---
base_model: distilbert/distilroberta-base
library_name: sentence-transformers
pipeline_tag: sentence-similarity
tags:
- sentence-transformers
- sentence-similarity
- feature-extraction
- generated_from_trainer
- dataset_size:54
- loss:TripletLoss
widget:
- source_sentence: "PART I\n\nItem 1A\n\n# Legal, Regulatory, And Litigation Risks\n\
\nGovernment enforcement under competition laws and new market regulation may\
\ limit how we design and market our products. Government agencies closely scrutinize\
\ us under U.S. and foreign competition laws.\n\nGovernments are actively enforcing\
\ competition laws and regulations and enacting new regulations to intervene in\
\ digital markets, and this includes markets such as the EU, the United Kingdom,\
\ the U.S., and China. Some jurisdictions also allow competitors or consumers\
\ to assert claims of anti-competitive conduct. U.S. and foreign antitrust authorities\
\ have previously brought enforcement actions and continue to scrutinize our business.\n\
\nFor example, the European Commission (\"the Commission\") has designated Windows\
\ and LinkedIn as core platform services subject to obligations under the EU Digital\
\ Markets Act, which prohibits certain self-preferencing behaviors and places\
\ limitations on certain data use among other obligations. The Commission also\
\ continues to closely scrutinize the design of high-volume Microsoft products\
\ and the terms on which we make certain technologies used in these products,\
\ such as file formats, programming interfaces, and protocols, available to other\
\ companies.\n\nFlagship product releases such as Microsoft 365 and Windows can\
\ receive significant scrutiny under EU or other competition laws. \n\nOur portfolio\
\ of first-party devices continues to grow; at the same time, our OEM partners\
\ offer a large variety of devices for our platforms. As a result, we increasingly\
\ both cooperate and compete with our OEM partners, creating a risk that we fail\
\ to do so in compliance with competition rules. Regulatory scrutiny in this area\
\ may increase. Certain foreign governments, particularly in China and other countries\
\ in Asia, have advanced arguments under their competition laws that exert downward\
\ pressure on royalties for our intellectual property.\n\nCompetition law enforcement\
\ actions and court decisions along with new market regulations may result in\
\ fines or hinder our ability to provide the benefits of our software to consumers\
\ and businesses, reducing the attractiveness of our products and the revenue\
\ that comes from them. New competition law actions or obligations under market\
\ regulation schemes could be initiated, potentially using previous actions as\
\ precedent. The outcome of such actions, or steps taken to avoid them, could\
\ adversely affect us in a variety of ways, including causing us to withdraw products\
\ from or modify products for certain markets, decreasing the value of our assets,\
\ adversely affecting our ability to monetize our products, or inhibiting our\
\ ability to consummate acquisition or impose conditions on acquisitions that\
\ may reduce their value, which may adversely affect our business, financial condition,\
\ and results of operations.\n\nLaws and regulations relating to anti-corruption\
\ and trade could result in increased costs, fines, criminal penalties, or reputational\
\ damage. The Foreign Corrupt Practices Act (\"FCPA\") and other anti-corruption\
\ laws and regulations (\"Anti-Corruption Laws\") prohibit corrupt payments by\
\ our employees, vendors, or agents, and the accounting provisions of the FCPA\
\ require us to maintain accurate books and records and adequate internal controls.\
\ From time to time, we receive inquiries from authorities in the U.S. and elsewhere\
\ which may be based on reports from employees and others about our business activities\
\ outside the U.S. and our compliance with AntiCorruption Laws. Periodically,\
\ we receive such reports directly and investigate them, and also cooperate with\
\ investigations by U.S. and foreign law enforcement authorities. An example of\
\ increasing international regulatory complexity is the EU Whistleblower Directive,\
\ initiated in 2021, which presents compliance challenges as it is implemented\
\ in different forms by EU member states. Most countries in which we operate also\
\ have competition laws that prohibit competitors from colluding or otherwise\
\ attempting to reduce competition between themselves. While we devote substantial\
\ resources to our U.S. and international compliance programs and have implemented\
\ policies, training, and internal controls designed to reduce the risk of corrupt\
\ payments and collusive activity, our employees, partners, vendors, or agents\
\ may violate our policies. Our failure to comply with Anti-Corruption Laws or\
\ competition laws could result in significant fines and penalties, criminal sanctions\
\ against us, our officers, or our employees, prohibitions on the conduct of our\
\ business, and damage to our reputation, which could adversely affect our business,\
\ financial condition, and results of operations.\n\nIncreasing trade laws, policies,\
\ sanctions, and other regulatory requirements also affect our operations in and\
\ outside the U.S. relating to trade and investment. Economic sanctions in the\
\ U.S., the EU, and other countries prohibit most business with restricted entities\
\ or countries. U.S. export controls restrict Microsoft from offering many of\
\ its products and services to, or making investments in, certain entities in\
\ specified countries. U.S. import controls restrict us from integrating certain\
\ information and communication technologies into our supply chain and allow for\
\ government review of transactions involving information and communications technology\
\ from countries determined to be foreign\n\n\n\nPART I\n\nItem 1A\n\nadversaries.\
\ Supply chain regulations may impact the availability of goods or result in additional\
\ regulatory scrutiny.\n\nPeriods of intense diplomatic or armed conflict, such\
\ as the ongoing conflict in Ukraine, may result in (1) new and rapidly evolving\
\ sanctions and trade restrictions, which may impair trade with sanctioned individuals\
\ and countries, and (2) negative impacts to regional trade ecosystems among our\
\ customers, partners, and us. Non-compliance with sanctions as well as general\
\ ecosystem disruptions could result in reputational harm, operational delays,\
\ monetary fines, loss of revenue, increased costs, loss of export privileges,\
\ or criminal sanctions, which could adversely affect our business, financial\
\ condition, and results of operations.\n\nLaws and regulations relating to the\
\ handling of personal data may impede the adoption of our services or result\
\ in increased costs, legal claims, fines against us, or reputational damage.\
\ The growth of our Internetand cloud-based services internationally relies increasingly\
\ on the movement of data across national boundaries.\n\nLegal requirements relating\
\ to the collection, storage, handling, and transfer of personal data continue\
\ to evolve. For example, while the EU-U.S. Data Privacy Framework (\"DPF\") has\
\ been recognized as adequate under EU law to allow transfers of personal data\
\ from the EU to certified companies in the U.S., the DPF is subject to further\
\ legal challenge which could cause the legal requirements for data transfers\
\ from the EU to be uncertain. EU data protection authorities have and may again\
\ block the use of certain U.S.-based services that involve the transfer of data\
\ to the U.S. In the EU and other markets, potential new rules and restrictions\
\ on the flow of data across borders could increase the cost and complexity of\
\ delivering our products and services. In addition, the EU General Data Protection\
\ Regulation (\"GDPR\"), which applies to all of our activities conducted from\
\ an establishment in the EU or related to products and services offered in the\
\ EU, imposes a range of compliance obligations regarding the handling of personal\
\ data. More recently, the EU has been developing new requirements related to\
\ the use of data, including in the Digital Markets Act, the Digital Services\
\ Act, and the Data Act, that add additional rules and restriction on the use\
\ of data in our products and services. Engineering efforts to build and maintain\
\ capabilities to facilitate compliance with these laws involve substantial expense\
\ and the diversion of engineering resources from other projects. We might experience\
\ reduced demand for our offerings if we are unable to engineer products that\
\ meet our legal duties or help our customers meet their obligations under these\
\ and other data regulations, or if our implementation to comply makes our offerings\
\ less attractive. Compliance with these obligations depends in part on how particular\
\ regulators interpret and apply them. If we fail to comply, or if regulators\
\ assert we have failed to comply (including in response to complaints made by\
\ customers), it may lead to regulatory enforcement actions, which can result\
\ in significant monetary penalties, private lawsuits, reputational damage, blockage\
\ of product offerings or of international data transfers, and loss of customers.\
\ The highest fines assessed under GDPR have recently been increasing, especially\
\ against large technology companies, and European data protection authorities\
\ have taken action to block or remove services from their markets. Jurisdictions\
