using
upside calls as stock surrogates.
Power Play: Analysts are bullish on Box (BOX) regardless of whether the company wins its imminent
proxy battle with Starboard.
Inside Scoop: Activision Blizzard (ATVI) director Peter Nolan bought $2M of shares after a recent dip.
Fund Profile: Rafe Resendes, co-manager of the Applied Finance Select fund, says Facebook (FB) is 'a
screaming value'. Additional positive mentions for KLA (KLAC) and Aptiv (APTV).
Q&A: Economist Claudia Sahm says the big job gains are over, but Fed policy is on the right track.
Commodities Corner: China is limiting steel production to reduce carbon emissions, hurting
demand/prices for iron ore.
European Trader: Positive on Swatch (UHR.SW), which is enjoying a resurgence in demand, notably from
China. Control of its own supply chains is also an advantage.
Emerging Markets: China sets its sights on Afghanistan's $1T-plus in rare earth metals.
Reference Links:
Barron’s
Industries: Unspecified, Conglomerates, Auto & Truck Parts, Jewelry & Silverware, Biotechnology & Drugs, Major
Drugs, REIT, Retail (Internet & Catalog), Retail (Department & Discount), Computer Hardware, Computer & Internet
Services, Electronic Instruments & Controls, Semiconductors, Software & Programming
Primary Identifiers: AAPL-US, AMZN-US, APTV-US, ATVI-US, AZN-GB, BNTX-US, BOX-US, FB-US, GOOGL-US,
JEF-US, KLAC-US, MFA-US, MRNA-US, MSFT-US, PFE-US, PLTR-US, ROG-CH, RWT-US, STEM-US, UHR-CH,
WMT-US
Related Identifiers: AAPL-US, AMZN-US, APTV-US, ATVI-US, AZN-GB, BNTX-US, BOX-US, FB-US, GOOGL-US,
JEF-US, KLAC-US, MFA-US, MRNA-US, MSFT-US, PFE-US, PLTR-US, ROG-CH, RWT-US, STEM-US, UHR-CH,
WMT-US
Subjects: Conjecture, Media Summaries, Barron's Summary, Published Reports
Transcripts
Corrected Transcript
27-Jul-2021
Microsoft Corp. (MSFT)

Q4 2021 Earnings Call
Total Pages: 19
1-877-FACTSET www.callstreet.com Copyright © 2001-2021 FactSet CallStreet, LLC
Microsoft Corp. (MSFT) Corrected Transcript
Q4 2021 Earnings Call 27-Jul-2021
CORPORATE PARTICIPANTS
Brett Iversen Amy E. Hood
General Manager-Investor Relations, Microsoft Corp. Chief Financial Officer & Executive Vice President, Microsoft Corp.
Satya Nadella
Chief Executive Officer & Director, Microsoft Corp.
......................................................................................................................................................................................................................................................
OTHER PARTICIPANTS
Keith Weiss Mark R. Murphy
Analyst, Morgan Stanley & Co. LLC Analyst, JPMorgan Securities LLC
Mark L. Moerdler Brent A. Bracelin
Analyst, Sanford C. Bernstein & Co. LLC Analyst, Piper Sandler & Co.
Brent Thill Alex Zukin
Analyst, Jefferies LLC Analyst, Wolfe Research LLC
Karl E. Keirstead Keith Bachman
Analyst, UBS Securities LLC Analyst, BMO Capital Markets Corp.
......................................................................................................................................................................................................................................................
MANAGEMENT DISCUSSION SECTION

Operator: Greetings, and welcome to the Microsoft Fiscal Year 2021 Fourth Quarter Earnings Conference Call.
At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal
presentation. [Operator Instructions]
As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host, Brett Iversen, General Manager of Investor Relations. Thank you.
You may begin.
......................................................................................................................................................................................................................................................
Brett Iversen
General Manager-Investor Relations, Microsoft Corp.
Good afternoon, and thank you for joining us today. On the call with me are Satya Nadella, Chairman and Chief
Executive Officer; Amy Hood, Chief Financial Officer; Alice Jolla, Chief Accounting Officer and Keith Dolliver,
Deputy General Counsel.
On the Microsoft Investor Relations website, you can find our earnings press release and financial summary slide
deck, which is intended to supplement our prepared remarks during today's call and provides the reconciliation of
differences between GAAP and non-GAAP financial measures.
Unless otherwise specified, we will refer to the non-GAAP metrics on the call. The non-GAAP financial measures
provided should not be considered as a substitute for, or superior to, the measures of financial performance
2
prepared in accordance to GAAP. They are included as additional clarifying items to aid investors in further
understanding the company's fourth quarter performance, in addition the impact these items and events have on
the financial results.
All growth comparisons we make on the call today relate to the corresponding period of last year unless otherwise
noted. We will also provide growth rates in constant currency when available, as a framework for assessing how
our underlying businesses performed excluding the effect of foreign currency rate fluctuations. Where the growth
rates are the same in constant currency, we will refer to the growth rate only. We will post our prepared remarks
to our website immediately following the call until the complete transcript is available.
Today's call is being webcast live and recorded. If you ask a question, it will be included in our live transmission,
in the transcript, and in any future use of the recording. You can replay the call and view the transcript on the
Microsoft Investor Relations website.
During this call, we will be making forward-looking statements which are predictions, projections or other
statements about future events. These statements are based on current expectations and assumptions that are
subject to risks and uncertainties. Actual results could materially differ because of factors discussed in today's
earnings press release, in the comments made during this conference call, and in the Risk Factors section of our
Form 10-K, Forms 10-Q and other reports and filings with the Securities and Exchange Commission. We do not
undertake any duty to update any forward-looking statement.
And with that, I'll turn the call over to Satya.

