Cover and table of contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the Quarterly Period Ended December 31, 2023
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the Transition Period From to

Commission File Number 001-37845

MICROSOFT CORPORATION

Washington		91-1144442
(STATE OF INCORPORATION)		(I.R.S. ID)

ONE MICROSOFT WAY**,** REDMOND**,** Washington 98052-6399

(425) 882-8080

www.microsoft.com/investor

Securities registered pursuant to Section 12(b) of the Act:
Title of each class		Trading Symbol		Name of exchange on which registered
Common stock, $0.00000625 par value per share		MSFT		Nasdaq
3.125% Notes due 2028		MSFT		Nasdaq
2.625% Notes due 2033		MSFT		Nasdaq

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ☒		Accelerated Filer ☐
Non-accelerated Filer ☐		Smaller Reporting Company ☐
		Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class		Outstanding as of January 25, 2024
Common Stock, $0.00000625 par value per share		7,430,436,229 shares

MICROSOFT CORPORATION

FORM 10-Q

For the Quarter Ended December 31, 2023

INDEX

				Page
PART I.	FINANCIAL INFORMATION
	Item 1.	Financial Statements
		a)	Income Statements for the Three and Six Months Ended December 31, 2023 and 2022	3
		b)	Comprehensive Income Statements for the Three and Six Months Ended December 31, 2023 and 2022	4
		c)	Balance Sheets as of December 31, 2023 and June 30, 2023	5
		d)	Cash Flows Statements for the Three and Six Months Ended December 31, 2023 and 2022	6
		e)	Stockholders’ Equity Statements for the Three and Six Months Ended December 31, 2023 and 2022	7
		f)	Notes to Financial Statements	8
		g)	Report of Independent Registered Public Accounting Firm	30
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		31
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk		48
	Item 4.	Controls and Procedures		48
PART II.	OTHER INFORMATION
	Item 1.	Legal Proceedings		49
	Item 1A.	Risk Factors		49
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		63
	Item 5.	Other Information		64
	Item 6.	Exhibits		65
SIGNATURE				67

PART I

Item 1

PART I. FINANCI****AL INFORMATION

ITEM 1. FINANCI****AL STATEMENTS

INCOME STA****TEMENTS

(In millions, except per share amounts) (Unaudited)		Three Months Ended December 31,								Six Months Ended December 31,
		2023			2022					2023			2022
Revenue:
Product		$	18,941		$	16,517			$	34,476		$	32,258
Service and other			43,079			36,230				84,061			70,611
Total revenue			62,020			52,747				118,537			102,869
Cost of revenue:
Product			5,964			5,690				9,495			9,992
Service and other			13,659			11,798				26,430			22,948
Total cost of revenue			19,623			17,488				35,925			32,940
Gross margin			42,397			35,259				82,612			69,929
Research and development			7,142			6,844				13,801			13,472
Sales and marketing			6,246			5,679				11,433			10,805
General and administrative			1,977			2,337				3,451			3,735
Operating income			27,032			20,399				53,927			41,917
Other expense, net			**(**506	)		(60	)			**(**117	)		(6	)
Income before income taxes			26,526			20,339				53,810			41,911
Provision for income taxes			4,656			3,914				9,649			7,930
Net income		$	21,870		$	16,425			$	44,161		$	33,981
Earnings per share:
Basic		$	2.94		$	2.20			$	5.94		$	4.56
Diluted		$	2.93		$	2.20			$	5.92		$	4.54
Weighted average shares outstanding:
Basic			7,432			7,451				7,431			7,454
Diluted			7,468			7,473				7,465			7,479

Refer to accompanying notes.

PART I

Item 1

COMPREHENSIVE IN****COME STATEMENTS

(In millions) (Unaudited)		Three Months Ended December 31,						Six Months Ended December 31,
		2023			2022				2023			2022
Net income		$	21,870		$	16,425		$	44,161		$	33,981
Other comprehensive income (loss), net of tax:
Net change related to derivatives			**(**3	)		(32	)		18			(25	)
Net change related to investments			1,331			348			1,071			(1,549	)
Translation adjustments and other			660			570			305			(205	)
Other comprehensive income (loss)			1,988			886			1,394			(1,779	)
Comprehensive income		$	23,858		$	17,311		$	45,555		$	32,202

Refer to accompanying notes.