\ around the world, such as China, India, and states in the U.S.\n\nhave adopted,\
\ or are considering adopting or expanding, laws and regulations imposing obligations\
\ regarding the collection, handling, and transfer of personal data.\n\nOur investment\
\ in gaining insights from data is becoming central to the value of the services\
\ we deliver to customers, including AI services, to operational efficiency and\
\ key opportunities in monetization, and to customer perceptions of quality. Our\
\ ability to use data in this way may be constrained by regulatory developments\
\ that impede realizing the expected return from this investment. Ongoing legal\
\ analyses, reviews, and inquiries by regulators of Microsoft practices, or relevant\
\ practices of other organizations, may result in burdensome or inconsistent requirements,\
\ including data sovereignty and localization requirements, affecting the location,\
\ movement, collection, and use of our customer and internal employee data as\
\ well as the management of that data. Compliance with applicable laws and regulations\
\ regarding personal data may require changes in services, business practices,\
\ or internal systems that result in increased costs, lower revenue, reduced efficiency,\
\ or greater difficulty in competing with foreign-based firms. Compliance with\
\ data regulations might limit our ability to innovate or offer certain features\
\ and functionality in some jurisdictions where we operate. Failure to comply\
\ with existing or new rules may result in significant penalties or orders to\
\ stop the alleged noncompliant activity, negative publicity, and diversion of\
\ management time and effort.\n\nExisting and increasing legal and regulatory\
\ requirements could adversely affect our results of operations.\n\nWe are subject\
\ to a wide range of laws, regulations, and legal requirements in the U.S. and\
\ globally, including those that may apply to our products and online services\
\ offerings, and those that impose requirements related to user privacy, telecommunications,\
\ data storage and protection, digital accessibility, advertising, and online\
\ content. Laws in several jurisdictions, including EU Member State laws under\
\ the European Electronic Communications Code, increasingly define certain of\
\ our services as regulated telecommunications services. This trend may continue\
\ and will result in these offerings being subject to additional data protection,\
\ security, law enforcement surveillance, and other obligations. Regulators and\
\ private litigants may assert that our collection, use, and management of customer"
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- source_sentence: "```\n \
\ PART II\n \
\ \n \
\ Item 7\n \
\ \nof derivatives that are not designated as hedging instruments are\
\ primarily recognized in other income (expense),\n \
\ \
\ \nnet.\n \n\n```\n\n## Fiscal Year 2024\
\ Compared With Fiscal Year 2023\n\nInterest and dividends income increased due\
\ to higher yields. Interest expense increased due to the issuance of commercial\
\ paper. Net recognized losses on investments increased primarily due to higher\
\ equity impairments and lower gains on equity investments. Net losses on derivatives\
\ decreased primarily due to lower losses on equity derivatives. Other, net primarily\
\ reflects net recognized losses on equity method investments.\n\n## Income Taxes\
\ Effective Tax Rate\n\nOur effective tax rate for fiscal years 2024 and 2023\
\ was 18% and 19%, respectively. The decrease in our effective tax rate was primarily\
\ due to tax benefits from tax law changes, including the impact from the issuance\
\ of Notice 2023-55 and Notice 2023-80 by the Internal Revenue Service (\"IRS\"\
) and U.S. Treasury Department. Notice 202355, issued in the first quarter of\
\ fiscal year 2024, delayed the effective date of final foreign tax credit regulations\
\ to fiscal year 2024 for Microsoft. Notice 2023-80, issued in the second quarter\
\ of fiscal year 2024, further delayed the effective date of final foreign tax\
\ credit regulations indefinitely.\n\nOur effective tax rate was lower than the\
\ U.S. federal statutory rate, primarily due to earnings taxed at lower rates\
\ in foreign jurisdictions resulting from producing and distributing our products\
\ and services through our foreign regional operations center in Ireland.\n\n\
The mix of income before income taxes between the U.S. and foreign countries impacted\
\ our effective tax rate as a result of the geographic distribution of, and customer\
\ demand for, our products and services. In fiscal year 2024, our U.S. income\
\ before income taxes was $62.9 billion and our foreign income before income taxes\
\ was $44.9 billion. In fiscal year 2023, our U.S. income before income taxes\
\ was $52.9 billion and our foreign income before income taxes was $36.4 billion.\n\
\nThe Organisation for Economic Co-operation and Development (\"OECD\") published\
\ its model rules \"Tax Challenges Arising From the Digitalisation of the Economy\
\ - Global Anti-Base Erosion Model Rules (Pillar Two)\" which established a global\
\ minimum corporate tax rate of 15% for certain multinational enterprises. Many\
\ countries have implemented or are in the process of implementing the Pillar\
\ Two legislation, which will apply to Microsoft beginning in fiscal year 2025.\
\ While we do not currently estimate a material impact to our consolidated financial\
\ statements, we continue to monitor the impact as countries implement legislation\
\ and the OECD provides additional guidance.\n\n## Uncertain Tax Positions\n\n\
We remain under audit by the IRS for tax years 2014 to 2017. With respect to the\
\ audit for tax years 2004 to 2013, on September 26, 2023, we received Notices\
\ of Proposed Adjustment (\"NOPAs\") from the IRS. The primary issues in the NOPAs\
\ relate to intercompany transfer pricing. In the NOPAs, the IRS is seeking an\
\ additional tax payment of\n\n$28.9 billion plus penalties and interest. As of\
\ June 30, 2024, we believe our allowances for income tax contingencies are adequate.\
\ We disagree with the proposed adjustments and will vigorously contest the NOPAs\
\ through the IRS's administrative appeals office and, if necessary, judicial\
\ proceedings. We do not expect a final resolution of these issues in the next\
\ 12 months. Based on the information currently available, we do not anticipate\
\ a significant increase or decrease to our income tax contingencies for these\
\ issues within the next 12 months.\n\nWe are subject to income tax in many jurisdictions\
\ outside the U.S. Our operations in certain jurisdictions remain subject to examination\
\ for tax years 1996 to 2023, some of which are currently under audit by local\
\ tax authorities.\n\nThe resolution of each of these audits is not expected to\
\ be material to our consolidated financial statements.\n\n## Non-Gaap Financial\
\ Measures\n\nAdjusted gross margin, operating income, net income, and diluted\
\ EPS are non-GAAP financial measures. Prior year non-GAAP financial measures\
\ exclude the impact of the Q2 charge, which includes employee severance expenses,\n\
\n\n\nPART II\n\nItem 7 impairment charges resulting from changes to our hardware\
\ portfolio, and costs related to lease consolidation activities. We believe these\
\ non-GAAP measures aid investors by providing additional insight into our operational\
\ performance and help clarify trends affecting our business. For comparability\
\ of reporting, management considers non-GAAP measures in conjunction with GAAP\
\ financial results in evaluating business performance. These nonGAAP financial\
\ measures presented should not be considered a substitute for, or superior to,\
\ the measures of financial performance prepared in accordance with GAAP.\n\n\
The following table reconciles our financial results reported in accordance with\
\ GAAP to non-GAAP financial results:\n\n| \
\ | | Percentage | \
\ | | |\n|-----------------------------------------------------------------------|-----------------|--------------|---------|--------|-----|\n\
| (In millions, except percentages and per share amounts) | 2024\
\ | 2023 | Change | | |\n| Gross margin \
\ | $ 171,008 | $ \
\ | 146,052 | 17% | |\n| Severance, hardware-related impairment,\
\ and lease consolidation costs | 0 | 152 | * | \
\ | |\n| Adjusted gross margin (non-GAAP) \
\ | $ 171,008 | $ | 146,204 | 17% | |\n| Operating\
\ income | $ 109,433 \
\ | $ | 88,523 | 24% | |\n| Severance, hardware-related impairment,\
\ and lease consolidation costs | 0 | 1,171 | * | \
\ | |\n| Adjusted operating income (non-GAAP) \
\ | $ 109,433 | $ | 89,694 | 22% | |\n| Net\
\ income | $ \
\ | 88,136 | $ | 72,361 | 22% |\n| Severance, hardware-related\
\ impairment, and lease consolidation costs | 0 | 946 |\
\ * | | |\n| Adjusted net income (non-GAAP) \
\ | $ | 88,136 | $ | 73,307 |\
\ 20% |\n| Diluted earnings per share \
\ | $ | 11.80 | $ | 9.68 | 22% |\n| Severance,\
\ hardware-related impairment, and lease consolidation costs | 0 \
\ | 0.13 | * | | |\n| Adjusted diluted earnings per\
\ share (non-GAAP) | $ | 11.80 | $\
\ | 9.81 | 20% |\n| * \
\ | Not meaningful. | | | | \
\ |\n\n## Liquidity And Capital Resources\n\nWe expect existing cash, cash equivalents,\
\ short-term investments, cash flows from operations, and access to capital markets\
\ to continue to be sufficient to fund our operating activities and cash commitments\
\ for investing and financing activities, such as dividends, share repurchases,\
\ debt maturities, material capital expenditures, and the transition tax related\