......................................................................................................................................................................................................................................................
Satya Nadella
Thanks much, Brett. We had a very strong close to our fiscal year. Our commercial cloud surpassed $69 billion in
annual revenue, up 34%. We are seeing revenue growth across industries, customer segments and geographies
with over 50% of sales coming from outside the United States. We continue to grow new franchises for Microsoft
in large and growing markets. In the past three years alone, gaming, security and now LinkedIn have all
surpassed $10 billion in annual revenue.
Now I'll highlight our innovation and our expanding opportunity across the tech stack, starting with infrastructure.
Moving forward, every organization will need more ubiquitous and decentralized computing. We're the only cloud
provider with the capabilities to support every organization's multi-cloud hybrid and edge needs. Over the past
year, we have added new datacenter regions in 15 countries across five continents, delivering faster access to
cloud services and addressing data residency requirements. And now we're taking cloud compute to the edge,
with 5G deployments. Our new Azure Edge services help operators and enterprises deliver ultra-low latency
compute fabric, and we are also helping operators run their networks in the cloud. AT&T chose Azure to power its
5G core network, making it the first tier-one operator to move its existing customer traffic to the public cloud.
We're also expanding our opportunity in hybrid. Today, over 75% of the Fortune 500 use our hybrid offerings.
Azure Arc extends the Azure control plane across on-premise, multi-cloud and the edge. With Azure Arc,
customers like EY and Telstra can manage the Kubernetes deployments anywhere and deploy Azure SQL
databases, and run Azure application services on any infrastructure.
As the digital and physical worlds converge, we are leading in a new layer of the infrastructure stack, the
enterprise metaverse. AB InBev is using our solutions, including Azure Digital Twins and Azure IoT, to optimize
3
operations from the barley field to the warehouse to distribution. Customers also continue to choose our
infrastructure to run mission-critical SAP solutions. Thousands of enterprises have migrated their ERP workloads
to Azure including Campbell Soup, L'Oréal, Mondelēz International, ServiceNow and even SAP.
All this innovation is driving larger and more strategic Azure commitments from industry leaders including Mars in
consumer goods, Morgan Stanley in financial services and NEC in IT.
Now onto data. Data is the most strategic asset for every business. We're the only cloud provider that helps
organizations build sovereignty over their data by bringing together hyperscale OLTP, analytics and governance
workloads. Cosmos DB has become the go-to database, powering the world's most demanding, mission-critical
workloads. New capabilities help organizations like Albertsons, Asus, DHL, LaLiga, Maersk, Swiss Re optimize
costs and boost performance. Walmart is using Cosmos DB to handle billions of online requests daily and to
ensure millions of customers receive the items they want when they need them.
Azure Synapse brings together data integration, big data and data warehouses into a single service. From ABN
AMRO in finance, and AmerisourceBergen in pharma, to Walgreen's in retail and WPP in advertising,
organizations are using Synapse to generate insights from massive amounts of structured and unstructured data.
Queries performed using Synapse increased 146% over the last quarter alone. Now, onto developers.
GitHub is used by 72% of the Fortune 50 to build, ship and maintain software. Organizations like Ford, NASA and
Shopify are using new project planning capabilities to help developers better manage projects directly within their
workflow. And Epic Games, Motorola Solutions and Volkswagen Software Group all chose GitHub Advanced
Security this quarter to help secure their code. We're also leading in enterprise AI. Our new Azure-applied AI
services help organizations like Dow, Lufthansa and Samsung apply AI to common business scenarios. And live
captions in Twitter Spaces are being powered by our speech services.
Finally, we are bringing the power of our partnership with OpenAI to both professional developers and domain
experts. With GitHub Copilot, professional developers can write code faster with less work, and using the world's
most powerful language model, GPT-3, domain experts can build apps using natural language with Power
Platform.
Power Platform has become the leading business process automation and productivity suite for domain experts
across all functions. Power BI is the leader in business intelligence in the cloud. Organizations in every industry,
including Bayer, Cerner, Rolls-Royce are choosing the platform to foster a data-driven culture. The number of
organizations using Power Apps has more than doubled year-over-year. BASF chose Power Apps to give
122,000 employees the capability to build low-code/no-code apps. And at Toyota, Fusion teams of pro-developers
and domain experts are using Power Apps and Azure PaaS services to improve quality control. All-up, Power
Platform revenue increased 83% over the past year.
And now on to Dynamics 365. Every business function, including marketing, sales, customer support and supply
chain, will need to be reimagined for an AI-first and collaboration-first world and the silos between
communications, collaboration and business process have to be broken down. With Dynamics 365, we are
building a new generation of business applications to help organizations adapt to this new reality. We continue to
gain share. Dynamics 365 revenue accelerated for the third consecutive quarter, up 49% year-over-year.
We are helping businesses to become digitally sovereign over their customer interactions with our Customer
Insights product with organizations like Columbia Sportswear, GNC and LA Clippers all choosing to unify
4
customer profiles and deliver more personalized experiences. We are empowering employees for hybrid work by
creating a new category of collaborative applications, bringing business process directly into the flow of work.
New integrations between Dynamics 365 and Teams enable anyone in an organization to seamlessly view and
collaborate on customer records within Teams without having to purchase multiple licenses. Customers want this
and no other vendor is doing this today. And we are helping organizations reimagine their core business process
with new apps built for an age of omni-channel communications. With Dynamics 365, customer service
organizations like Coca-Cola, Renault and Xiaomi have a single comprehensive solution to deliver consistent and
personalized support across all channels.
Now on to industry solutions. Over the past year, we have introduced Industry Clouds for financial services,
healthcare, manufacturing, nonprofit and retail. And this quarter, we announced our new Microsoft Cloud for
Sustainability, bringing together capabilities across our stack to create an entirely new business process category
to help every organization address this very urgent need.
Now on to LinkedIn. LinkedIn's revenue surpassed $10 billion for the first time this fiscal year, up 27%, a
testament to how mission-critical the platform has become to help people connect, learn, grow and get hired over
the course of their careers. In the past five years, since our acquisition, revenue has nearly tripled and growth has
accelerated. LinkedIn has become a leader across multiple secular growth areas, spanning B2B advertising,
professional hiring, corporate learning and sales intelligence. And from LinkedIn profiles within Office to LinkedIn
Learning courses within Microsoft Viva, and LinkedIn Sales Navigator leads within Microsoft Dynamics 365, we
have brought together the power of LinkedIn and Microsoft to transform how people learn, sell and connect.
LinkedIn has more than 774 million members who are more engaged than ever. Sessions were up 30% this
quarter, compared to a year ago and LinkedIn's advertising business surpassed $1 billion in revenue this quarter
for the first time, up 97% year-over-year, growing three times faster than the category.
Now, to Microsoft 365 and Teams. Hybrid work represents the biggest change to the way we work in a generation
and will require a new operating model spanning people, places and processes. We are the only cloud that
supports everything an organization needs to successfully make the shift. Microsoft Teams is the new front end.
It's where people meet, chat, call, collaborate and automate business processes, all within the flow of work.
Teams usage has never been higher. We are nearly 250 million monthly active users as people use Teams each
day to communicate, collaborate and co-author content across work, life and learning. We are leading in the new
and growing enterprise phone category. Just like video meetings, chat and business processes happen in Teams,
calls happen in Teams, creating a huge new opportunity. We have nearly 80 million monthly active Teams
Phones users with total calls surpassing 1 billion in a single month this quarter and we're just getting started.
Teams is also at the center of orchestrating collaboration across the entire SaaS estate from HR to marketing to
finance. Leading third-party SaaS vendors including Adobe, Atlassian, Salesforce, SAP, ServiceNow and
Workday, have now built apps that deeply integrate with Teams, bringing every business process and function
directly into the flow of work. And we are bringing Teams to consumers, so people can connect and collaborate
with family and friends across desktop, mobile and the web.
All this innovation is driving growth. 124 organizations now have more than 100,000 users of Teams and nearly
3,000 have more than 10,000 users. More broadly across Microsoft 365, we are seeing double-digit year-over-
year seat growth in every segment, from frontline and small business to enterprise. Leading companies like
5
Bayer, Siemens, Vodafone all chose our premium E5 offerings for advanced security, compliance, voice and
analytics.
Now onto Employee Experience cloud. Having a digital employee experience platform is critical for every
organization. With Microsoft Viva, we are creating an entirely new category, bringing together communications,
learning, well-being and knowledge directly into the flow of work. New capabilities empower leaders to build
human capital, nurture well-being and focus on employee results. We are seeing strong interest and early
adoption in every industry, from American Express and Barclays, to AT&T and Mars. Humana chose Viva to help
26,000 employees make the shift to hybrid work, gaining insights on everything from collaboration trends to
manager effectiveness.
Now onto Windows. Windows 11 is the biggest update to our operating system in a decade. We are reimagining
everything from the Windows platform to the store, to help people and organizations be more productive and
secure and build a more open ecosystem for developers and creators. We are delighted by early feedback. More
people have downloaded our early builds than any other Windows release or update in the history of our Insider
Program. And along with our OEM ecosystem, we're excited to bring Windows 11 to new PCs beginning this
holiday.
And with Windows 365, we're creating a new category, the Cloud PC. Just like applications moved to the cloud
with SaaS, we're now bringing the operating system to the cloud, enabling organizations to stream the full
Windows experience to any employee's personal or corporate device.
Now onto security. With the cybersecurity landscape more complex than ever, it's never been clearer that every
organization will need to deploy and maintain a Zero Trust Security architecture. This is driving accelerated
demand for our integrated end-to-end solutions, spanning identity, security, compliance and device management
across all clouds and all platforms. No other vendor is recognized by analysts as the leader in as many
categories. This is reflected in our share gains with nearly 600,000 organizations including FedEx, Nestlé, NTT
and Volkswagen using our security offerings across Azure and Microsoft 365.
We saw a 70% increase in the number of small- and medium-business customers and it's reflected in our sales
growth with annual revenue continuing to increase 40% year-over-year.
We are going further to protect organizations and our recent acquisitions of CloudKnox, ReFirm Labs and RiskIQ
bolster our security capabilities in key areas including identity management, IoT and threat intelligence.
Now onto gaming. Gaming is the largest category in the entertainment industry, and we're expanding our
opportunity to reach the world's three billion gamers, wherever and whenever they play. We are all-in on games.
At E3 last month, we unveiled our biggest games lineup ever, announcing 27 new titles, which will all be available
to Game Pass subscribers. Game Pass is growing rapidly, and it's transforming how people discover, connect
and play games. Subscribers play approximately 40% more games and spend 50% more than non-members.
We continue to lead in the fast-growing cloud gaming market with last month – just last month we made Xbox
Cloud Gaming available on PCs as well as Apple phones and tablets via the browser in 22 countries, with more to
come. Millions have already streamed games to their desktops, tablets and phones. And the Xbox Series S and X
are our fastest-selling consoles ever, with more consoles sold live to date than any previous generation.
6
Finally, we continue to grow our opportunity in the creator economy adding new ways for players to build and
monetize their creations in many of our most popular games, including Flight Simulator and Minecraft. Creators
earn more than double what they did a year ago across our titles.
In closing, going forward, every person and every organization will require more digital technology to be more
resilient and to transform. We are innovating across the entire tech stack to ensure our customers succeed in this
new era.
With that, I'll hand it over to Amy.