PART I

Item 1

BALANCE SHEETS

(In millions) (Unaudited)
		December 31, 2023				June 30, 2023
Assets
Current assets:
Cash and cash equivalents		$	17,305			$	34,704
Short-term investments			63,712				76,558
Total cash, cash equivalents, and short-term investments			81,017				111,262
Accounts receivable, net of allowance for doubtful accounts of **$**591 and $650			42,831				48,688
Inventories			1,615				2,500
Other current assets			21,930				21,807
Total current assets			147,393				184,257
Property and equipment, net of accumulated depreciation of **$**72,949 and $68,251			112,308				95,641
Operating lease right-of-use assets			16,398				14,346
Equity investments			13,367				9,879
Goodwill			118,931				67,886
Intangible assets, net			29,896				9,366
Other long-term assets			32,265				30,601
Total assets		$	470,558			$	411,976
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable		$	17,695			$	18,095
Short-term debt			27,041				0
Current portion of long-term debt			2,250				5,247
Accrued compensation			8,813				11,009
Short-term income taxes			5,787				4,152
Short-term unearned revenue			43,068				50,901
Other current liabilities			16,362				14,745
Total current liabilities			121,016				104,149
Long-term debt			44,928				41,990
Long-term income taxes			25,890				25,560
Long-term unearned revenue			2,966				2,912
Deferred income taxes			2,548				433
Operating lease liabilities			14,155				12,728
Other long-term liabilities			20,787				17,981
Total liabilities			232,290				205,753
Commitments and contingencies
Stockholders’ equity:
Common stock and paid-in capital – shares authorized 24,000; outstanding 7,432 and 7,432			97,480				93,718
Retained earnings			145,737				118,848
Accumulated other comprehensive loss			**(**4,949	)			(6,343	)
Total stockholders’ equity			238,268				206,223
Total liabilities and stockholders’ equity		$	470,558			$	411,976

Refer to accompanying notes.

PART I

Item 1

CASH FLOWS STATEMENTS

(In millions) (Unaudited)		Three Months Ended December 31,									Six Months Ended December 31,
		2023				2022					2023				2022
Operations
Net income		$	21,870			$	16,425			$	44,161			$	33,981
Adjustments to reconcile net income to net cash from operations:
Depreciation, amortization, and other			5,959				3,648				9,880				6,438
Stock-based compensation expense			2,828				2,538				5,335				4,730
Net recognized losses on investments and derivatives			198				214				212				192
Deferred income taxes			**(**1,702	)			(1,305	)			**(**2,270	)			(2,496	)
Changes in operating assets and liabilities:
Accounts receivable			**(**2,951	)			(3,164	)			8,083				8,565
Inventories			1,474				1,305				969				762
Other current assets			725				(392	)			**(**71	)			(724	)
Other long-term assets			**(**1,427	)			(65	)			**(**3,440	)			(731	)
Accounts payable			**(**2,521	)			(2,058	)			**(**1,307	)			(3,625	)
Unearned revenue			**(**5,538	)			(5,186	)			**(**9,664	)			(8,508	)
Income taxes			**(**1,554	)			(2,863	)			**(**129	)			(2,453	)
Other current liabilities			1,518				1,819				**(**2,588	)			(2,205	)
Other long-term liabilities			**(**26	)			257				265				445
Net cash from operations			18,853				11,173				49,436				34,371
Financing
Proceeds from issuance (repayments) of debt, maturities of 90 days or less, net			**(**8,490	)			0				10,202				0
Proceeds from issuance of debt			10,773				0				17,846				0
Repayments of debt			**(**2,916	)			(750	)			**(**4,416	)			(1,750	)
Common stock issued			261				243				946				818
Common stock repurchased			**(**4,000	)			(5,459	)			**(**8,831	)			(11,032	)
Common stock cash dividends paid			**(**5,574	)			(5,066	)			**(**10,625	)			(9,687	)
Other, net			**(**201	)			(317	)			**(**508	)			(581	)
Net cash from (used in) financing			**(**10,147	)			(11,349	)			4,614				(22,232	)
Investing
Additions to property and equipment			**(**9,735	)			(6,274	)			**(**19,652	)			(12,557	)
Acquisition of companies, net of cash acquired, and purchases of intangible and other assets			**(**65,029	)			(679	)			**(**66,215	)			(1,028	)
Purchases of investments			**(**4,258	)			(11,599	)			**(**12,718	)			(16,612	)
Maturities of investments			4,150				6,928				19,868				13,590
Sales of investments			1,600				4,775				6,930				7,486
Other, net			1,347				(301	)			365				(1,161	)
Net cash used in investing			**(**71,925	)			(7,150	)			**(**71,422	)			(10,282	)
Effect of foreign exchange rates on cash and cash equivalents			72				88				**(**27	)			(142	)
Net change in cash and cash equivalents			**(**63,147	)			(7,238	)			**(**17,399	)			1,715
Cash and cash equivalents, beginning of period			80,452				22,884				34,704				13,931
Cash and cash equivalents, end of period		$	17,305			$	15,646			$	17,305			$	15,646