\ to the Tax Cuts and Jobs Act (\"TCJA\"), for at least the next 12 months and\
\ thereafter for the foreseeable future. \n\n## Cash, Cash Equivalents, And Investments\n\
\nCash, cash equivalents, and short-term investments totaled $75.5 billion and\
\ $111.3 billion as of June 30, 2024 and 2023, respectively. Equity and other\
\ investments were $14.6 billion and $9.9 billion as of June 30, 2024 and 2023,\
\ respectively. Our short-term investments are primarily intended to facilitate\
\ liquidity and capital preservation. They consist predominantly of highly liquid\
\ investment-grade fixed-income securities, diversified among industries and individual\
\ issuers. The investments are predominantly U.S. dollar-denominated securities,\
\ but also include foreign currency-denominated securities to diversify risk.\
\ Our fixed-income investments are exposed to interest rate risk and credit risk.\
\ The credit risk and average maturity of our fixed-income portfolio are managed\
\ to achieve economic returns that correlate to certain fixed-income indices.\
\ The settlement risk related to these investments is insignificant given that\
\ the short-term investments held are primarily highly liquid investment-grade\
\ fixed-income securities. \n\nValuation"
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- source_sentence: "```\n \
\ PART II\n \
\ \n \
\ Item 7\n \
\ \nNote 16 - Stockholders' Equity of the Notes to Financial Statements\
\ (Part II, Item 8 of this Form 10-K) for further\n \
\ \
\ \ndiscussion.\n \n\n```\n\n##\
\ Dividends\n\nDuring fiscal years 2024 and 2023, our Board of Directors declared\
\ dividends totaling $22.3 billion and $20.2 billion, respectively. We intend\
\ to continue returning capital to shareholders in the form of dividends, subject\
\ to declaration by our Board of Directors. Refer to Note 16 - Stockholders' Equity\
\ of the Notes to Financial Statements (Part II,\n\nItem 8 of this Form 10-K)\
\ for further discussion.\n\n## Other Planned Uses Of Capital\n\nWe will continue\
\ to invest in sales, marketing, product support infrastructure, and existing\
\ and advanced areas of technology, as well as acquisitions that align with our\
\ business strategy. Additions to property and equipment will continue, including\
\ new facilities, datacenters, and computer systems for research and development,\
\ sales and marketing, support, and administrative staff. We expect capital expenditures\
\ to increase in coming years to support growth in our cloud offerings and our\
\ investments in AI infrastructure and training. We have operating and finance\
\ leases for datacenters, corporate offices, research and development facilities,\
\ Microsoft Experience Centers, and certain equipment. We have not engaged in\
\ any related party transactions or arrangements with unconsolidated entities\
\ or other persons that are reasonably likely to materially affect liquidity or\
\ the availability of capital resources.\n\n## Recent Accounting Guidance\n\n\
Refer to Note 1 - Accounting Policies of the Notes to Financial Statements (Part\
\ II, Item 8 of this Form 10-K) for further discussion.\n\n## Critical Accounting\
\ Estimates\n\nOur consolidated financial statements and accompanying notes are\
\ prepared in accordance with GAAP. Preparing consolidated financial statements\
\ requires management to make estimates and assumptions that affect the reported\
\ amounts of assets, liabilities, revenue, and expenses. Critical accounting estimates\
\ are those estimates that involve a significant level of estimation uncertainty\
\ and could have a material impact on our financial condition or results of operations.\
\ We have critical accounting estimates in the areas of revenue recognition, impairment\
\ of investment securities, goodwill, research and development costs, legal and\
\ other contingencies, income taxes, and business combinations - valuation of\
\ intangible assets.\n\n## Revenue Recognition\n\nOur contracts with customers\
\ often include promises to transfer multiple products and services to a customer.\n\
\nDetermining whether products and services are considered distinct performance\
\ obligations that should be accounted for separately versus together may require\
\ significant judgment. When a cloud-based service includes both on-premises software\
\ licenses and cloud services, judgment is required to determine whether the software\
\ license is considered distinct and accounted for separately, or not distinct\
\ and accounted for together with the cloud service and recognized over time.\
\ Certain cloud services, primarily Office 365, depend on a significant level\
\ of integration, interdependency, and interrelation between the desktop applications\
\ and cloud services, and are accounted for together as one performance obligation.\
\ Revenue from Office 365 is recognized ratably over the period in which the cloud\
\ services are provided. \n\nJudgment is required to determine the standalone\
\ selling price (\"SSP\") for each distinct performance obligation. We use a single\
\ amount to estimate SSP for items that are not sold separately, including on-premises\
\ licenses sold with SA or software updates provided at no additional charge.\
\ We use a range of amounts to estimate SSP when we sell each of the products\
\ and services separately and need to determine whether there is a discount to\
\ be allocated based on the relative SSP of the various products and services.\
\ \n\n\n\nPART II\n\nItem 7 In instances where SSP is not directly observable,\
\ such as when we do not sell the product or service separately, we determine\
\ the SSP using information that may include market conditions and other observable\
\ inputs. We typically have more than one SSP for individual products and services\
\ due to the stratification of those products and services by customers and circumstances.\
\ In these instances, we may use information such as the size of the customer\
\ and geographic region in determining the SSP. \n\nDue to the various benefits\
\ from and the nature of our SA program, judgment is required to assess the pattern\
\ of delivery, including the exercise pattern of certain benefits across our portfolio\
\ of customers. \n\nOur products are generally sold with a right of return, we\
\ may provide other credits or incentives, and in certain instances we estimate\
\ customer usage of our products and services, which are accounted for as variable\
\ consideration when determining the amount of revenue to recognize. Returns and\
\ credits are estimated at contract inception and updated at the end of each reporting\
\ period if additional information becomes available. Changes to our estimated\
\ variable consideration were not material for the periods presented.\n\n## Impairment\
\ Of Investment Securities\n\nWe review debt investments quarterly for credit\
\ losses and impairment. 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. This determination requires significant judgment. In making this judgment,\
\ we employ a systematic methodology that considers available quantitative and\
\ qualitative evidence in evaluating potential impairment of our investments.\
\ 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. \n\nEquity investments without\
\ readily determinable fair values are written down to fair value if a qualitative\
\ assessment indicates that the investment is impaired and the fair value of the\
\ investment is less than carrying value. We perform a qualitative assessment\
\ on a periodic basis. We are required to estimate the fair value of the investment\
\ to determine the amount of the impairment loss. Once an investment is determined\
\ to be impaired, an impairment charge is recorded in other income (expense),\
\ net. \n\n## Goodwill\n\nWe allocate goodwill to reporting units based on the\
\ reporting unit expected to benefit from the business combination. We evaluate\
\ our reporting units on an annual basis and, if necessary, reassign goodwill\
\ using a relative fair value allocation approach. Goodwill is tested for impairment\
\ at the reporting unit level (operating segment or one level below an operating\
\ segment) on an annual basis (May 1) and between annual tests if an event occurs\
\ or circumstances change that would more likely than not reduce the fair value\
\ of a reporting unit below its carrying value. These events or circumstances\
\ could include a significant change in the business climate, legal factors, operating\
\ performance indicators, competition, or sale or disposition of a significant\
\ portion of a reporting unit. \n\nApplication of the goodwill impairment test\
\ requires judgment, including the identification of reporting units, assignment\
\ of assets and liabilities to reporting units, assignment of goodwill to reporting\
\ units, and determination of the fair value of each reporting unit. The fair\
\ value of each reporting unit is estimated primarily through the use of a discounted\
\ cash flow methodology. This analysis requires significant judgments, including\
\ estimation of future cash flows, which is dependent on internal forecasts, estimation\
\ of the long-term rate of growth for our business, estimation of the useful life\
\ over which cash flows will occur, and determination of our weighted average\
\ cost of capital. \n\nThe estimates used to calculate the fair value of a reporting\
\ unit change from year to year based on operating results, market conditions,\
\ and other factors. Changes in these estimates and assumptions could materially\
\ affect the determination of fair value and goodwill impairment for each reporting\
\ unit."