......................................................................................................................................................................................................................................................
Amy E. Hood
Chief Financial Officer & Executive Vice President, Microsoft Corp.
Thank you, Satya, and good afternoon, everyone. This quarter, revenue was $46.2 billion, up 21% and 17% in
constant currency. Earnings per share was $2.17, increasing 49% and 42% in constant currency.
In our largest quarter of the year, focused execution by our sales and partner teams, along with broad-based
strength across geographical markets and customer segments, drove another very strong quarter of top and
bottom-line growth.
In our Commercial business, healthy demand for our differentiated hybrid and cloud offerings, as well as
increased long-term commitments to our platform, drove significant growth in the number of $10 million-plus
Azure and Microsoft 365 contracts.
Customer reliance on the Microsoft Cloud drove sequential increases in usage across Teams, Power Platform
and our advanced security and identity offerings, which are empowering organizations to shift to hybrid work and
modernize business processes.
And in LinkedIn account solutions business, an improving job market drove strength in annual contracts and job
postings. In our on-premises business, strong annuity performance across Office, Server and Windows also
benefited from a greater mix of contracts with higher end-period revenue recognition under ASC 606. In our
Consumer business, Windows OEM and Surface were impacted by the ongoing constraints in the supply chain.
Search and LinkedIn benefited from an improved advertising market, and in gaming, we again saw strong
engagement across our platform, while demand for Xbox Series X and S consoles continued to exceed supply.
As a reminder, Q4 was the first full quarter impacted by COVID-19 a year ago across revenue and operating
expense. This quarter, even with a declining expiration base, Commercial bookings grew 30% and 25% in
constant currency, significantly ahead of expectations, driven by strong execution across our core annuity sales
motions and an increase in the number of larger, long-term Azure contracts. As a result, Commercial remaining
performance obligation increased 32% and 31% in constant currency to $141 billion.
Roughly 45% will be recognized in revenue in the next 12 months, up 25% year-over-year. The remaining portion,
which will be recognized beyond the next 12 months, increased 38% year-over-year, highlighting the growing
long-term commitment to our Microsoft Cloud. And our annuity mix increased 1 point year-over-year to 95%.
Commercial Cloud revenue, also better than expected, was $19.5 billion, as growth accelerated to 36% and 31%
in constant currency. Commercial Cloud gross margin percentage expanded 4 points year-over-year to 70% with
roughly 1 point from the change in accounting estimate for the useful life of server and network equipment assets.
Excluding this impact, Commercial Cloud gross margin percentage increased despite revenue mix shift to Azure,
7
driven by improvement across all our Cloud services on a prior-year comparable, impacted by strategic
investments we made to support significant customer engagement and usage in remote work scenarios, including
free trials, flexible financing options and capacity for cloud infrastructure usage.
With the weaker US dollar, FX increased growth by approximately 4 points, about a point more favorable than
anticipating – than anticipated. FX increased COGS growth by approximately 1 point and operating expense
growth by approximately 2 points, both in line with expectations.
Gross margin dollars increased 25% and 20% in constant currency. Gross margin percentage was 70%, up 2
points year-over-year, with roughly 1 point of favorable impact from the change in accounting estimate. Excluding
this impact, company gross margin percentage increased, despite sales mix shift to the cloud, driven by
Commercial Cloud gross margin percentage improvement noted earlier. Operating expense grew 6% and 4% in
constant currency in line with expectations on a prior-year comparable that included roughly 4 points of impact
from the realignment of our retail store strategy and 2 points of impact from an increase in bad debt expense.
Overall, company head count grew again in this quarter, up 12% year-over-year, as we continue to invest across
key areas like cloud engineering, sales and customer deployment.
Operating income increased 42% and 35% in constant currency and operating margins expanded 6 points year-
over-year to 41%, including roughly 2 points of impact from the retail stores charge and increase in bad debt
expense in the prior year, and nearly 1 point of favorable impact from the change in accounting estimate.
Now, to our segment results. Revenue from Productivity and Business Processes was $14.7 billion and grew 25%
and 21% in constant currency, with better-than-expected performance across all businesses. Office Commercial
revenue grew 20% and 15% in constant currency. Office 365 Commercial revenue grew 25% and 20% in
constant currency, again, driven by installed base expansion across all workloads and customer segments, as
well as higher ARPU.
Paid Office 365 Commercial seats increased 17% year-over-year, with continued recovery, driving acceleration in
our small and medium business and frontline worker offerings. Demand for Microsoft 365, particularly for security,
compliance and voice, drove strong E5 momentum again this quarter. E5 now accounts for 8% of our Office 365
Commercial installed base. And on a low prior-year comparable, impacted by a slowdown in transactional
purchasing, Office Commercial licensing was ahead of expectations, down 8% and 11% in constant currency,
also benefiting from higher end-period revenue recognition noted earlier.
In Office Consumer, revenue grew 18% and 15% in constant currency, driven by continued momentum in
Microsoft 365 subscriptions, which grew to $51.9 million, up 22% year-over-year. Dynamics revenue grew 33%
and 26% in constant currency, better than expected. Dynamics 365 revenue growth was 49% and 42% in
constant currency, with strong momentum in Power Apps and Power Automate, reflecting growing demand for our
modern solutions to build apps and automate workflows. Dynamics 365 now accounts for over 70% of total
Dynamics revenue.
LinkedIn revenue increased 46% and 42% in constant currency, ahead of expectations against a comparable
impacted by the advertising and job markets of a year ago. Segment gross margin dollars increased 33% and
27% in constant currency and gross margin percentage was up 5 points year-over-year, primarily driven by
improvement in our Cloud services, against a low prior-year comparable impacted mostly by increased usage.
The change in accounting estimate drove roughly 1 point of favorable impact.
8
Operating expense increased 8% and 6% in constant currency and operating income increased 62% and 53% in
constant currency, including 4 points due to the change in accounting estimate.
Next, the Intelligent Cloud segment. Revenue was $17.4 billion, increasing 30% and 26% in constant currency.
We exceeded expectations across our consumption and per-user Azure businesses, as well as in our on-
premises server products business. Overall, server products and cloud services revenue increased 34% and 29%
in constant currency. Azure revenue grew 51% and 45% in constant currency, driven by strong performance
across our core and premium consumption-based services.
In our per-user business, the Enterprise Mobility and Security install base increased 29% to over 190 million
seats. Our on-premise server business increased 16% and 12% in constant currency, driven by strong annuity
performance and benefiting roughly 4 points from the higher end-period revenue recognition noted earlier,
particularly in some of our largest deals in the quarter.
Enterprise Services revenue grew 12% and 9% in constant currency, driven by growth in Premier Support
services and Microsoft Consulting services. Segment gross margin dollars increased 32% and 27% in constant
currency. Gross margin percentage increased 1 point year-over-year, with roughly 1 point of favorable impact
from the change in accounting estimate. Operating expense increased 14% and 12% in constant currency, and
operating income grew 46% and 39% in constant currency, including 3 points due to the change in accounting
estimate.
Now, to More Personal Computing. Revenue was $14.1 billion, increasing 9% and 6% at constant currency, with
better-than-expected performance in Windows Commercial, Gaming and Search, offsetting OEM and Surface
weakness from supply chain constraints. OEM revenue declined 3% and Surface declined 20% and 23% at
constant currency, as both were impacted by the significant supply chain constraints noted earlier in a good
demand environment. Windows Commercial products and Cloud Services revenue grew 20% and 14% in
constant currency, driven by demand for Microsoft 365, with some benefit from the higher end-period revenue
recognition noted earlier.
Search revenue, ex-TAC, increased 53% and 49% in constant currency, benefiting from the improved advertising
market and in Gaming, revenue increased 11% and 7% in constant currency. Xbox hardware revenue grew 172%
and 163% in constant currency, driven by demand for our new consoles.
Xbox content and services revenue declined 4% and 7% in constant currency, against a high prior-year
comparable. Segment gross margin dollars increased 8% and 4% in constant currency, gross margin percentage
decreased roughly 1 point year-over-year, driven by sales mix shift to gaming hardware. Operating expense
decreased 6% and 7% in constant currency, including approximately 13 points of impact from the retail stores
charge in the prior year, and operating income grew 19% and 13% in constant currency.
Now, back to our total company results. Capital expenditures, including finance leases, were $7.3 billion, in line
with expectations, driven by ongoing investment to support growing global demand and usage of our Cloud
services. Cash paid for PP&E was $6.5 billion. Cash flow from operations were $22.7 billion, increasing 22%
year-over-year, driven by strong Cloud billings and collections. Free cash flow was $16.3 billion, up 17%,
reflecting higher capital expenditures in support of our growing Cloud business. For FY 2021, we generated over
$76 billion in operating cash flow, up 26% year-over-year, and over $56 billion in free cash flow, up 24% year-
over-year.
9
This quarter, other income and expense was $310 million, higher than anticipated, primarily driven by net gains
on investments. As a reminder, we are required to recognize mark-to-market gains or losses on our equity
portfolio. Our effective tax rate was approximately 15%. And finally, we returned $10.4 billion to shareholders
through share repurchases and dividends, bringing our total cash return to shareholders to over $39 billion for the
full fiscal year.
Now, before we turn to our outlook, I'd like to provide a few reminders for next fiscal year. Revenue growth rates
across all segments will reflect the impact from COVID-19 a year ago, though the impacts do shift as we move
through the year. Also, our FY 2021 operating income and margin benefited from two factors that will be
headwinds in FY 2022. First, the change in accounting estimate for the useful life of server and network
equipment resulted in $2.7 billion of depreciation expense shifting from FY 2021 to future periods. And second,
we saved nearly $1.2 billion in operating expense from COVID-19-related restrictions, which will also moderate in
FY 2022 as geographies reopen globally.
With those reminders in place, let's move to our next quarter outlook. Accelerating digital transformation and
consistent strong execution should drive another quarter of growing commitment to our Microsoft Cloud. In
Commercial bookings, our core annuity sales motions should drive healthy growth on a growing expiry base, even
against the strong prior-year comparables. As always, quarterly volatility and bookings can be driven by an
increasing mix of larger long-term Azure contracts which are more unpredictable in their timing.
Commercial Cloud gross margin percentage should decrease roughly 1 point year-over-year with roughly 4 points
of negative impact from the change in accounting estimates previously discussed. Excluding the accounting
change, Q1 gross margin percentage will increase, despite revenue mix shift to Azure, driven by continued
improvement across our Cloud services on a prior-year comparable impacted by the strategic investments we
mentioned earlier. Longer-term, which excludes the impact of the accounting change, Commercial Cloud gross
margin percentage will continue to be impacted by the same three things we often discuss. Revenue mix shift to
Azure, increased usage of our Cloud services and ongoing strategic investments to support our customers'
success.
In capital expenditures, we expect a sequential increase on a dollar basis as we continue to invest to meet global
demand for our Cloud services.
Now to FX. Based on current rates, we expect FX to increase revenue growth at the total company and all
individual segment levels by approximately 2 points, and total operating expense and comps growth by
approximately 1 point.
Now, to segment guidance. In Productivity and Business Processes, we expect revenue between $14.5 billion
and $14.75 billion. In Office Commercial, revenue growth will again be driven by Office 365, with healthy seat
growth across segments and continued momentum in E5. In our on-premises business, we expect revenue to
decline approximately 20%, consistent with the ongoing customer shift to the cloud. In Office Consumer, against
the strong prior-year comparable, we expect high single-digit revenue growth with continued momentum in
Microsoft 365 Consumer subscriptions.
For LinkedIn, continued strong engagement on the platform and improvements in the advertising and job markets
should drive revenue growth in the high 30% range and in Dynamics, we expect continued strength in Dynamics
365, which includes our significant momentum in Power Apps to drive revenue growth in the high 20s. For
Intelligent Cloud, we expect revenue between $16.4 billion and $16.65 billion.
10
In Azure, revenue will be driven by continued strong growth in our consumption-based business and our per-user
business, should continue to benefit from Microsoft 365 Suite momentum, though we expect some moderation in
growth rate, given the size of the install base. Therefore, in constant currency, Azure revenue growth should
remain relatively stable on a sequential basis. In our on-premises server business, we expect revenue growth in
the high single-digits, driven by continued demand for our hybrid and premium annuity offerings, against a low
prior-year comparable.
In Enterprise Services, we expect revenue to be in the high single digits. In More Personal Computing, we have
estimated the Q1 impact of the required Windows 11 revenue deferral that will shift to Q2 to be approximately
$300 million, therefore, our segment revenue outlook is $12.4 billion to $12.8 billion. Given the 10-point estimated
negative impact from the deferral, OEM revenue should decline mid to high-single digits in Q1. In Surface, on a
strong prior-year comparable, we expect revenue to decline in the low teens as we continue to work through the
supply chain challenges.
In Windows Commercial, Products and Cloud services, continued demand for Microsoft 365 and our advanced
security solutions should drive healthy double-digit growth.
In Search, ex-TAC, we expect revenue growth in the high 30s, driven by improvements in the advertising market.
In Gaming, we expect revenue growth in the low double digits. Console growth will again be constrained by
supply. And on a strong prior-year comparable, Xbox content and services revenue should grow low single-digits.
Now, back to company guidance. We expect COGS of $13.55 billion to $13.75 billion, and operating expense of
$11.6 billion to $11.7 billion. In other income and expense, interest income and expense should offset each other.
And, finally, we expect our Q1 tax rate to be approximately 16%, lower than our expected full-year rate, given the
volume of equity vests in our first quarter.
In closing, we remain focused on driving revenue growth, as we invest boldly against the strategic, high-growth
opportunities ahead that will deliver significant value to our customers worldwide. Our outlook for FY 2022 reflects
this with healthy double-digit revenue and operating income growth. Together, that results in expanded operating
margins in FY 2022 after excluding the headwinds from the useful life change noted earlier.
Together, with our customers and partners, we look forward to FY 2022. Now, Brett, let's go to Q&A.
......................................................................................................................................................................................................................................................
Brett Iversen
Thanks, Amy. We'll now move to Q&A. Out of respect for others on the call, we request that participants please
only ask one question.
Operator, can you please repeat your instructions?
11
QUESTION AND ANSWER SECTION