Refer to accompanying notes.

PART I

Item 1

STOCKHOLDERS’ EQ****UITY STATEMENTS

(In millions, except per share amounts) (Unaudited)		Three Months Ended December 31,									Six Months Ended December 31,
		2023				2022					2023				2022
Common stock and paid-in capital
Balance, beginning of period		$	95,508			$	88,535			$	93,718			$	86,939
Common stock issued			261				243				946				818
Common stock repurchased			**(**1,300	)			(1,090	)			**(**2,701	)			(2,261	)
Stock-based compensation expense			2,828				2,538				5,335				4,730
Other, net			183				(1	)			182				(1	)
Balance, end of period			97,480				90,225				97,480				90,225
Retained earnings
Balance, beginning of period			132,143				92,374				118,848				84,281
Net income			21,870				16,425				44,161				33,981
Common stock cash dividends			**(**5,574	)			(5,059	)			**(**11,145	)			(10,123	)
Common stock repurchased			**(**2,702	)			(4,372	)			**(**6,127	)			(8,771	)
Balance, end of period			145,737				99,368				145,737				99,368
Accumulated other comprehensive loss
Balance, beginning of period			**(**6,937	)			(7,343	)			**(**6,343	)			(4,678	)
Other comprehensive income (loss)			1,988				886				1,394				(1,779	)
Balance, end of period			**(**4,949	)			(6,457	)			**(**4,949	)			(6,457	)
Total stockholders’ equity		$	238,268			$	183,136			$	238,268			$	183,136
Cash dividends declared per common share		$	0.75			$	0.68			$	1.50			$	1.36

Refer to accompanying notes.

PART I

Item 1

NOTES TO FINANCI****AL STATEMENTS

(Unaudited)

NOTE 1 — ACCOUNTING POLICIES

Accounting Principles

Our unaudited interim consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, the unaudited interim consolidated financial statements reflect all adjustments of a normal recurring nature that are necessary for a fair presentation of the results for the interim periods presented. Interim results are not necessarily indicative of results for a full year. The information included in this Form 10-Q should be read in conjunction with information included in the Microsoft Corporation fiscal year 2023 Form 10-K filed with the U.S. Securities and Exchange Commission on July 27, 2023.

We have recast certain prior period amounts to conform to the current period presentation. The recast of these prior period amounts had no impact on our consolidated balance sheets, consolidated income statements, or consolidated cash flows statements.

Principles of Consolidation

The consolidated financial statements include the accounts of Microsoft Corporation and its subsidiaries. Intercompany transactions and balances have been eliminated.

Estimates and Assumptions

Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. Examples of estimates and assumptions include: for revenue recognition, determining the nature and timing of satisfaction of performance obligations, and determining the standalone selling price of performance obligations, variable consideration, and other obligations such as product returns and refunds; loss contingencies; product warranties; the fair value of and/or potential impairment of goodwill and intangible assets for our reporting units; product life cycles; useful lives of our tangible and intangible assets; allowances for doubtful accounts; the market value of, and demand for, our inventory; stock-based compensation forfeiture rates; when technological feasibility is achieved for our products; the potential outcome of uncertain tax positions that have been recognized in our consolidated financial statements or tax returns; and determining the timing and amount of impairments for investments. Actual results and outcomes may differ from management’s estimates and assumptions due to risks and uncertainties.