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- source_sentence: "| Less than 12 Months | 12 Months\
\ or Greater | Total | | | | | \
\ | | | | |\n|-------------------------------------------------------|------------------------|---------|------------|--------|--------|-----------|-----------|-----------|---------|---------|---------|\n\
| Unrealized | Unrealized \
\ | Total | Unrealized | | | | | \
\ | | | |\n| (In millions) \
\ | Fair Value | Losses | | |\
\ | | | | | | |\n\
| Losses | Fair Value \
\ | Losses | Fair Value | | | | | \
\ | | | |\n| June 30, 2024 U.S. government and agency\
\ securities $ | 529 $ | (12) | $ | 45,821 | $ \
\ | (2,936) $ | 46,350 | $ | (2,948) | | |\n| Foreign\
\ government bonds | 79 | (2)\
\ | 180 | (14) | 259 | (16) | | | \
\ | | |\n| Mortgage- and asset-backed securities \
\ | 201 | (1) | 409 | (34) | 610 |\
\ (35) | | | | | |\n| Corporate\
\ notes and bonds | 1,310 | (9) \
\ | 5,779 | (310) | 7,089 | (319) | | | \
\ | | |\n| Municipal securities \
\ | 38 | (1) | 243 | (29) | 281 | (30)\
\ | | | | | |\n| Total \
\ | $ | 2,157 \
\ | $ | (25) | $ | 52,432 | $ | (3,323) $ | 54,589\
\ | $ | (3,348) |\n| Less than 12 Months \
\ | 12 Months or Greater | Total | | | | \
\ | | | | | |\n| Unrealized\
\ | Unrealized | Total\
\ | Unrealized | | | | | | \
\ | | |\n| (In millions) \
\ | Fair Value | Losses | | | | \
\ | | | | | |\n| Losses \
\ | Fair Value | Losses\
\ | Fair Value | | | | | | \
\ | | |\n| June 30, 2023 U.S. government and agency securities\
\ $ | 7,950 | $ | (336) | $ | 45,273 | $ \
\ | (3,534) $ | 53,223 | $ | (3,870) | |\n| Foreign government\
\ bonds | 77 | (5) | 391\
\ | (19) | 468 | (24) | | | | \
\ | |\n| Mortgage- and asset-backed securities |\
\ 257 | (5) | 412 | (34) | 669 | (39) \
\ | | | | | |\n| Corporate notes and\
\ bonds | 2,326 | (49) | 7,336\
\ | (534) | 9,662 | (583) | | | | \
\ | |\n| Municipal securities | 111\
\ | (3) | 186 | (31) | 297 | (34) | \
\ | | | | |\n| Total \
\ | $ | 10,721 | $ \
\ | (398) | $ | 53,598 | $ | (4,152) $ | 64,319 | $ \
\ | (4,550) |\n\nUnrealized losses from fixed-income securities are primarily\
\ attributable to changes in interest rates. Management does not believe any remaining\
\ unrealized losses represent impairments based on our evaluation of available\
\ evidence. \n\n| | Adjusted | Estimated\
\ | | |\n|---------------------------------------|------------|-------------|-------|--------|\n\
| (In millions) | Cost Basis | Fair Value | | \
\ |\n| June 30, 2024 Due in one year or less | $ | 19,815 \
\ | $ | 19,596 |\n| Due after one year through five years | 38,954 | 36,779\
\ | | |\n| Due after five years through 10 years | 8,028 \
\ | | 7,242 | |\n| Due after 10 years \
\ | 1,412 | | 1,282 | |\n| Total \
\ | $ | 68,209 | $ | 64,899 |\n\n## Debt Investment\
\ Maturities\n\nThe following table outlines maturities of our debt investments\
\ as of June 30, 2024:\n\n## Note 5 - Derivatives\n\nWe use derivative instruments\
\ to manage risks related to foreign currencies, interest rates, equity prices,\
\ and credit; to enhance investment returns; and to facilitate portfolio diversification.\
\ Our objectives for holding derivatives include reducing, eliminating, and efficiently\
\ managing the economic impact of these exposures as effectively as possible.\n\
\nOur derivative programs include strategies that both qualify and do not qualify\
\ for hedge accounting treatment. \n\n\n\nPART II\n\nItem 8\n\n## Foreign Currencies\n\
\nCertain forecasted transactions, assets, and liabilities are exposed to foreign\
\ currency risk. We monitor our foreign currency exposures daily to maximize the\
\ economic effectiveness of our foreign currency hedge positions. \n\nForeign\
\ currency risks related to certain non-U.S. dollar-denominated investments are\
\ hedged using foreign exchange forward contracts that are designated as fair\
\ value hedging instruments. Foreign currency risks related to certain Euro-denominated\
\ debt are hedged using foreign exchange forward contracts that are designated\
\ as cash flow hedging instruments.\n\nCertain options and forwards not designated\
\ as hedging instruments are also used to manage the variability in foreign exchange\
\ rates on certain balance sheet amounts and to manage other foreign currency\
\ exposures. \n\n## Interest Rate\n\nInterest rate risks related to certain fixed-rate\
\ debt are hedged using interest rate swaps that are designated as fair value\
\ hedging instruments to effectively convert the fixed interest rates to floating\
\ interest rates.\n\nSecurities held in our fixed-income portfolio are subject\
\ to different interest rate risks based on their maturities. We manage the average\
\ maturity of our fixed-income portfolio to achieve economic returns that correlate\
\ to certain broad-based fixed-income indices using option, futures, and swap\
\ contracts. These contracts are not designated as hedging instruments and are\
\ included in \"Other contracts\" in the tables below.\n\n## Equity\n\nSecurities\
\ held in our equity investments portfolio are subject to market price risk. At\
\ times, we may hold options, futures, and swap contracts. These contracts are\
\ not designated as hedging instruments.\n\n## Credit\n\nOur fixed-income portfolio\
\ is diversified and consists primarily of investment-grade securities. We use\
\ credit default swap contracts to manage credit exposures relative to broad-based\
\ indices and to facilitate portfolio diversification.\n\nThese contracts are\
\ not designated as hedging instruments and are included in \"Other contracts\"\
\ in the tables below.\n\n## Credit-Risk-Related Contingent Features\n\nCertain\
\ counterparty agreements for derivative instruments contain provisions that require\
\ our issued and outstanding long-term unsecured debt to maintain an investment\
\ grade credit rating and require us to maintain minimum liquidity of $1.0 billion.\
\ To the extent we fail to meet these requirements, we will be required to post\
\ collateral, similar to the standard convention related to over-the-counter derivatives.\
\ As of June 30, 2024, our longterm unsecured debt rating was AAA, and cash investments\
\ were in excess of $1.0 billion. As a result, no collateral was required to be\
\ posted. \n\nThe following table presents the notional amounts of our outstanding\
\ derivative instruments measured in U.S. dollar equivalents:\n\n| \
\ | June 30, \
\ | June 30, | |\n|----------------------------------------------------------------------------|------------|------------|-------|\n\
| (In millions) |\
\ | 2024 | 2023 |\n| Designated as Hedging Instruments Foreign\
\ exchange contracts purchased | $ | 1,492 $ | 1,492 |\n| Interest\
\ rate contracts purchased | 1,100 \
\ | 1,078 | |\n| Not Designated as Hedging Instruments Foreign exchange\
\ contracts purchased | 7,167 | 7,874 | |\n| Foreign exchange\
\ contracts sold | 31,793 | 25,159\
\ | |\n| Equity contracts purchased \
\ | 4,016 | 3,867 | |\n| Equity contracts sold\
\ | 2,165 | 2,154 \
\ | |"
sentences:
- P
- S
- '|'
- source_sentence: "PART II\n\nItem 8 Judgment is required to determine the SSP for\
\ each distinct performance obligation. We use a single amount to estimate SSP\
\ for items that are not sold separately, including on-premises licenses sold\
\ with SA or software updates provided at no additional charge. We use a range\
\ of amounts to estimate SSP when we sell each of the products and services separately\
\ and need to determine whether there is a discount to be allocated based on the\
\ relative SSP of the various products and services. \n\nIn instances where SSP\
\ is not directly observable, such as when we do not sell the product or service\
\ separately, we determine the SSP using information that may include market conditions\
\ and other observable inputs. We typically have more than one SSP for individual\
\ products and services due to the stratification of those products and services\
\ by customers and circumstances. In these instances, we may use information such\
\ as the size of the customer and geographic region in determining the SSP. \n\
\nDue to the various benefits from and the nature of our SA program, judgment\