Operator: Absolutely. [Operator Instructions] Our first question is coming from the line of Keith Weiss with
Morgan Stanley. Please proceed with your question.
......................................................................................................................................................................................................................................................
Keith Weiss
Analyst, Morgan Stanley & Co. LLC Q
Thank you for taking the question, guys, and congratulations on a great FY 2021 and a great end to the fiscal
year. Satya, last year at this time you made a comment that I think really defined the conversation in software
over the past year when you were talking about an acceleration in digital transformation you saw coming out of
COVID, and I think that's evident in the results that we see here with 25% growth in your Commercial bookings
growth. What I want to ask you is the durability of that growth on a going-forward basis. Was that acceleration a
pull-forward of demand and at some point, we're going to have that hard comp, or do you see durability in this
acceleration on a go-forward basis? Is there a lot more to come?
And then, Amy, to you, a similar kind of question, but more on sort of the margin side of the equation. I think your
entire tenure at Morgan – at Microsoft has really been defined by good operational controls and ability to grow
gross profit dollars well ahead of OpEx. Is that durable longer term? Is there still enough sort of efficiency gains at
Microsoft to be able to keep that up over the medium term, if you will?
......................................................................................................................................................................................................................................................
Satya Nadella
Chief Executive Officer & Director, Microsoft Corp. A
Thanks so much, Keith, for the question. The way we see the results today reflect that, but more importantly, on a
secular basis, as I think about – I always go back to that number which is 5% of world GDP's tech spend, it's
projected to double. I think that doubling will happen in a more accelerated pace.
And we feel well-positioned because of the innovation across the stack, because if you think about it, what's going
to happen is, every business, whether you're a retailer, a manufacturer in the service sector, public sector or
private sector, digital adoption is the way you're going to be both resilient, as well as transform the core business
processes. And the strength we have is that entirety of the Microsoft Cloud stack, right? So, it's not just about
infrastructure or any application. It's the entirety of what we do. And so, I think it is durable.
Quarter-to-quarter, depending on what happened during the pandemic, depending on the segments that were
impacted, for example, the Consumer segments that were impacted are coming back and then they'll normalize.
Whereas in our case, we do – in fact, one of the things I love about sort of our exposure is both it's a worldwide
exposure, and it has got the right balance between the Consumer segments and the Enterprise business-to-
business segment. So, it's a very durable, long-term growth prospect that we have tough competition and we
need to keep innovating, which is what we'll stay focused on.
......................................................................................................................................................................................................................................................
Amy E. Hood
Chief Financial Officer & Executive Vice President, Microsoft Corp. A
And maybe turning to your margin question, and while I am obviously proud of the work we've done, Keith, that
you referenced as a team on margins and returns, I would say, in general, our focus remains and has been for the
duration of really Satya and I've worked together along with the rest of the SLT, on consistently moving our
resources and talent to our highest growth and most differentiated places. When you do that in expansive, total
12
addressable markets in the way that I believe we're focused on as an organization, you do see the type of
operating leverage that you're referring to in margins.
And that, along, as you see, sort of mathematically, with a shift in our revenue to higher overall gross margin
segments, you do get the results we've seen. So, you know, I feel very good about the work we've done and as
you heard, I'm quite optimistic about the opportunities we have to invest leading into FY 2022 as well.
......................................................................................................................................................................................................................................................
Keith Weiss
Analyst, Morgan Stanley & Co. LLC Q
Excellent. Thank you so much, guys.
......................................................................................................................................................................................................................................................
Brett Iversen
General Manager-Investor Relations, Microsoft Corp. A
Thanks, Keith. Operator, next question, please.
......................................................................................................................................................................................................................................................
Operator: Thank you. Our next question comes from the line of Mark Moerdler with Bernstein Research. Please
proceed with your question.
......................................................................................................................................................................................................................................................
Mark L. Moerdler
Analyst, Sanford C. Bernstein & Co. LLC Q
Thank you very much for taking the question, and again, also congrats on the quarter. And Amy, thanks for the
details and color, especially in the guidance.
So, I want to ask about seasonality in Azure. Traditionally, we've seen seasonality in the Azure numbers in Q4,
and obviously, last year we didn't see it because of COVID, but we also didn't see it this year. Has something
changed that has changed the seasonality of the business, and does that continue going forward? And then as a
follow-up question, Keith asked about OpEx efficiency overall, but I'd like to ask specifically on the Cloud. Is there
any reason that Cloud OpEx shouldn't continue to grow slower than revenue? Obviously, on an annual basis, not
a quarterly basis. Thank you.
......................................................................................................................................................................................................................................................
Amy E. Hood
Thanks, Mark, for the question. Let me cover your first one, which is the seasonality in the Azure business. In
some ways, Mark, some of that seasonality, frankly, was because Azure has two fundamental components. It's
got a consumption model, as well as a per-user model. The per-user model, which, as you well know, is far more
aligned to our sort of end-of-year and can be more aligned to our end-of-year rhythms. It also can have more
quarterly volatility in terms of accounting, in terms of revenue recognition, the same topic we often talk about
when it comes to Microsoft 365 in terms of more in-quarter recognition.
What you've seen is, that did historically represent a larger component of Azure, so, added volatility to Q4. As
we've seen our consumption businesses grow and grow consistently, and thus far becoming a larger percentage
of Azure, you do have more stability, Mark, and so you start seeing less of that volatility that we've historically
seen from Q3 to Q4. We still have some of it, as we talked about, but I think it's an interesting observation, and it's
a very good question.
In terms of your comment on Cloud revenue and OpEx, yes, I do believe that's durable. We get a lot of focus.
We'll continue to invest. There's lots of opportunity there, but the market certainly warrants it.
13
Mark L. Moerdler
Analyst, Sanford C. Bernstein & Co. LLC Q
Makes sense and I appreciate all the detail. Thank you very much and congrats.
......................................................................................................................................................................................................................................................
Brett Iversen
Thanks Mark. Operator, next question, please.
......................................................................................................................................................................................................................................................
Operator: Our next question is coming from the line of Brent Thill with Jefferies. Please proceed with your
question.
......................................................................................................................................................................................................................................................
Brent Thill
Analyst, Jefferies LLC Q
Amy, a lot of questions on margins. I'm curious if you think there is a feeling in the near term on margins, or do
you feel that you've got an elevated flight level, if you will, and we shouldn't have to be worrying about that level of
margins? Can you just give us any more color as it relates to how you're thinking about that? Thank you.
......................................................................................................................................................................................................................................................
Amy E. Hood
So I think for FY 2022 on operating margins, which is really where I focus most of my thoughts, as I said, when
you exclude the useful life change, I feel very good about margin improvement in FY 2022, but what sits behind
that, Keith, is – I mean, sorry, Brent, is this focus on the first thing I said, which is, with every operating expense
dollar we invest, are we continuing to invest in the highest growth places? If you continue to invest in high-growth
places with differentiation that customers care about, and you add value, you continue to see improvements in
this area.
From time-to-time, I'm sure there will be quarters where that isn't the case, if we have some mix shift in hardware,
et cetera, but in general, over a longer period of time, you've seen us focus on this. And so, if you remove a little
of the noise and some of the useful life changes and look back a few years, I do think you'd see the biggest
needle-mover being where we invest the dollars, as opposed to the overall amounts of them, which should grow
based on the opportunity.
......................................................................................................................................................................................................................................................
Brent Thill
Analyst, Jefferies LLC Q
Thank you.
......................................................................................................................................................................................................................................................
Brett Iversen
Thanks, Brent. Operator, next question, please.
......................................................................................................................................................................................................................................................
Operator: Thank you. Our next question comes from the line of Karl Keirstead with UBS. Please proceed with
your question.
......................................................................................................................................................................................................................................................
Karl E. Keirstead
Analyst, UBS Securities LLC Q
14
Thanks very much. Amy, thank you for giving more formal Azure guidance for the next quarter. That's very
helpful. So, if Azure's going to remain stable in constant currency, I guess that 45%, and you had indicated that
EMS growth should moderate, effectively you're saying that the consumption piece of Azure might accelerate in
the September quarter. So, I'm wondering if you could unpack that a little bit? Is this as simple as prior-period
commitments ramping at an accelerated pace? I'd love to hear your thoughts. Thank you.
......................................................................................................................................................................................................................................................
Amy E. Hood
Thanks, Karl. I think in general, you've got the right trajectory and I do think it's both things. You've heard me say
it's both some of our core as well as premium SKUs. We've seen some nice execution and I think Satya
mentioned some of these differentiated places in the Azure stack where I think we also can see some growth.
Data services is a very good point where I feel like we've made a lot of progress, have a real differentiation and
have seen some acceleration in the past couple of quarters.
......................................................................................................................................................................................................................................................
Karl E. Keirstead
Analyst, UBS Securities LLC Q
Got it. Thank you.
......................................................................................................................................................................................................................................................
Brett Iversen
Thanks, Karl. Operator, next question, please.
......................................................................................................................................................................................................................................................
Operator: Our next question is coming from Mark Murphy with JPMorgan. Please proceed with your question.
......................................................................................................................................................................................................................................................
Mark R. Murphy
Analyst, JPMorgan Securities LLC Q
Yeah. Thank you very much. Satya, at the Ignite Conference a few months ago, you commented that cloud
architectures have reached peak centralization. I am wondering what developments are you seeing that inform
your viewpoint? And, Amy, do you sense uplift in some of those intelligent edge products, such as Azure Stack or
others, contributing to the improvement in Server products growth that we saw this quarter?
......................................................................................................................................................................................................................................................
Satya Nadella
Thanks so much for that question. Couple things that are happening, one is that, all up, even what we consider
the cloud infrastructure is getting increasingly distributed. If you think about the approach we took to our
datacenter architecture, the fact that we have more regions, is to meet, I would say, both the real-world needs for
the computing architecture side, but also the regulatory and data residency requirements. So we feel we have
picked the right approach and that's paying dividends today just even in terms of our geographic coverage, our
coverage of all of the regulatory requirements.
Then the second piece, of course, is distributed computing will remain distributed and what we are seeing with
edge is going to be the case, where we will see more of both the old workloads with hybrid benefits and hybrid
deployments, as well as new workloads, right? So, if you take the AB InBev digital twin meets IoT type of
scenario, that's going to require a lot more compute close to their factories. And so, to me, those new scenarios –
or 5G, I mean, think about what AT&T is planning to do, which is a hybrid deployment in a completely new space,
where there is going to be compute that's located to be able to take core network traffic and use cloud economics.
15
So, that's what we think of going forward, which is, really compute will remain distributed both because of their
needs across geographies, regulation and the very nature of compute architecture.
......................................................................................................................................................................................................................................................
Amy E. Hood
And to the question you asked on how to think about the Edge and where to see that in results, really it shows up
– this is one where I would focus on the overall Server products and Cloud services number, which I think, Mark,
was at the heart of your question, because through our purchasing vehicles, the most effective way to purchase
for flexibility with and across the edge and the cloud, is sometimes some of the on-prem licensing with hybrid
rights. So, you do see that both in our Azure results, but also depending on how it's purchased and Server KPI.
......................................................................................................................................................................................................................................................
Mark R. Murphy
Analyst, JPMorgan Securities LLC Q
Thank you very much.
......................................................................................................................................................................................................................................................
Brett Iversen
Thanks, Mark. Operator, next question, please.
......................................................................................................................................................................................................................................................
Operator: Thank you. Our next question comes from Brent Bracelin with Piper Sandler. Please proceed with
your question.
......................................................................................................................................................................................................................................................
Brent A. Bracelin
Analyst, Piper Sandler & Co. Q
Hi. Good afternoon, and thanks for taking the call here. Question for you really around $10 million-plus contracts.
You called out momentum this quarter and last quarter. My question is around the drivers of these larger
enterprise commitments. Is this driven by just the larger scope of deals, or are you seeing kind of broader attach
rate across the whole breadth of Microsoft Cloud products? Thanks.
......................................................................................................................................................................................................................................................
Amy E. Hood
Thanks, Brent. Maybe, Satya, I'll take this one first, and if you want to add anything. Brent, unfortunately, I'm
going to answer, it's everything, and let me talk about why I say that. When you see the size of the contracts
increase, it's about the entire scope of what's offered under the Microsoft Cloud. We're seeing both really strong
renewals of our core contracts, really strong additions across Dynamics, Power Apps, Power Automate, M365,
premium SKUs, Security, Compliance, Voice, which, of course, increases those commitment sizes, and you're
seeing the addition of Azure commitments, which we often talk about as these multi-year longer term contracts.
And so, then you do, of course, see them just have longer duration, especially in the case of Azure.
So, in many ways, what we focus on are the components that make up the larger contracts. Is each component
being additive to selling the value that's present across all of our pieces of the Microsoft Cloud, and this was a
good execution quarter for us. You see it in the bookings number even more. When you have a declining expiry
base and then bookings growth that's that high, you have to do all of those things well. And that's, I think, really
what's reflected ultimately and transactionally, meaning those larger $10-million-plus contracts being done.
......................................................................................................................................................................................................................................................
16
Brent A. Bracelin
Analyst, Piper Sandler & Co. Q
Thank you.
......................................................................................................................................................................................................................................................
Brett Iversen
Thanks, Brent. Operator, next question, please.
......................................................................................................................................................................................................................................................
Operator: Thank you. Our next question comes from Alex Zukin with Wolfe Research. Please proceed with your
question.
......................................................................................................................................................................................................................................................
Alex Zukin
Analyst, Wolfe Research LLC Q
Hey, guys. Thanks for taking the question. I guess, my main question, maybe for Satya, you've noted the future of
work having changed, and you've talked about the fusion of Teams into both the application stack, the operating
systems stack and really amongst the entire Microsoft portfolio. Is that driving – given the acceleration you're
seeing in Dynamics, can you talk to the fact, is that driving larger deals, new bites at the apple, or how is that
changing the landscape, and how do you think about that versus what your competitors are doing?
......................................................................................................................................................................................................................................................
Satya Nadella
Yeah. That's a great question. Thanks for that. Multiple things happening, and some of them are independent
secular growth trends and they do reinforce each other. Let's just take Dynamics. It's probably one of the most
exciting things we're seeing is that coming out of this pandemic, there is an absolute new chapter for a complete
new suite all the way from, whether it's sales, to customer service, to marketing, to supply chain, or digital
manufacturing, that's all going to be reimplemented. So there's going to be a complete new cycle of business
process automation, that is going to be AI-first and collaboration-first.
And that second part is where that intersection between Teams and Business Process or Dynamics comes
through, because you do not want to have a system of record for anything, whether it is a customer, or a part, or a
forecast that you don't want to collaborate on, that you don't want to communicate on – and by the way, the
communications and the collaboration artifacts are part of the record. And that's what I think that this new
generation of software will enable.
And so you see it in two fronts: One is Teams has become a platform, not just for Dynamics, even for Salesforce,
for SAP, for Adobe, for ServiceNow – they're all building great integrations into Teams and will foster that; and
Dynamics itself, of course, will integrate deeply with Teams and embed Teams or Azure Communication
Services. So when you think about our omni-channel customer service module, it doesn't look like anything that
from two years ago. It's a completely rebuilt omni-channel customer service system which has all the
communication functionality built in.
So, it's a pretty exciting space and it also speaks to a lot of the questions around, where is the margin, how is it
going to sort of evolve? I think tracking what's happening with Power Platform, Dynamics and Teams, I think
probably – and its intersection to even some of our data layers in Azure, is perhaps the best indication of some of
our competitor differentiation at scale already.
......................................................................................................................................................................................................................................................
17
Alex Zukin
Analyst, Wolfe Research LLC Q
Perfect. Thank you, guys, so much.
......................................................................................................................................................................................................................................................
Brett Iversen
Thanks, Alex. Operator, we have time for one last question.
......................................................................................................................................................................................................................................................
Operator: Thank you. Our final question comes from the line of Keith Bachman with Bank of Montreal. Please
proceed with your question.
......................................................................................................................................................................................................................................................
Keith Bachman
Analyst, BMO Capital Markets Corp. Q
Hi. Many thanks for taking the question. Amy, I wanted to direct this to you and go back to margins for a second.
Is there any comments or color that you could provide? I know you said you focus on the operating margins side,
but on the trends you anticipate this year in 2022 around gross margins, with or without the depreciation
schedules? Part B is, on the last quarter call, you indicated that you – operating expenses might grow kind of mid-
teen or low teens, I should say, in 2022. I was wondering if you would want to update the comments on how we
should be thinking about operating expense trends as we look at FY 2022? Thank you.
......................................................................................................................................................................................................................................................
Amy E. Hood
Thanks, Keith. When I think about your operating expense comments, no, I don't have any update to that. I think,
if you think about our head count growth at 12%-plus for the year continuing to invest in some of the places where
we saw savings through the year on COVID, I would expect that that is still a good placeholder for people as we
work through the year. I mean, with the opportunity we see in the market, I think it supports that level and given
our execution when we do invest, which leads me to margin, I feel very good about that.
At the gross margin level, we'll continue to focus really on the same things we've always focused on, which is
continuing across our Cloud services to see improving margins. You'll continue to see a mix shift to Azure, given
the growth we expect there. And we'll continue to see gross margin improvements across individual services that
make up many of our components across the company. So, in general, I feel like the gross margin trends are
quite healthy heading into 2022.
......................................................................................................................................................................................................................................................
Keith Bachman
Analyst, BMO Capital Markets Corp. Q
Okay. Great. Thank you.
......................................................................................................................................................................................................................................................
Brett Iversen
Thanks, Keith. So that wraps up the Q&A portion of today's earnings call. Thank you for joining us today and we
look forward to speaking with all of you soon.
......................................................................................................................................................................................................................................................
Amy E. Hood
Chief Financial Officer & Executive Vice President, Microsoft Corp.
18
Thank you, everyone.