Financial Instruments

Investments

We consider all highly liquid interest-earning investments with a maturity of three months or less at the date of purchase to be cash equivalents. The fair values of these investments approximate their carrying values. In general, investments with original maturities of greater than three months and remaining maturities of less than one year are classified as short-term investments. Investments with maturities beyond one year may be classified as short-term based on their highly liquid nature and because such marketable securities represent the investment of cash that is available for current operations.

Debt investments are classified as available-for-sale and realized gains and losses are recorded using the specific identification method. Changes in fair value, excluding credit losses and impairments, are recorded in other comprehensive income. Fair value is calculated based on publicly available market information or other estimates determined by management. If the cost of an investment exceeds its fair value, we evaluate, among other factors, general market conditions, credit quality of debt instrument issuers, and the extent to which the fair value is less than cost. To determine credit losses, we employ a systematic methodology that considers available quantitative and qualitative evidence. In addition, we consider specific adverse conditions related to the financial health of, and business outlook for, the investee. If we have plans to sell the security or it is more likely than not that we will be required to sell the security before recovery, then a decline in fair value below cost is recorded as an impairment charge in other income (expense), net and a new cost basis in the investment is established. If market, industry, and/or investee conditions deteriorate, we may incur future impairments.

PART I

Item 1

Equity investments with readily determinable fair values are measured at fair value. Equity investments without readily determinable fair values are measured using the equity method or measured at cost with adjustments for observable changes in price or impairments (referred to as the measurement alternative). We perform a qualitative assessment on a periodic basis and recognize an impairment if there are sufficient indicators that the fair value of the investment is less than carrying value. Changes in value are recorded in other income (expense), net.

Derivatives

Derivative instruments are recognized as either assets or liabilities and measured at fair value. The accounting for changes in the fair value of a derivative depends on the intended use of the derivative and the resulting designation.

For derivative instruments designated as fair value hedges, gains and losses are recognized in other income (expense), net with offsetting gains and losses on the hedged items. Gains and losses representing hedge components excluded from the assessment of effectiveness are recognized in other income (expense), net.

For derivative instruments designated as cash flow hedges, gains and losses are initially reported as a component of other comprehensive income and subsequently recognized in other income (expense), net with the corresponding hedged item. Gains and losses representing hedge components excluded from the assessment of effectiveness are recognized in other income (expense), net.

For derivative instruments that are not designated as hedges, gains and losses from changes in fair values are primarily recognized in other income (expense), net.

Fair Value Measurements

We account for certain assets and liabilities at fair value. The hierarchy below lists three levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. We categorize each of our fair value measurements in one of these three levels based on the lowest level input that is significant to the fair value measurement in its entirety. These levels are:

Level 1 – inputs are based upon unadjusted quoted prices for identical instruments in active markets. Our Level 1 investments include U.S. government securities, common and preferred stock, and mutual funds. Our Level 1 derivative assets and liabilities include those actively traded on exchanges.

Level 2 – inputs are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques (e.g. the Black-Scholes model) for which all significant inputs are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, credit spreads, foreign exchange rates, and forward and spot prices for currencies. Our Level 2 investments include commercial paper, certificates of deposit, U.S. agency securities, foreign government bonds, mortgage- and asset-backed securities, corporate notes and bonds, and municipal securities. Our Level 2 derivative assets and liabilities include certain cleared swap contracts and over-the-counter forward, option, and swap contracts.

Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques, including option pricing models and discounted cash flow models. Our Level 3 assets and liabilities include investments in corporate notes and bonds, municipal securities, and goodwill and intangible assets, when they are recorded at fair value due to an impairment charge. Unobservable inputs used in the models are significant to the fair values of the assets and liabilities.

We measure equity investments without readily determinable fair values on a nonrecurring basis. The fair values of these investments are determined based on valuation techniques using the best information available, and may include quoted market prices, market comparables, and discounted cash flow projections.

Our other current financial assets and current financial liabilities have fair values that approximate their carrying values.

PART I

Item 1

Contract Balances and Other Receivables

As of December 31, 2023 and June 30, 2023, long-term accounts receivable, net of allowance for doubtful accounts, was $4.8 billion and $4.5 billion, respectively, and is included in other long-term assets in our consolidated balance sheets.