\ is required to assess the pattern of delivery, including the exercise pattern\
\ of certain benefits across our portfolio of customers. \n\nOur products are\
\ generally sold with a right of return, we may provide other credits or incentives,\
\ and in certain instances we estimate customer usage of our products and services,\
\ which are accounted for as variable consideration when determining the amount\
\ of revenue to recognize. Returns and credits are estimated at contract inception\
\ and updated at the end of each reporting period if additional information becomes\
\ available. Changes to our estimated variable consideration were not material\
\ for the periods presented.\n\n## Contract Balances And Other Receivables\n\n\
Timing of revenue recognition may differ from the timing of invoicing to customers.\
\ We record a receivable when revenue is recognized prior to invoicing, or unearned\
\ revenue when revenue is recognized subsequent to invoicing.\n\nFor multi-year\
\ agreements, we generally invoice customers annually at the beginning of each\
\ annual coverage period. We record a receivable related to revenue recognized\
\ for multi-year on-premises licenses as we have an unconditional right to invoice\
\ and receive payment in the future related to those licenses. \n\nUnearned revenue\
\ comprises mainly unearned revenue related to volume licensing programs, which\
\ may include SA\n\nand cloud services. Unearned revenue is generally invoiced\
\ annually at the beginning of each contract period for multi-year agreements\
\ and recognized ratably over the coverage period. Unearned revenue also includes\
\ payments for consulting services to be performed in the future, LinkedIn subscriptions,\
\ Office 365 subscriptions, Xbox subscriptions, Windows post-delivery support,\
\ Dynamics business solutions, and other offerings for which we have been paid\
\ in advance and earn the revenue when we transfer control of the product or service.\
\ \n\nRefer to Note 13 - Unearned Revenue for further information, including unearned\
\ revenue by segment and changes in unearned revenue during the period.\n\nPayment\
\ terms and conditions vary by contract type, although terms generally include\
\ a requirement of payment within 30 to 60 days. In instances where the timing\
\ of revenue recognition differs from the timing of invoicing, we have determined\
\ our contracts generally do not include a significant financing component. The\
\ primary purpose of our invoicing terms is to provide customers with simplified\
\ and predictable ways of purchasing our products and services, not to receive\
\ financing from our customers or to provide customers with financing. Examples\
\ include invoicing at the beginning of a subscription term with revenue recognized\
\ ratably over the contract period, and multiyear on-premises licenses that are\
\ invoiced annually with revenue recognized upfront.\n\nAs of June 30, 2024 and\
\ 2023, long-term accounts receivable, net of allowance for doubtful accounts,\
\ was $4.9 billion and $4.5 billion, respectively, and is included in other long-term\
\ assets in our consolidated balance sheets.\n\nThe allowance for doubtful accounts\
\ reflects our best estimate of probable losses inherent in the accounts receivable\
\ balance. We determine the allowance based on known troubled accounts, historical\
\ experience, and other currently available evidence. \n\n\n\n| (In millions)\
\ June 30, | 2024 | 2023 | 2022 | \
\ | |\n|-------------------------------------------------------------|--------|--------|--------|----|-----|\n\
| Accounts receivable, net of allowance for doubtful accounts | $ | 830 $\
\ | 650 | $ | 633 |\n| Other long-term assets \
\ | 54 | 66 | 77 | | |\n| Total \
\ | $ | 884 $ | 716 | $ | 710 |\n\
\n| (In millions) Year Ended June 30, | 2024 | 2023 \
\ | 2022 | | | |\n|-------------------------------------|----------------------------|--------|--------|-------|----|-----|\n\
| Balance, beginning of period | $ | 716 |\
\ $ | 710 | $ | 798 |\n| | Charged\
\ to costs and other | 386 | 258 | 157 | | |\n| \
\ | Write-offs | (218) | (252) | (245)\
\ | | |\n| Balance, end of period | $ \
\ | 884 | $ | 716 | $ | 710 |\n\nAs of June 30, 2024 and 2023,\
\ other receivables related to activities to facilitate the purchase of server\
\ components were $10.5 billion and $9.2 billion, respectively, and are included\
\ in other current assets in our consolidated balance sheets.\n\nWe record financing\
\ receivables when we offer certain customers the option to acquire our software\
\ products and services offerings through a financing program in a limited number\
\ of countries. As of June 30, 2024 and 2023, our financing receivables, net were\
\ $4.5 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.\n\n## Assets Recognized From Costs To Obtain A Contract\
\ With A Customer\n\nWe recognize an asset for the incremental costs of obtaining\
\ a contract with a customer if we expect the benefit of those costs to be longer\
\ than one year. We have determined that certain sales incentive programs meet\
\ the requirements to be capitalized. Total capitalized costs to obtain a contract\
\ were immaterial during the periods presented and are included in other current\
\ and long-term assets in our consolidated balance sheets. \n\nWe apply a practical\
\ expedient to expense costs as incurred for costs to obtain a contract with a\
\ customer when the amortization period would have been one year or less. These\
\ costs include our internal sales organization compensation program and certain\
\ partner sales incentive programs as we have determined annual compensation is\
\ commensurate with annual sales activities.\n\n## Cost Of Revenue\n\nCost of\
\ revenue includes: manufacturing and distribution costs for products sold and\
\ programs licensed; operating costs related to product support service centers\
\ and product distribution centers; costs incurred to include software on PCs\
\ sold by original equipment manufacturers (\"OEM\"), to drive traffic to our\
\ websites, and to acquire online advertising space; costs incurred to support\
\ and maintain cloud-based and other online products and services, including datacenter\
\ costs and royalties; warranty costs; inventory valuation adjustments; costs\
\ associated with the delivery of consulting services; and the amortization of\
\ capitalized software development costs. Capitalized software development costs\
\ are amortized over the estimated lives of the products."
sentences:
- i
- P
- P
---
# SentenceTransformer based on distilbert/distilroberta-base
This is a [sentence-transformers](https://www.SBERT.net) model finetuned from [distilbert/distilroberta-base](https://huggingface.co/distilbert/distilroberta-base). It maps sentences & paragraphs to a 768-dimensional dense vector space and can be used for semantic textual similarity, semantic search, paraphrase mining, text classification, clustering, and more.
## Model Details
### Model Description
- **Model Type:** Sentence Transformer
- **Base model:** [distilbert/distilroberta-base](https://huggingface.co/distilbert/distilroberta-base)
- **Maximum Sequence Length:** 512 tokens
- **Output Dimensionality:** 768 tokens
- **Similarity Function:** Cosine Similarity
### Model Sources
- **Documentation:** [Sentence Transformers Documentation](https://sbert.net)
- **Repository:** [Sentence Transformers on GitHub](https://github.com/UKPLab/sentence-transformers)
- **Hugging Face:** [Sentence Transformers on Hugging Face](https://huggingface.co/models?library=sentence-transformers)
### Full Model Architecture
```
SentenceTransformer(
(0): Transformer({'max_seq_length': 512, 'do_lower_case': False}) with Transformer model: RobertaModel
(1): Pooling({'word_embedding_dimension': 768, 'pooling_mode_cls_token': False, 'pooling_mode_mean_tokens': True, 'pooling_mode_max_tokens': False, 'pooling_mode_mean_sqrt_len_tokens': False, 'pooling_mode_weightedmean_tokens': False, 'pooling_mode_lasttoken': False, 'include_prompt': True})
)
```
## Usage
### Direct Usage (Sentence Transformers)
First install the Sentence Transformers library:
```bash
pip install -U sentence-transformers
```
Then you can load this model and run inference.