......................................................................................................................................................................................................................................................
Satya Nadella
Thank you.
......................................................................................................................................................................................................................................................
Operator: Ladies and gentlemen, this concludes today's conference. We thank you for your participation and
you may disconnect your lines at this time.
Disclaimer
The information herein is based on sources we believe to be reliable but is not guaranteed by us and does not purport to be a complete or error-free statement or summary of the available data.
As such, we do not warrant, endorse or guarantee the completeness, accuracy, integrity, or timeliness of the information. You must evaluate, and bear all risks associated with, the use of any
information provided hereunder, including any reliance on the accuracy, completeness, safety or usefulness of such information. This information is not intended to be used as the primary basis
of investment decisions. It should not be construed as advice designed to meet the particular investment needs of any investor. This report is published solely for information purposes, and is
not to be construed as financial or other advice or as an offer to sell or the solicitation of an offer to buy any security in any state where such an offer or solicitation would be illegal. Any
information expressed herein on this date is subject to change without notice. Any opinions or assertions contained in this information do not represent the opinions or beliefs of FactSet
CallStreet, LLC. FactSet CallStreet, LLC, or one or more of its employees, including the writer of this report, may have a position in any of the securities discussed herein.
THE INFORMATION PROVIDED TO YOU HEREUNDER IS PROVIDED "AS IS," AND TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, FactSet CallStre et, LLC AND ITS LICENSORS,
BUSINESS ASSOCIATES AND SUPPLIERS DISCLAIM ALL WARRANTIES WITH RESPECT TO THE SAME, EXPRESS, IMPLIED AND STATUTORY, INCLUDING WITHOUT LIMITATION ANY IMPLIED
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, ACCURACY, COMPLETENESS, AND NON-INFRINGEMENT. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE
LAW, NEITHER FACTSET CALLSTREET, LLC NOR ITS OFFICERS, MEMBERS, DIRECTORS, PARTNERS, AFFILIATES, BUSINESS ASSOCIATES, LICENSORS OR SUPPLIERS WILL BE LIABLE FOR ANY
INDIRECT, INCIDENTAL, SPECIAL, CONSEQUENTIAL OR PUNITIVE DAMAGES, INCLUDING WITHOUT LIMITATION DAMAGES FOR LOST PROFITS OR RE VENUES, GOODWILL, WORK STOPPAGE,
SECURITY BREACHES, VIRUSES, COMPUTER FAILURE OR MALFUNCTION, USE, DATA OR OTHER INTANGIBLE LOSSES OR COMMERCIAL DAMAGES, EVEN IF ANY OF SUCH PARTIES IS ADVISED
OF THE POSSIBILITY OF SUCH LOSSES, ARISING UNDER OR IN CONNECTION WITH THE INFORMATION PROVIDED HEREIN OR ANY OTHER SUBJECT MATTER HEREOF.
The contents and appearance of this report are Copyrighted FactSet CallStreet, LLC 2021 CallStreet and FactSet CallStreet, LLC are trademarks and service marks of FactSet CallStreet, LLC. All
other trademarks mentioned are trademarks of their respective companies. All rights reserved.
19
Investor Slides
Management & Board
Microsoft Corporation (MSFT-US)$300.21 Next Rpt Date: 27 Oct '21Report as of 09 Sep '21
TOTAL INDEPENDENT AVERAGE AVERAGE INSIDER

Mgmt 65 Mgmt 53 Mgmt 12 Mgmt 0.059%
MEMBERS DIRECTORS AGE TENURE OWNED
75 Board 11 91% 54 YRS Board 59 11 YRS Board 5 0.061% Board 0.025%
Management
Company Insider Total

Name Position Age Tenure (Yrs) Holdings (%) Salary Comp.
Satya Nadella, MBA Chairman & Chief Executive Officer 54 29 0.022 $2,500,000 $44,321,788
Bradford L. Smith President & Chief Legal Officer 62 28 0.010 $860,000 $16,667,713
Kirk Koenigsbauer COO & VP-Experiences & Devices Group 53 19 - - -
Amy E. Hood, MBA Chief Financial Officer & Executive Vice President 49 19 0.006 $975,000 $19,626,234
James Kevin Scott, PhD Chief Technology Officer & Executive VP 49 4 - - -
Judson Althoff Chief Commercial Officer & Executive VP - 8 0.002 - -
Panos Panay Executive Vice President 48 17 - - -
Kurt D. DelBene, MBA Executive Vice President 61 29 - - -
Jean-Philippe Courtois Executive Vice President 60 37 0.012 $777,000 $13,949,304
Lakecia N. Gunter VP, GM-IoT Global & Strategic Engagement - 1 - - -
Ahmed Jamil Mazhari President-Microsoft Asia & Vice President 52 1 - - -
Edna Conway Vice President - 1 - - -
Brendan Burns, PhD Vice President - 5 - - -
Alice L. Jolla Chief Accounting Officer & Vice President 55 13 0.001 - -
Jeff Teper, MBA Vice President 57 - - - -
Lila Alexey Tretikov Vice President 43 - - - -
Christopher D. Young, MBA EVP-Business Development, Strategy & Ventures 49 <1 0.001 - -
Omar P. Abbosh, MBA Vice President-Cross Industry Solution 65 1 - - -
Rubén Caballero Vice President-Engineering 53 1 - - -
Mala Anand Vice President-Customer Experience & Success 53 2 - - -
Sháka Rasheed, MBA Managing Director & GM-Capital Markets - 2 - - -
Darryl K. Willis Vice President-Energy 52 2 - - -
David Rhew, MD President & Chief Medical Officer-Healthcare - 2 - - -
Gayle Sheppard Vice President-Azure Data - 2 - - -
Gregory J. Moore, PhD, MD Vice President-Health Technology & Alliances 56 2 - - -
Sophia Velastegui Chief Technology Officer-Operation Applications 45 4 - - -
Rani Borkar VP-Azure Hardware Systems & Infrastructure 59 4 - - -
Sarah R. Bond, MBA Vice President-Gaming Ecosystem 42 4 - - -
Toni Townes-Whitley President-US Regulated Industries 57 6 - - -
Source: FactSet People, Ownership
Management
Company Insider Total