As of December 31, 2023 and June 30, 2023, other receivables related to activities to facilitate the purchase of server components were $8.8 billion and $9.2 billion, respectively, and are included in other current assets in our consolidated balance sheets.

We record financing receivables when we offer certain of our customers the option to acquire our software products and services offerings through a financing program in a limited number of countries. As of December 31, 2023 and June 30, 2023, our financing receivables, net were $3.6 billion and $5.3 billion, respectively, for short-term and long-term financing receivables, which are included in other current assets and other long-term assets in our consolidated balance sheets. We record an allowance to cover expected losses based on troubled accounts, historical experience, and other currently available evidence.

Recent Accounting Guidance

Segment Reporting – Improvements to Reportable Segment Disclosures

In November 2023, the Financial Accounting Standards Board (“FASB”) issued a new standard to improve reportable segment disclosures. The guidance expands the disclosures required for reportable segments in our annual and interim consolidated financial statements, primarily through enhanced disclosures about significant segment expenses. The standard will be effective for us beginning with our annual reporting for fiscal year 2025 and interim periods thereafter, with early adoption permitted. We are currently evaluating the impact of this standard on our segment disclosures.

Income Taxes – Improvements to Income Tax Disclosures

In December 2023, the FASB issued a new standard to improve income tax disclosures. The guidance requires disclosure of disaggregated income taxes paid, prescribes standardized categories for the components of the effective tax rate reconciliation, and modifies other income tax-related disclosures. The standard will be effective for us beginning with our annual reporting for fiscal year 2026, with early adoption permitted. We are currently evaluating the impact of this standard on our income tax disclosures.

NOTE 2 — EARNINGS PER SHARE

Basic earnings per share (“EPS”) is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted EPS is computed based on the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method. Dilutive potential common shares include outstanding stock options and stock awards.

The components of basic and diluted EPS were as follows:

(In millions, except per share amounts)		Three Months Ended December 31,									Six Months Ended December 31,
		2023				2022					2023				2022
Net income available for common shareholders (A)		$	21,870			$	16,425			$	44,161			$	33,981
Weighted average outstanding shares of common stock (B)			7,432				7,451				7,431				7,454
Dilutive effect of stock-based awards			36				22				34				25
Common stock and common stock equivalents (C)			7,468				7,473				7,465				7,479
Earnings Per Share
Basic (A/B)		$	2.94			$	2.20			$	5.94			$	4.56
Diluted (A/C)		$	2.93			$	2.20			$	5.92			$	4.54

Anti-dilutive stock-based awards excluded from the calculations of diluted EPS were immaterial during the periods presented.

PART I

Item 1

NOTE 3 — OTHER INCOME (EXPENSE), NET

The components of other income (expense), net were as follows:

(In millions)		Three Months Ended December 31,								Six Months Ended December 31**,**
		2023				2022				2023				2022
Interest and dividends income		$	734			$	700			$	1,900			$	1,341
Interest expense			**(**909	)			(490	)			**(**1,434	)			(990	)
Net recognized gains (losses) on investments			69				(15	)			**(**38	)			(2	)
Net losses on derivatives			**(**267	)			(199	)			**(**174	)			(190	)
Net gains (losses) on foreign currency remeasurements			36				(18	)			**(**65	)			(96	)
Other, net			**(**169	)			(38	)			**(**306	)			(69	)
Total		$	**(**506	)		$	(60	)		$	**(**117	)		$	(6	)

Net Recognized Gains (Losses) on Investments

Net recognized gains (losses) on debt investments were as follows:

(In millions)			Three Months Ended December 31,							Six Months Ended December 31,
		2023				2022				2023				2022
Realized gains from sales of available-for-sale securities		$	4			$	27			$	6			$	30
Realized losses from sales of available-for-sale securities			**(**29	)			(23	)			**(**54	)			(43	)
Impairments and allowance for credit losses			18				5				12				(13	)
Total		$	**(**7	)		$	9			$	**(**36	)		$	(26	)

Net recognized gains (losses) on equity investments were as follows:

(In millions)		Three Months Ended December 31,								Six Months Ended December 31,
		2023				2022				2023				2022
Net realized gains (losses) on investments sold		$	**(**31	)		$	(8	)		$	14			$	75
Net unrealized gains (losses) on investments still held			286				(7	)			163				(35	)
Impairments of investments			**(**179	)			(9	)			**(**179	)			(16	)
Total		$	76			$	(24	)		$	**(**2	)		$	24