```python
from sentence_transformers import SentenceTransformer
# Download from the 🤗 Hub
model = SentenceTransformer("sidddddddddddd/alpha-street-distilroberta-base-sentence-transformer")
# Run inference
sentences = [
'PART II\n\nItem 8 Judgment is required to determine the SSP for each distinct performance obligation. We use a single amount to estimate SSP for items that are not sold separately, including on-premises licenses sold with SA or software updates provided at no additional charge. We use a range of amounts to estimate SSP when we sell each of the products and services separately and need to determine whether there is a discount to be allocated based on the relative SSP of the various products and services. \n\nIn instances where SSP is not directly observable, such as when we do not sell the product or service separately, we determine the SSP using information that may include market conditions and other observable inputs. We typically have more than one SSP for individual products and services due to the stratification of those products and services by customers and circumstances. In these instances, we may use information such as the size of the customer and geographic region in determining the SSP. \n\nDue to the various benefits from and the nature of our SA program, judgment is required to assess the pattern of delivery, including the exercise pattern of certain benefits across our portfolio of customers. \n\nOur products are generally sold with a right of return, we may provide other credits or incentives, and in certain instances we estimate customer usage of our products and services, which are accounted for as variable consideration when determining the amount of revenue to recognize. Returns and credits are estimated at contract inception and updated at the end of each reporting period if additional information becomes available. Changes to our estimated variable consideration were not material for the periods presented.\n\n## Contract Balances And Other Receivables\n\nTiming of revenue recognition may differ from the timing of invoicing to customers. We record a receivable when revenue is recognized prior to invoicing, or unearned revenue when revenue is recognized subsequent to invoicing.\n\nFor multi-year agreements, we generally invoice customers annually at the beginning of each annual coverage period. We record a receivable related to revenue recognized for multi-year on-premises licenses as we have an unconditional right to invoice and receive payment in the future related to those licenses. \n\nUnearned revenue comprises mainly unearned revenue related to volume licensing programs, which may include SA\n\nand cloud services. Unearned revenue is generally invoiced annually at the beginning of each contract period for multi-year agreements and recognized ratably over the coverage period. Unearned revenue also includes payments for consulting services to be performed in the future, LinkedIn subscriptions, Office 365 subscriptions, Xbox subscriptions, Windows post-delivery support, Dynamics business solutions, and other offerings for which we have been paid in advance and earn the revenue when we transfer control of the product or service. \n\nRefer to Note 13 - Unearned Revenue for further information, including unearned revenue by segment and changes in unearned revenue during the period.\n\nPayment terms and conditions vary by contract type, although terms generally include a requirement of payment within 30 to 60 days. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined our contracts generally do not include a significant financing component. The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of purchasing our products and services, not to receive financing from our customers or to provide customers with financing. Examples include invoicing at the beginning of a subscription term with revenue recognized ratably over the contract period, and multiyear on-premises licenses that are invoiced annually with revenue recognized upfront.\n\nAs of June 30, 2024 and 2023, long-term accounts receivable, net of allowance for doubtful accounts, was $4.9 billion and $4.5 billion, respectively, and is included in other long-term assets in our consolidated balance sheets.\n\nThe allowance for doubtful accounts reflects our best estimate of probable losses inherent in the accounts receivable balance. We determine the allowance based on known troubled accounts, historical experience, and other currently available evidence. \n\n\n\n| (In millions) June 30, | 2024 | 2023 | 2022 | | |\n|-------------------------------------------------------------|--------|--------|--------|----|-----|\n| Accounts receivable, net of allowance for doubtful accounts | $ | 830 $ | 650 | $ | 633 |\n| Other long-term assets | 54 | 66 | 77 | | |\n| Total | $ | 884 $ | 716 | $ | 710 |\n\n| (In millions) Year Ended June 30, | 2024 | 2023 | 2022 | | | |\n|-------------------------------------|----------------------------|--------|--------|-------|----|-----|\n| Balance, beginning of period | $ | 716 | $ | 710 | $ | 798 |\n| | Charged to costs and other | 386 | 258 | 157 | | |\n| | Write-offs | (218) | (252) | (245) | | |\n| Balance, end of period | $ | 884 | $ | 716 | $ | 710 |\n\nAs of June 30, 2024 and 2023, other receivables related to activities to facilitate the purchase of server components were $10.5 billion and $9.2 billion, respectively, and are included in other current assets in our consolidated balance sheets.\n\nWe record financing receivables when we offer certain customers the option to acquire our software products and services offerings through a financing program in a limited number of countries. As of June 30, 2024 and 2023, our financing receivables, net were $4.5 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.\n\n## Assets Recognized From Costs To Obtain A Contract With A Customer\n\nWe recognize an asset for the incremental costs of obtaining a contract with a customer if we expect the benefit of those costs to be longer than one year. We have determined that certain sales incentive programs meet the requirements to be capitalized. Total capitalized costs to obtain a contract were immaterial during the periods presented and are included in other current and long-term assets in our consolidated balance sheets. \n\nWe apply a practical expedient to expense costs as incurred for costs to obtain a contract with a customer when the amortization period would have been one year or less. These costs include our internal sales organization compensation program and certain partner sales incentive programs as we have determined annual compensation is commensurate with annual sales activities.\n\n## Cost Of Revenue\n\nCost of revenue includes: manufacturing and distribution costs for products sold and programs licensed; operating costs related to product support service centers and product distribution centers; costs incurred to include software on PCs sold by original equipment manufacturers ("OEM"), to drive traffic to our websites, and to acquire online advertising space; costs incurred to support and maintain cloud-based and other online products and services, including datacenter costs and royalties; warranty costs; inventory valuation adjustments; costs associated with the delivery of consulting services; and the amortization of capitalized software development costs. Capitalized software development costs are amortized over the estimated lives of the products.',
'P',
'i',
]
embeddings = model.encode(sentences)
print(embeddings.shape)
# [3, 768]
# Get the similarity scores for the embeddings
similarities = model.similarity(embeddings, embeddings)
print(similarities.shape)
# [3, 3]
```
## Training Details
### Training Dataset
#### Unnamed Dataset
* Size: 54 training samples
* Columns: sentence_0, sentence_1, and sentence_2
* Approximate statistics based on the first 54 samples:
| | sentence_0 | sentence_1 | sentence_2 |
|:--------|:-------------------------------------------------------------------------------------|:--------------------------------------------------------------------------------|:-------------------------------------------------------------------------------|
| type | string | string | string |
| details | - min: 49 tokens
- mean: 495.98 tokens
- max: 512 tokens
| - min: 2 tokens
- mean: 2.87 tokens
- max: 3 tokens
| - min: 3 tokens
- mean: 3.0 tokens
- max: 3 tokens
|
* Samples:
| sentence_0 | sentence_1 | sentence_2 |
|:---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|:---------------|:---------------|
| # Microsoft Quarterly Highlights, Product Releases And Enhancements
## Fy24 Q4
Every quarter Microsoft delivers hundreds of products, either as new releases or services or as enhancements to current products and services. These releases are a result of significant research and development investments, made over multiple years, designed to help customers be more productive and secure and to deliver differentiated value across the cloud and the edge.
Following are the major product releases and other highlights for the quarter, organized by product categories, to help illustrate how we are accelerating innovation across our businesses while expanding our market opportunities.
## Microsoft 365 Consumer/Commercial
Access Copilot directly in new Outlook for Windows and web is the same Microsoft Copilot experience users get from the Microsoft Teams app, at copilot.microsoft.com
(Work mode), and other places but is now available from within Microsoft Outlook for Windows and web.
Interact with Copilot in the new Outlook for Windows and web allows users to ask questions or provide instructions directly inside Outlook. Users can type and receive responses from Copilot in a right-hand side panel that can be opened by the user by clicking on the Copilot icon in the top nav bar.
Access Copilot directly in classic Outlook for Windows is the Microsoft Copilot experience users get in Microsoft Teams and copilot.microsoft.com (Work mode) but is now available from within classic Microsoft Outlook for Windows.
Coaching by Copilot in classic Outlook for Windows combines the power of LLMs and Outlook data to coach users on how to best get their message across.
Draft by Copilot in classic Outlook for Windows combines the power of LLMs and Outlook data to help users draft new messages or replies.
Bing search integration brings the power of the web to chats in Word. Ask Copilot a question in Word chat and Copilot generates an answer using integrated Bing search, so users never have to leave the app. Available on web and Windows desktop.