Tuula Rytila Vice President-Seattle Division 54 7 - - -
Chris Carper Director-Customer Success - 8 - - -
Jacqueline Wright Chief Digital Officer 61 10 - - -
Mary Ellen Smith, MBA Vice President-Worldwide Business Operations 61 10 - - -
David Porter Vice President-Microsoft Store 56 12 - - -
Colin Masson Director-Global Industry Marketing & Manufacturing - 14 - - -
Michael T. Ford Head-Global Real Estate & Security 54 16 - - -
Phil Spencer Executive Vice President-Gaming - 18 - - -
Bhavana Bartholf Global Head-Business Development - 21 - - -
Joy Chik Vice President-Identity Division 45 23 - - -
Scott Guthrie Executive VP-Microsoft Cloud & AI Group - 24 - - -
Chia Pin Tu, EMBA General Manager-Beijing 63 27 - - -
Julia Liuson Vice President-Developer Division 50 29 - - -
Yusuf I. Mehdi, MBA Vice President-Modern Life & Devices Group 54 29 - - -
Keith Ranger Dolliver Assistant Secretary 58 - - - -
Bill Duff CFO-Operating Systems Group - - - - -
David M. O'Hara, MBA Chief Financial Officer-Online Services Division - - - - -
Lorraine G. Bardeen CTO-World Wide Enterprise & Commercial Industries 44 - - - -
Vasu Jakkal CVP-Security, Compliance & Identity Marketing - - - - -
Claudia Roessler Director-Agriculture Strategic Partnerships 51 - - - -
Cécile Ferreboeuf Clayes Director-Business Development - - - - -
Bernard Dakar Director-Business Process Transformation - - - - -
Joseph D. Rozek, II Executive Director-Homeland Security - - - - -
Karsten Aagaard Manager-Prototyping Outsource - - - - -
Martin Sacchi Principal - - - - -
Annica Elmehagen Lundquist Senior Account Executive 52 - - - -
Ja-Chin Lee, PhD Senior Director-Energy Strategy 42 - - - -
Edward Kerbs Senior Manager-Worldwide Rewards & Recognition - - - - -
Jeffrey B. Yapp, MBA Strategic Partner 62 - - - -
Lori Wright Vice President-Gaming 43 - - - -
William Stasior, PhD Vice President-Technology - - - - -
Patricia Obermaier Vice President-US Health & Life Science - - - - -
Christopher C. Capossela Chief Marketing Officer & EVP-Consumer Business 51 30 0.001 - -
Rodney Clark General Manager-Samsung Alliance 51 - - - -
Kathleen T. Hogan, MBA Chief People Officer & Executive VP-HR 55 18 0.003 - -
Paula H. Boyd Senior Director-Government & Regulatory Affairs - - - - -
Board Members
Board Insider Total

Satya Nadella, MBA Chairman & Chief Executive Officer 54 7 0.022 $2,500,000 $44,321,788
Emma N. Walmsley Independent Director 52 2 0.000 - -
Penny Sue Pritzker, MBA Independent Director 62 4 0.000 - -
Hugh F. Johnston, MBA Independent Director 60 4 0.000 - -
Reid G. Hoffman Independent Director 53 4 0.000 - -
Sandra E. Peterson Independent Director 62 6 0.000 - -

Padmasree Y. Warrior, PhD Independent Director 60 6 0.000 - -
Teri L. List-Stoll, CPA Independent Director 58 7 0.000 - -
Charlie Scharf, MBA Independent Director 56 7 0.001 - -
John W. Stanton, MBA Independent Director 65 7 0.001 - -
John Wendell Thompson, PhD Lead Independent Director 71 9 0.000 - -

Broker Research
DEFENSE WINS CHAMPIONSHIPS
EVITAR CORTE, A TAIL RISK HEDGE FROM STOCK TRADERS DAILY, HAS HELPED
PORTFOLIOS PROTECT THEMSELVES FROM MARKET CRASHES SINCE 2000.
Request Access to Evitar Corte by visiting Stock Traders Daily. There, you will see a trial form. This will
allow you to investigate this in detail. Once you have done this, then select one of the access options
Trial Access:
Evitar Corte, Our Market Analysis, & Trading Reports
Biggest Readers of our Research include Blackrock, Two Sigma, Invictus, Citadel, RenTech, etc.
www.stocktradersdaily.com
MSFT
Sep 01
2021
Suggestion
Start with the longer term
trading plans
MSFT (MICROSOFT)
Recently trading at: 302.45 September 1, 2021, 3:15 pm ET
Technical Summary
Term → Near Mid Long
Bias Neutral Strong Strong
P1 0 0 266.14
P2 299.20 302.19 278.43
P3 302.16 308.76 291.53
Suggestion: Start with the longer term trading plans.
The technical summary data above is used to determine trading

plans; it has been derived using our proprietary algorithms. To Market Analysis Technical
obtain an updated report, please click here: UPDATE THIS REPORT
DOW S&P
NASDAQ RUSSELL
Long Term Trading Plans for MSFT

September 1, 2021, 3:15 pm ET
Buy near support, sell or short near resistance, and take advantage of the opportunities this stock
provides. The BLUE dot is the current price, the RED dots are resistance levels, and the GREEN are
support levels. Review the trading plans below. We like tight stops.
Technical Summary: 266.14, 278.43, 291.53, 302.45 , Where 302.45 = the recent price
Legend
Stock Finder
Current stock price
Support level Find a Stock to Buy or Short
Resistance level
Buy This Stock - Long Term Trades Short This Stock - Long Term Trades
MSFT - (Long) Support Plan MSFT - (Short) Resistance Plan

Buy over 291.53 target n/a stop loss @ 290.69. NONE .
The technical summary data tells us to buy MSFT NONE .

near 291.53, but there is no current upside target There are no current resistance levels from the
from the summary table. In this case we should summary table, and therefore there are no Short
wait until either an update to the summary table resistance Plans which tell us to short upon tests
has been made (which usually happens at the of resistance. Resistance levels have broken
beginning of every trading day), or until the higher and unless the stock reverses lower and
position has been stopped. The data does tell us below support levels again short positions look
to set a stop loss 290.69 to protect against risky.
excessive loss in case the stock begins to move
against the trade. 291.53 is the first level of
support below 302.45, and by rule, any test of
support is a buy signal. In this case, if support
291.53 is being tested, a buy signal would exist. MSFT - (Short) Support Plan
Short under 291.53 target 278.43 stop loss @ 292.37
The technical summary data is suggesting a short

MSFT - (Long) Resistance Plan of MSFT if it breaks below 291.53 with a downside
NONE.
target of 278.43. we should also have a stop loss
in place at 292.37 according to the data. 291.53 is
first level of support below 302.45, and by rule,
NONE. any break below support is a short signal. In this
There are no current resistance levels from the case, if support 291.53 is breaking lower, a short
summary table, and therefore there are no Long signal would exist.
Resistance Plans which tell us to buy the stock.
This should be considered a bullish sign and
unless the stock breaks below support additional
up moves are likely. The data is telling us to buy
the stock when it tests support only. This can be
used as a tool to avoid ?chasing? stocks; it
requires you to wait for a test of support again
before buying..
Swing Trading Plans for MSFT

Technical Summary: 266.14, 278.43, 291.53, 302.19, 302.45 , 308.76, Where 302.45 = the recent
price
Legend
Stock Finder
Current stock price
Resistance level
Buy This Stock - Swing Trades Short This Stock - Swing Trades
MSFT - (Long) Resistance Plan MSFT - (Short) Resistance Plan

Buy over 308.76, target n/a, Stop Loss @ 307.87 Short near 308.76, target 302.19, Stop Loss @ 309.65.
If 308.76 begins to break higher, the technical The technical summary data is suggesting a short
summary data tells us to buy MSFT just over of MSFT if it tests 308.76 with a downside target
308.76, with an upside target of n/a. The data also of 302.19. We should have a stop loss in place at
tells us to set a stop loss @ 307.87 in case the 309.65 though in case the stock begins to move
stock turns against the trade. 308.76 is the first against the trade. By rule, any test of resistance is
level of resistance above 302.45, and by rule, any a short signal. In this case, if resistance, 308.76, is
break above resistance is a buy signal. In this being tested a short signal would exist. Because
case, 308.76, initial resistance, would be breaking this plan is a short plan based on a test of
higher, so a buy signal would exist. Because this resistance it is referred to as a Short Resistance
plan is based on a break of resistance, it is Plan.
referred to as a Long Resistance Plan.
MSFT - (Long) Support Plan MSFT - (Short) Support Plan
Buy near 302.19, target 308.76, Stop Loss @ 301.32 Short under 302.19, target 291.53, Stop Loss @ 303.06
Buy near 302.19, target 308.76, Stop Loss @ Buy near 302.19, target 308.76, Stop Loss @
301.32The technical summary data tells us to buy 301.32The technical summary data tells us to buy
MSFT near 302.19 with an upside target of 308.76. MSFT near 302.19 with an upside target of 308.76.
This data also tells us to set a stop loss @ 301.32 This data also tells us to set a stop loss @ 301.32
to protect against excessive loss in case the stock to protect against excessive loss in case the stock
begins to move against the trade. 302.19 is the begins to move against the trade. 302.19 is the
first level of support below 302.45, and by rule, first level of support below 302.45, and by rule,
any test of support is a buy signal. In this case, any test of support is a buy signal. In this case,
302.19, initial support, would be tested, so a buy 302.19, initial support, would be tested, so a buy
signal would exist. Because this plan is based on signal would exist. Because this plan is based on
a test of support it is referred to as a Long a test of support it is referred to as a Long
Support Plan. Support Plan.
Day Trading Plans for MSFT

Technical Summary: 266.14, 278.43, 291.53, 299.20, 302.19, 302.45 , 308.76, Where 302.45 = the
recent price
Legend
Stock Finder
Current stock price
Resistance level
Buy This Stock - Day Trades Short This Stock - Day Trades
MSFT - (Long) Resistance Plan