PART I

Item 1

NOTE 4 — INVESTMENTS

Investment Components

The components of investments were as follows:

(In millions)		Fair Value Level		Adjusted Cost Basis			Unrealized Gains			Unrealized Losses				Recorded Basis			Cash and Cash Equivalents			Short-term Investments			Equity Investments
December 31, 2023
Changes in Fair Value Recorded in Other Comprehensive Income
Commercial paper		Level 2		$	4,577		$	0		$	0			$	4,577		$	4,574		$	3		$	0
Certificates of deposit		Level 2			2,973			0			0				2,973			2,931			42			0
U.S. government securities		Level 1			54,775			11			**(**2,848	)			51,938			0			51,938			0
U.S. agency securities		Level 2			24			0			0				24			0			24			0
Foreign government bonds		Level 2			420			4			**(**12	)			412			7			405			0
Mortgage- and asset-backed securities		Level 2			926			5			**(**31	)			900			0			900			0
Corporate notes and bonds		Level 2			10,164			63			**(**349	)			9,878			0			9,878			0
Corporate notes and bonds		Level 3			129			0			0				129			0			129			0
Municipal securities		Level 2			282			1			**(**13	)			270			0			270			0
Municipal securities		Level 3			104			0			**(**16	)			88			0			88			0
Total debt investments				$	74,374		$	84		$	**(**3,269	)		$	71,189		$	7,512		$	63,677		$	0
Changes in Fair Value Recorded in Net Income
Equity investments		Level 1												$	3,276		$	257		$	0		$	3,019
Equity investments		Other													10,348			0			0			10,348
Total equity investments														$	13,624		$	257		$	0		$	13,367
Cash														$	9,536		$	9,536		$	0		$	0
Derivatives, net (a)															35			0			35			0
Total														$	94,384		$	17,305		$	63,712		$	13,367

PART I

Item 1

(In millions)		Fair Value Level		Adjusted Cost Basis			Unrealized Gains			Unrealized Losses				Recorded Basis			Cash and Cash Equivalents			Short-term Investments			Equity Investments
June 30, 2023
Changes in Fair Value Recorded in Other Comprehensive Income
Commercial paper		Level 2		$	16,589		$	0		$	0			$	16,589		$	12,231		$	4,358		$	0
Certificates of deposit		Level 2			2,701			0			0				2,701			2,657			44			0
U.S. government securities		Level 1			65,237			2			(3,870	)			61,369			2,991			58,378			0
U.S. agency securities		Level 2			2,703			0			0				2,703			894			1,809			0
Foreign government bonds		Level 2			498			1			(24	)			475			0			475			0
Mortgage- and asset-backed securities		Level 2			824			1			(39	)			786			0			786			0
Corporate notes and bonds		Level 2			10,809			8			(583	)			10,234			0			10,234			0
Corporate notes and bonds		Level 3			120			0			0				120			0			120			0
Municipal securities		Level 2			285			1			(18	)			268			7			261			0
Municipal securities		Level 3			103			0			(16	)			87			0			87			0
Total debt investments				$	99,869		$	13		$	(4,550	)		$	95,332		$	18,780		$	76,552		$	0
Changes in Fair Value Recorded in Net Income
Equity investments		Level 1												$	10,138		$	7,446		$	0		$	2,692
Equity investments		Other													7,187			0			0			7,187
Total equity investments														$	17,325		$	7,446		$	0		$	9,879
Cash														$	8,478		$	8,478		$	0		$	0
Derivatives, net (a)															6			0			6			0
Total														$	121,141		$	34,704		$	76,558		$	9,879

(a)

Refer to Note 5 – Derivatives for further information on the fair value of our derivative instruments.

Equity investments presented as “Other” in the tables above include investments without readily determinable fair values measured using the equity method or measured at cost with adjustments for observable changes in price or impairments, and investments measured at fair value using net asset value as a practical expedient which are not categorized in the fair value hierarchy. As of December 31, 2023 and June 30, 2023, equity investments without readily determinable fair values measured at cost with adjustments for observable changes in price or impairments were $4.0 billion and $4.2 billion, respectively.

PART I