Copilot in Loop is available in Loop components in Teams and Outlook. People with a Copilot License can now leverage Copilot in Loop when they paste Loop components into the Teams app, Outlook and Meeting Notes.
The Microsoft Copilot Academy is a new addition to Viva Learning designed to help customers effectively utilize Copilot experiences through guided upskilling. Learning content curated by Microsoft experts is organized into learning paths like "meet Copilot," "intro to prompts" and more.
The Microsoft Copilot Dashboard provides company leaders with out-of-the-box reports to understand and measure every stage of their Copilot transformation journey. This privacy-protected data spans across readiness, adoption, impact and user sentiment via survey response.
Copilot in Microsoft Viva Engage helps leaders create compelling and inspiring posts from simple prompts or trending topics within workplace communities and storyline conversations. Copilot offers suggestions to personalize messages with options to adjust tone and length and to suggest relevant images, all to help drive authenticity and engagement. Further, leaders can utilize Copilot to analyze engagement metrics, assess sentiment and recommend responses.
The new Copilot Deployment Kit in Viva Amplify helps organizations launch and roll out Copilot campaigns with ease. Teams can use prebuilt campaign templates to drive awareness and help employees learn what Copilot can do for them. It comes with eight predrafted communications that include videos, and guides that can easily be customized and sent to help users learn about Copilot.
ONA is a critical workplace analytics tool to help organizations better understand and improve how teams work together through collaboration, communication, change management and more. The ONA change management template enables analysts to conduct in-depth analysis to help understand how major organizational changes, such as a reorganization, large-scale transformation or shift in work modes impact collaboration behavior.
The solutions of the Microsoft Intune Suite help organizations improve their security posture, simplify IT and security operations, and reduce costs of managing and protecting their endpoint estate. Intune Suite and standalone solutions are now also generally available for customers in the United States federal, state, local and tribal governments, assisting them to meet the demands of the Executive Order to achieve a Zero Trust security model.
Microsoft Teams
Intelligent recap supports meetings with just transcription enabled, allowing people to enjoy AI-generated summaries for more types of meetings. Sometimes, meeting participants may choose to transcribe a meeting without recording it. In these cases, Teams Premium and Copilot for Microsoft 365 licensed users will be able to access AI-generated notes, AI-generated tasks, and name mentions after the meeting to catch up.
Intelligent call recap brings one of the best AI features in meetings to calling.
Intelligent call recap provides AI-powered insights and recaps of users' VoIP and PSTN calls in Teams. This feature is available for Teams Premium and Copilot for Microsoft 365 users.
Help keep confidential meetings protected with expanded controls for managing who can initiate transcription. Meeting organizers with eligible licenses can see a control called "Who can record and transcribe" in the meeting options, offering three choices: (1) organizers and co-organizers, or (2) organizers, co-organizers and presenters, or (3) no one. This way meeting organizers can manage which roles can initiate recording and transcription for a meeting.
Users can now instruct Copilot to adjust their draft message. To try it out, write a message in chat or channels, open Copilot beneath the message box in Teams, choose to adjust the message with a custom prompt, and type a prompt like "add a call to action" or "make it persuasive" or "convert my message into a list and add inclusive language."
In addition to accessing Copilot in Teams during a meeting on a mobile device, users can now access Copilot in Teams and ask questions about meetings after they end.
Just tap a Teams calendar item to access Copilot in the meeting "Details" or
"Recap" view. This is available for eligible meetings with transcription turned on.
When users get a message in a different language, they will see a suggestion to translate the message into their preferred language. Additionally, in translation settings, they can select which languages they don't want to translate and whether to translate messages automatically. These features reduce the need for manual translation or switching between apps.
Nearby conversations can interfere with Teams calls and meetings. Voice isolation is an AI-based advanced noise suppression feature that eliminates unwanted background noise, including other human voices. The technology recognizes a user's voice profile and ensures only their voice is transmitted. Voice isolation can be enabled for calls and meetings.
Zero-touch provisioning is a feature that allows users to deploy Microsoft Teams Rooms on Windows devices without any physical intervention at the site. It leverages Windows Autopilot and Auto-login technologies to automate the enrollment and configuration of the devices from the cloud, using the credentials stored in the Teams Rooms Pro Management service.
Users can extend the power and knowledge of Copilot in Teams meetings for sales organizations by enabling a plugin to connect to Copilot for Sales. With this plugin, Copilot can process conversations in real time and return insights to sellers, such as an overview of an account opportunity, based on the organization's Copilot for Sales data. Copilot can also suggest dynamic prompts for querying account information when sellers mention keywords and names during a discussion.
Frontline teams can harness the power of Copilot for Microsoft 365 with the new Shifts plugin. Both managers and workers can ask Copilot to show them their shifts schedule for their specific team, as well as open shifts and time off. With quick insights at their fingertips, frontline teams can manage schedules with more agility and speed so they can focus on critical tasks. Shifts plugin for Copilot is now generally available with both the Copilot for Microsoft 365 license as well as Microsoft Teams E and F-SKU licenses.
## Windows
The company announced a new category of Windows PCs designed for AI called Copilot+ PCs. Copilot+ PCs are the fastest, most intelligent Windows PCs ever built.
With powerful new silicon capable of an incredible 40+ TOPS (trillion operations per second), all-day battery life and access to the most advanced AI models, Copilot+
PCs will enable you to do things you can't on any other PC. Generate and refine AI
images in near real time directly on the device using Cocreator; bridge language barriers with Live Captions, translating audio from 40+ languages into English; and unlock more AI capabilities with first-party and third-party apps faster than ever. Introducing Copilot+ PCs - The Official Microsoft Blog.
Windows 365 Frontline is designed to meet the distinct needs of shift and part-time employees. With Windows 365 Frontline for FedRAMP, Cloud PCs are provisioned in an Azure Commercial datacenter and meet FedRAMP requirements when they are properly configured and used within CONUS.
Hibernation support in Azure Virtual Desktop is now generally available. Hibernating a session host virtual machine (VM) deallocates the machine while persisting the VMs in-memory state. When a VM hibernates, users only pay for storage and networking costs, not compute costs. When it restarts, users can quickly resume their work.
App attach for Azure Virtual Desktop allows IT admins to dynamically attach applications from an application package to a user session in Azure Virtual Desktop.
App attach is now generally available. The new UI for App Attach will be seen in the Azure Portal. Customers and partners should use the new App Attach application delivery approach going forward.
## Dynamics 365
Dynamics 365 Customer Insights enables users to ensure messages go to the right contact email address. Users can choose which of a contact's email addresses to target in their journeys. For example, some email messages may be more appropriate for a contact's work email address, whereas others may best target a personal email address. Users can also now use timeline highlights, which enable quick access to actionable record updates. | # | S |
| ```
PART I
Item 1A
abusive activities through our cloud-based services, such as unauthorized account access, payment fraud, or terms of service violations including cryptocurrency mining or launching cyberattacks. While are committed to detecting and controlling such misuse of our cloud-based and AI services, our efforts may not be effective, and we may incur reputational damage or experience adverse impacts to our business and results of operations.
## Risks Relating To The Evolution Of Our Business
We make significant investments in products and services that may not achieve expected returns. We will continue to make significant investments in research, development, and marketing for existing products, services, and technologies. In addition, we are focused on developing new AI platform services and incorporating AI into existing products and services. We also invest in the development and acquisition of a variety of hardware for productivity, communication, and entertainment, including PCs, tablets, and gaming devices. Investments in new technology are speculative. Commercial success depends on many factors, including innovation, developer support, and effective distribution and marketing. If customers do not perceive our latest offerings as providing significant new functionality or other value, they may reduce their purchases of new software and hardware products or upgrades, unfavorably affecting revenue. We may not achieve significant revenue from new product, service, and distribution channel investments for several years, if at all. New products and services may not be profitable or may not achieve operating margins as high as we have experienced historically. We may not get engagement in certain features that drive post-sale monetization opportunities. Our data-handling practices across our products and services will continue to be under scrutiny. Perceptions of mismanagement, driven by regulatory activity or negative public reaction to our practices or product experiences, could negatively impact product and feature adoption. Developing new technologies is complex. It can require long development and testing periods. We could experience significant delays in new releases or significant problems in creating new products or services. These factors could adversely affect our business, financial condition, and results of operations.