Buy over 308.76, target n/a, Stop Loss @ 308.04
MSFT - (Short) Resistance Plan
Short near 308.76, target 302.19, Stop Loss @ 309.48.
If 308.76 begins to break higher, the technical The technical summary data is suggesting a short
summary data tells us to buy MSFT just over of MSFT if it tests 308.76 with a downside target
308.76, with an upside target of n/a. The data also of 302.19. We should have a stop loss in place at
tells us to set a stop loss @ 308.04 in case the 309.48 though in case the stock begins to move
stock turns against the trade. 308.76 is the first against the trade. By rule, any test of resistance is
level of resistance above 302.45, and by rule, any a short signal. In this case, if resistance, 308.76, is
break above resistance is a buy signal. In this being tested a short signal would exist. Because
case, 308.76, initial resistance, would be breaking this plan is a short plan based on a test of
higher, so a buy signal would exist. Because this resistance it is referred to as a Short Resistance
plan is based on a break of resistance, it is Plan.
referred to as a Long Resistance Plan.
MSFT - (Long) Support Plan
Buy near 302.19, target 308.76, Stop Loss @ 301.48
MSFT - (Short) Support Plan
Short under 302.19, target 299.20, Stop Loss @ 302.9
Buy near 302.19, target 308.76, Stop Loss @

301.48The technical summary data tells us to buy Buy near 302.19, target 308.76, Stop Loss @
MSFT near 302.19 with an upside target of 308.76. 301.48The technical summary data tells us to buy
This data also tells us to set a stop loss @ 301.48 MSFT near 302.19 with an upside target of 308.76.
to protect against excessive loss in case the stock This data also tells us to set a stop loss @ 301.48
begins to move against the trade. 302.19 is the to protect against excessive loss in case the stock
first level of support below 302.45, and by rule, begins to move against the trade. 302.19 is the
any test of support is a buy signal. In this case, first level of support below 302.45, and by rule,
302.19, initial support, would be tested, so a buy any test of support is a buy signal. In this case,
signal would exist. Because this plan is based on 302.19, initial support, would be tested, so a buy
a test of support it is referred to as a Long signal would exist. Because this plan is based on
Support Plan. a test of support it is referred to as a Long
Support Plan.
Fundamental Charts
Find the Fundamental Charts for MSFT below. With a focus on earnings growth valuation, these charts help
define the underlying company.
MSFT EPS Analysis

MSFT Revenue
MSFT Growth Rate - Quartely
MSFT P/E Chart

MSFT PEG
Powered by TCPDF (www.tcpdf.org)

RELIABLE RESEARCH
Closing Price as of 08/20/2021: $304.36
Dividend Yield: 0.7%
Period End Date: 06/30/2021
Microsoft Corporation (MSFT) 3 - Neutral

NASDAQ - Technology
Price 08/20/2021: $304.36
Investment Recommendation Economic Book Value per share $138.63
52-Week Range $194.47 - $305.84
• We do not recommend investors buy MSFT.
• MSFT earns our Neutral rating. See Investment
Rating Details below.
• A Neutral rating means this stock’s upside
potential is about equal to its downside risk.
• MSFT ranks in the 55th percentile of the 2800+
stocks we cover.
• Ranks 145th out of 465 Technology Sector
stocks.
Investment Rating Details
Risk/Reward Quality of Earnings Valuation

Rating Economic vs Return on Invested Growth Appreciation
FCF Yield Price-to-EBV Ratio Period (yrs)
Reported EPS Capital (ROIC)
5 - Very Unattractive Misleading Trend Bottom Quintile <-5% > 3.5 or -1 < 0 > 50
4 - Unattractive False Positive 4th Quintile -5%<-1% 2.4 < 3.5 or < -1 20 < 50
3 - Neutral Neutral EE 3rd Quintile -1%<3% 1.6 < 2.4 10 < 20
2 - Attractive Positive EE 2nd Quintile 3%<10% 1.1 < 1.6 3 < 10
1 - Very Attractive Rising EE Top Quintile >10% 0 < 1.1 0<3
Accounting vs Economic Earnings Accounting Adjustments Summary

• MSFT's accounting earnings overstate its economic earnings,
which equal (ROIC - WACC) * Average Invested Capital.
• For MSFT, we made a total of $206,141 million in income
statement and balance sheet adjustments to convert accounting
earnings to economic earnings in FY21.
• We made $223,429 million in adjustments in our DCF valuation
of the stock.
• We make, in general, 10 types of income statement adjustments
to derive NOPAT, 12 types of balance sheet adjustments to
derive Average Invested Capital, & 10 types of valuation
adjustments in our reverse DCF valuation models.
Analyst Notes Trust More Reliable Data About New Constructs

• Best fundamental data in the world, proven in
Analyst Notes are only available to We empower you with superior fundamental data. the Journal of Financial Economics
members of our website. They provide
additional insights and alert clients to • Best research, see appendix of this paper
important corporate events or disclosures See the PROOF
that can impact investment decisions. • Superior stock ratings: our Robo-Analyst
outperforms human analysts
• Best Investment Research Tech: Benzinga's
We democratize access to the truth about
Global Fintech Winner
earnings.
Page 1
www.newconstructs.com Microsoft Corporation (MSFT)
RELIABLE RESEARCH
08/21/2021
Economic vs Reported Earnings
Economic Earnings are 1 - Very Attractive

Economic Earnings are almost always meaningfully different
than reported earnings. We believe Economic Earnings provide
a truer measure of profitability and shareholder value creation
than reported earnings because they have been adjusted to
remove over twenty accounting distortions.
The majority of data required to reverse accounting distortions is

available only in the Footnotes and MD&A, which we analyze
rigorously. Our core competency is gathering and analyzing all
relevant financial data from filings so that we can deliver
earnings analysis that best represents the true profitability of
businesses.
Appendix 1 in the report available to members of our website

provides a detailed reconciliation between economic and
accounting earnings.
Return on Invested Capital (ROIC)
ROIC is 1 - Very Attractive

ROIC measures a company's return on all cash invested in the
business. It is the truest measure of profitability. Stock valuations
are more highly correlated to ROIC than any other metric. ROIC
is calculated as NOPAT divided by Average Invested Capital.
Weighted-Average Cost of Capital (WACC) is the average of debt

and equity capital costs that all publicly traded companies with
debt and equity stakeholders incur as a cost of operating.
Companies must earn an ROIC greater than WACC to generate

positive economic earnings and create value for shareholders.
Appendix 1 in the report available to members of our website

provides details on all the accounting adjustments we make to
provide the best ROIC in the business. This paper compares our
ROIC for a mega cap company to other major providers.
Free Cash Flow Yield (FCF Yield)
Free Cash Flow Yield is 3 - Neutral

Free Cash Flow reflects the amount of cash free for distribution to
all stakeholders (including debt & equity). FCF Yield divides free
cash flow by enterprise value.
Using Free Cash Flow Yield to pick stocks is not a new strategy.
However, our strategy yields superior results because we use a
better measure of Free Cash Flow. In the same way our
Economic EPS are better measures of profitability than reported
EPS, our measure of Free Cash Flow is better than traditional
accounting-based Free Cash Flow.
Appendix 1 in the reports available members of our website

provides the income statement and balance sheet adjustments
required for an accurate measure of FCF.
Page 2
RELIABLE RESEARCH
08/21/2021
Price-to-EBV Ratio
Price-to-EBV Ratio is 3 - Neutral

Price-to-Economic Book Value (EBV) measures the difference
between the market's expectations for future profits and the
no-growth value of the stock.
EBV measures the no-growth value of the company based on the

company's current Net Operating Profit After Tax (NOPAT).
When prices are higher than EBV, the market predicts the NOPAT
of the company will increase and expectations for profit growth
are reflected in the stock. If the stock price equals EBV, the
market predicts NOPAT will remain the same and there are no
expectations for profit growth reflected in the stock. When
stock prices are lower than EBV, the market predicts NOPAT will
decrease and expectations for permanent profit decline are
reflected in the stock.
In general, we like to buy stocks with low expectations for profit

growth and sell/short stocks with high expectations for profit
growth.
Appendix 2 in the reports available to member of our website

details all the valuation adjustments required for an accurate
measure of economiv book value.
Growth Appreciation Period
The Growth Appreciation Period is 3 - Neutral

Historical Performance Market Expectations
The market-implied duration of profit growth or GAP measures Performance Hurdles
the number of years the company must maintain an edge over its 5 Yr 3Yr Last FY
Default
competitors by earning ROIC greater than the weighted-average based on current price
cost of capital on new investments. Stock Price $68.93 $133.96 $270.90 $304.36
We believe MSFT embeds a Neutral level of market expectations
Revenue CAGR 16.9% 15.6% 17.5% 8.7%
because there is a healthy difference between the expected
financial performance implied by its market price and the ROIC - WACC 28.6% 32.6% 39.6% 42.6%
company's historical performance.
Growth Appreciation Period - - - 13 years
At MSFT's current stock price of $304.36, the market is expecting
revenue to grow at 8.7% for the next 13 years. Over this period,
MSFT is also expected to generate an average Economic
Earnings Margin of 42.6%.
These results are derived using our dynamic discounted cash

flow model.
Learn More
Members of our website get exclusive access to more data and detailed analytics on the 10,000 securities we cover. Stock reports from our
website include detailed information on the number and dollar value of every income statement, balance sheet and DCF valuation
adjustments we make.
Members also get exclusive access to multiple model portfolios, weekly Long Ideas, and Danger Zone calls, IPO Research, Market
Outlooks, Webinars and thought leadership on Machine Learning & AI for Investing and Fiduciary Rule fulfillment.
Members get advanced screening capabilities on our best-in-class metrics like ROIC and Free Cash Flow Yield and alerts whenever there
are changes to any of the securities in your custom portfolio.
Take a free tour and get a risk-free trial today!
Page 3
RELIABLE RESEARCH
08/21/2021
Appendix: Explanation of New Constructs' Stock Ratings
Ratings
In-depth risk/reward analysis underpins our stock rating. Our stock rating methodology grades every stock according to what
we believe are the 5 most important criteria for assessing the quality of a stock. Each grade reflects the balance of potential
risk and reward of buying that stock. Our analysis results in the 5 ratings described below. Very Attractive and Attractive
correspond to a "Buy" rating, Very Unattractive and Unattractive correspond to a "Sell" rating, while Neutral corresponds to a
"Hold" rating.
Quality of Earnings Valuation

Risk/Reward Rating
Economic vs Return on Invested FCF Yield Price-to-EBV Ratio Growth
Reported EPS Capital (ROIC) Appreciation Period
5 -Very Unattractive Misleading Trend Bottom Quintile < -5% > 3.5 or -1 < 0 > 50
4 - Unattractive False Positive 4th Quintile -5% < -1% 2.4 < 3.5 or < -1 20 < 50
3 - Neutral Neutral EE 3rd Quintile -1% < 3% 1.6 < 2.4 10 < 20
2 - Attractive Positive EE 2nd Quintile 3% < 10% 1.1 < 1.6 3 < 10
1 - Very Attractive Rising EE Top Quintile > 10% 0 < 1.1 0<3
Ratings
Economic earnings and return on capital metrics are significantly more accurate when as-reported financial statements have
been adjusted to reverse accounting distortions and Red Flags. The majority of the data required to reverse accounting
distortions is available only in the Notes to the Financial Statements, which we analyze rigorously. Our core competency is
gathering and analyzing all relevant financial data (from the Financial Statements and Notes) so that we can deliver
earnings analysis that best represents the true profitability of businesses. See the figure below for a list of the Red Flag
adjustments we make to a company's reported GAAP profits in order to reverse accounting distortions and arrive at a better
measure of a firm's profits.
Accounting Issues and Red Flags that Distort GAAP

• Employee Stock Options • Off-Balance-Sheet Financing
• Pension Over/Under Funding • LIFO Reserve
• Excess Cash • Unrealized Gains/Losses
• Restructuring Charges • Goodwill Amortization
• Pooling Goodwill • Unconsolidated Subsidiaries
• Minority Interests • Capitalized Expenses
• Discontinued Operations • Deferred Compensation
• Preferred Stock • Net Deferred tax Assets and Liabilities
• Mid-Year Acquisitions
Page 4
RELIABLE RESEARCH
08/21/2021
It's Official: We Offer the Best Fundamental Data in the World

Many firms claim their research is superior, but none of them can prove it with independent studies from highly-respected institutions as we can. Three
different papers from both the public and private sectors show:
1. Legacy fundamental datasets suffer from significant inaccuracies, omissions, and biases.
2. Only our "novel database" enables investors to overcome these flaws and apply reliable fundamental data in their research.
3. Our proprietary measures of Core Earnings and Earnings Distortion materially improve stock picking and forecasting of profits.
Best Fundamental Data in the World

Forthcoming in The Journal of Financial Economics, a top peer-reviewed journal, Core Earnings: New Data & Evidence proves our Robo-Analyst
technology overcomes material shortcomings in legacy firms' data collection processes to provide superior fundamental data, earnings models, and
research. More details.
Key quotes from the paper:

• "[New Constructs'] Total Adjustments differs significantly from the items identified and excluded from Compustat's adjusted earnings
measures. For example... 50% to 70% of the variation in Total Adjustments is not explained by S&P Global's (SPGI) Adjustments individually."
-pp. 14, 1st para.
• "A final source of differences [between New Constructs' and S&P Global's data] is due to data collection oversights... we identified
cases where Compustat did not collect information relating to firms' income that is useful in assessing core earnings." - pp. 16, 2nd
para.
Superior Models
A top accounting firm features the superiority of our ROIC, NOPAT, and Invested Capital research to Capital IQ & Bloomberg's in Getting ROIC Right. See
the Appendix for direct comparison details.
• "...an accurate calculation of ROIC requires more diligence than often occurs in some of the common, off-the-shelf ROIC
calculations. Only by scouring the footnotes and the MD&A [as New Constructs does] can investors get an accurate
calculation of ROIC." -pp. 8, 5th para.
• "The majority of the difference... comes from New Constructs' machine learning approach, which leverages technology to calculate
ROIC by applying accounting adjustments that may be buried deeply in the footnotes across thousands of companies." -pp. 4, 2nd
para.
Superior Stock Ratings

Robo-Analysts' stock ratings outperform those from human analysts as shown in this paper from Indiana's Kelley School of business. Bloomberg features the
paper here.

• "the portfolios formed following the buy recommendations of Robo-Analysts earn abnormal returns that are statistically and
economically significant." -pp. 6, 3rd para.
• "Our results ultimately suggest that Robo-Analysts are a valuable, alternative information intermediary to traditional sell-side
analysts." -pp. 20, 3rd para.
Our mission is to provide the best fundamental analysis of public and private businesses in the world and make it affordable for all investors, not just Wall
Street insiders.
We believe every investor deserves to know the whole truth about the profitability and valuation of any company they consider for investment. More details on
our cutting-edge technology and how we use it are here.
Page 5
RELIABLE RESEARCH
08/21/2021
DISCLOSURES
New Constructs®, LLC (together with any subsidiaries and/or affiliates, 'New Constructs') is an independent organization with no management ties to the companies it covers.
None of the members of New Constructs' management team or the management team of any New Constructs' affiliate holds a seat on the Board of Directors of any of the
companies New Constructs covers. New Constructs does not perform any investment or merchant banking functions and does not operate a trading desk.
New Constructs' Stock Ownership Policy prevents any of its employees or managers from engaging in Insider Trading and restricts any trading whereby an employee may
exploit inside information regarding our stock research. In addition, employees and managers of the company are bound by a code of ethics that restricts them from purchasing
or selling a security that they know or should have known was under consideration for inclusion in a New Constructs report nor may they purchase or sell a security for the first
15 days after New Constructs issues a report on that security.
DISCLAIMERS
The information and opinions presented in this report are provided to you for information purposes only and are not to be used or considered as an offer or solicitation of an offer
to buy or sell securities or other financial instruments. New Constructs has not taken any steps to ensure that the securities referred to in this report are suitable for any particular
investor and nothing in this report constitutes investment, legal, accounting or tax advice. This report includes general information that does not take into account your individual
circumstance, financial situation or needs, nor does it represent a personal recommendation to you. The investments or services contained or referred to in this report may not
be suitable for you and it is recommended that you consult an independent investment advisor if you are in doubt about any such investments or investment services.
Information and opinions presented in this report have been obtained or derived from sources believed by New Constructs to be reliable, but New Constructs makes no
representation as to their accuracy, authority, usefulness, reliability, timeliness or completeness. New Constructs accepts no liability for loss arising from the use of the
information presented in this report, and New Constructs makes no warranty as to results that may be obtained from the information presented in this report. Past performance
should not be taken as an indication or guarantee of future performance, and no representation or warranty, express or implied, is made regarding future performance.
Information and opinions contained in this report reflect a judgment at its original date of publication by New Constructs and are subject to change without notice. New Constructs
may have issued, and may in the future issue, other reports that are inconsistent with, and reach different conclusions from, the information presented in this report. Those
reports reflect the different assumptions, views and analytical methods of the analysts who prepared them and New Constructs is under no obligation to insure that such other
reports are brought to the attention of any recipient of this report.
New Constructs' reports are intended for distribution to its professional and institutional investor customers. Recipients who are not professionals or institutional investor
customers of New Constructs should seek the advice of their independent financial advisor prior to making any investment decision or for any necessary explanation of its
contents.
This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or jurisdiction
where such distribution, publication, availability or use would be contrary to law or regulation or which would be subject New Constructs to any registration or licensing
requirement within such jurisdiction.
This report may provide the addresses of websites. Except to the extent to which the report refers to New Constructs own website material, New Constructs has not reviewed
the linked site and takes no responsibility for the content therein. Such address or hyperlink (including addresses or hyperlinks to New Constructs own website material) is
provided solely for your convenience and the information and content of the linked site do not in any way form part of this report. Accessing such websites or following such
hyperlink through this report shall be at your own risk.
All material in this report is the property of, and under copyright, of New Constructs. None of the contents, nor any copy of it, may be altered in any way, copied, or distributed or
transmitted to any other party without the prior express written consent of New Constructs. All trademarks, service marks and logos used in this report are trademarks or service
marks or registered trademarks or service marks of New Constructs.
Copyright New Constructs, LLC 2003 through the present date. All rights reserved.
Page 6

Microsoft Corporation

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Microsoft Corporation

Uploaded by

Copyright:

Available Formats

Microsoft Corporation MSFT-USA

09 Sep 21 Public Information Book

Sales & Earnings

11 Sales & Earnings

39 StreetAccount Summary: The Economist print edition

40 StreetAccount Summary: The Economist print edition

45 Microsoft Corp.(MSFT-US), Q4 2021 Earnings Call, 27-July-2021 5:30 PM ET

65 Microsoft Corp. Q3 2021 Earnings Call

Management & Board

88 Management and Board

Sector Industry Mkt Cap (B) EV (B) Sales (B)

Estimates Net Margin 36.5 16.0 8.2

© 2021 FactSet Research Systems, Inc.

Upcoming Events EPS Sales

27 Jan '22 - Q2 2022 Earnings Release (Projected)

28 Apr '22 - Q3 2022 Earnings Release (Projected)

21 Jul '22 - Q4 2022 Earnings Release (Projected)

Past Events EPS Sales

09 Jun '21 04:15 PM Morgan Stanley Sustainable Futures

07 Jun '21 11:45 AM Evercore TMT Conference

25 May '21 02:10 PM J.P. Morgan Global Virtual Technology,

17 May '21 - RSA Conference

12 Apr '21 11:00 AM Acquisition of Nuance Communications,

12 Apr '21 - GPU Technology Conference

© 2021 FactSet Research Systems, Inc.

© 2021 FactSet Research Systems, Inc.

Management (6 of 65) Board (6 of 11)

One Microsoft Way Michael Spencer Fiscal Year June

NET POSITION CHANGE -17,563,468

© 2021 FactSet Research Systems, Inc.

Top Holders - Institutions and Insiders

© 2021 FactSet Research Systems, Inc.

Segments Snapshot - Quarterly (B)

Jun '21 YoY % % of Sales Sep '21E YoY % 3Y Trend

Estimate Growth - Quarterly

Sep '20 Sep '21E Growth (YoY%)

Sep '20 Sep '21E Growth (YoY%)

© 2021 FactSet Research Systems, Inc.

EPS - Consensus Outlook - Annual & Quarterly

Segments LT Estimates - Annual (B)

© 2021 FactSet Research Systems, Inc.

© 2021 FactSet Research Systems, Inc.

Sales - Consensus Trend - Annual (B)

Sales - Broker Detail - Sep '21E (B)

Consensus Guidance # of Brokers

Top 14 Brokers Research Estimate Bottom 13 Brokers Research Estimate

© 2021 FactSet Research Systems, Inc.

Sales - Broker Revisions - Sep '21E (B)

Consensus Guidance 1M Revision 1W Revision

© 2021 FactSet Research Systems, Inc.

EPS - Consensus Trend - Annual

EPS - Broker Detail - Sep '21E

Consensus Guidance # of Brokers

Top 15 Brokers Research Estimate Bottom 14 Brokers Research Estimate

© 2021 FactSet Research Systems, Inc.

EPS - Broker Revisions - Sep '21E

Consensus Guidance 1M Revision 1W Revision

© 2021 FactSet Research Systems, Inc.

Valuation Peers Analysis

Microsoft IBM Oracle SAP (SAP- Broadcom salesforce com

© 2021 FactSet Research Systems, Inc.

Price to Earnings - NTM

© 2021 FactSet Research Systems, Inc.

© 2021 FactSet Research Systems, Inc.