Acquisitions, joint ventures, and strategic alliances may have an adverse effect on our business. We expect to continue making acquisitions and entering into joint ventures and strategic alliances as part of our long-term business strategy. For example, in March 2022 we completed our acquisition of Nuance Communications, Inc., and in October 2023 we completed our acquisition of Activision Blizzard, Inc. ("Activision Blizzard"). In January 2023 we announced the third phase of our OpenAI strategic partnership. Acquisitions and other transactions and arrangements involve significant challenges and risks, including that they do not advance our business strategy, that we get an unsatisfactory return on our investment, that they raise new compliance-related obligations and challenges, that we have difficulty integrating and retaining new employees, business systems, and technology, that they distract management from our other businesses, or that announced transactions may not be completed. If an arrangement fails to adequately anticipate changing circumstances and interests of a party, it may result in early termination or renegotiation of the arrangement. We also have limited ability to control or influence third parties with whom we have arrangements, which may impact our ability to realize the anticipated benefits. The success of these transactions and arrangements depend in part on our ability to leverage them to enhance our existing products and services or develop compelling new ones, as well as the acquired companies' ability to meet our policies and processes in areas such as data governance, privacy, and cybersecurity. It may take longer than expected to realize the full benefits from these transactions and arrangements, such as increased revenue or enhanced efficiencies, or the benefits may ultimately be smaller than we expected. In addition, an acquisition may be subject to challenge even after it has been completed. For example, the Federal Trade Commission continues to challenge our Activision Blizzard acquisition and could, if successful, alter or unwind the transaction. These events could adversely affect our business, operations, financial condition, and results of operations.
If our goodwill or amortizable intangible assets become impaired, we may be required to record a significant charge to earnings. We acquire other companies and intangible assets and may not realize all the economic benefit from those acquisitions, which could cause an impairment of goodwill or intangibles. We review our amortizable intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. We test goodwill for impairment at least annually. Factors that may be a change in circumstances, indicating that the carrying value of our goodwill or amortizable intangible assets may not be recoverable, include a decline in our stock price and market capitalization, reduced future cash flow estimates, and slower growth rates in industry segments in which we participate. We have in the past recorded, and may in the future be required to record, a significant charge in our consolidated financial statements during the period in which any impairment of our goodwill or amortizable intangible assets is determined, negatively affecting our results of operations.
```
PART I
Item 1A
CYBERSECURITY, DATA PRIVACY, AND PLATFORM ABUSE RISKS
Cyberattacks and security vulnerabilities could lead to reduced revenue, increased costs, liability claims, or
harm to our reputation or competitive position.
```
## Security Of Our Information Technology
Threats to IT security can take a variety of forms. Individual and groups of hackers and sophisticated organizations, including state-sponsored organizations or nation-states, continuously undertake attacks that pose threats to our customers and our IT, and we have experienced cybersecurity incidents in which such actors have gained unauthorized access to our IT systems and data, including customer systems and data. These actors use a wide variety of methods, which include developing and deploying malicious software; exploiting known and potential vulnerabilities or intentionally designed processes in hardware, software, or other infrastructure to attack our products and services or gain access to our networks and datacenters; using social engineering techniques to induce our employees, users, partners, or customers to disclose sensitive information, such as passwords, or take other actions to gain access to our data or our users' or customers' data; or acting in a coordinated manner or conducting coordinated attacks. For example, as previously disclosed in our Form 8-K filed with the Securities and Exchange Commission on January 19, 2024 and amended on March 8, 2024, beginning in late November 2023, a nation-state associated threat actor used a password spray attack to compromise a legacy test account and, in turn, gain access to Microsoft email accounts. The threat actor used and may continue to use information it obtained to gain, or attempt to gain, unauthorized access to some of our source code repositories and internal systems, and the threat actor may utilize this information to otherwise adversely affect our business and results of operations. This incident has and may continue to result in harm to our reputation and customer relationships. Additionally, we may discover additional impacts of this or other incidents as part of our ongoing examination of this incident. Nation-state and statesponsored actors can sustain malicious activities for extended periods and deploy significant resources to plan and carry out attacks. Nation-state attacks against us, our customers, or our partners have and may continue to intensify during periods of intense diplomatic or armed conflict, such as the ongoing conflict in Ukraine. Cyber incidents and attacks, individually or in the aggregate, could adversely affect our financial condition, results of operations, competitive position, and reputation, or expose us to legal or regulatory risk.
Inadequate account security or organizational security practices, including those of companies we have acquired or those of the third parties we utilize, have resulted and may result in unauthorized access to our IT systems and data, including customer systems and data, in the future. For example, system administrators may fail to timely remove employee account access when no longer appropriate. Employees or third parties may intentionally compromise our or our users' security or systems or reveal confidential information. Malicious actors may employ the IT supply chain to introduce malware through software updates or compromised supplier accounts or hardware.
Cyberthreats are constantly evolving and becoming increasingly sophisticated and complex, increasing the difficulty of detecting and successfully defending against them. Threat actors may also utilize emerging technologies, such as AI and machine learning. We may have no current capability to detect certain vulnerabilities or new attack methods, which may allow them to persist in the environment over long periods of time. It may be difficult to determine the best way to investigate, mitigate, contain, and remediate the harm caused by a cyber incident. Such efforts may not be successful, and we may make errors or fail to take necessary actions. It is possible that threat actors may gain undetected access to other networks and systems after establishing a foothold on an internal system. Cyber incidents and attacks can have cascading impacts that unfold with increasing speed across our internal networks and systems, as well as those of our partners and customers. In addition, it may take considerable time for us to investigate and evaluate the full impact of incidents, particularly for sophisticated attacks. These factors may inhibit our ability to provide prompt, full, and reliable information about the incident to our customers, partners, regulators, and the public. Breaches of our facilities, network, or data security can disrupt the security of our systems and business applications, impair our ability to provide services to our customers and protect the privacy of their data, result in product development delays, compromise confidential or technical business information, result in theft or misuse of our intellectual property or other assets, subject us to ransomware attacks, require us to allocate more resources to improve technologies or remediate the impacts of attacks, or otherwise adversely affect our business. In addition, actions taken to remediate an incident could result in outages, data losses, and disruptions of our services. | ` | o |
| PART II
Item 7
## Research And Development Costs
Costs incurred internally in researching and developing a computer software product are charged to expense until technological feasibility has been established for the product. Once technological feasibility is established, software costs are capitalized until the product is available for general release to customers. Judgment is required in determining when technological feasibility of a product is established. We have determined that technological feasibility for our software products is reached after all high-risk development issues have been resolved through coding and testing. Generally, this occurs shortly before the products are released to production. The amortization of these costs is included in cost of revenue over the estimated life of the products.
## Legal And Other Contingencies
The outcomes of legal proceedings and claims brought against us are subject to significant uncertainty. An estimated loss from a loss contingency such as a legal proceeding or claim is accrued by a charge to income if it is probable that an asset has been impaired or a liability has been incurred and the amount of the loss can be reasonably estimated. In determining whether a loss should be accrued we evaluate, among other factors, the degree of probability of an unfavorable outcome and the ability to make a reasonable estimate of the amount of loss. Changes in these factors could materially impact our consolidated financial statements.
## Income Taxes
The objectives of accounting for income taxes are to recognize the amount of taxes payable or refundable for the current year, and deferred tax liabilities and assets for the future tax consequences of events that have been recognized in an entity's financial statements or tax returns. We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Accounting literature also provides guidance on derecognition of income tax assets and liabilities, classification of deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, and income tax disclosures. Judgment is required in assessing the future tax consequences of events that have been recognized in our consolidated financial statements or tax returns. Variations in the actual outcome of these future tax consequences could materially impact our consolidated financial statements.
## Business Combinations - Valuation Of Intangible Assets
Accounting for business combinations requires significant judgments when allocating the purchase price to the estimated fair values of assets acquired and liabilities assumed at the acquisition date. Determination of fair value involves estimates and assumptions which can be complex, most notably with respect to intangible assets. Critical estimates used in the valuation of intangible assets include, but are not limited to, the amount and timing of projected cash flows, useful lives, and discount rates. While management's estimates of fair value are based on assumptions that are believed to be reasonable, these assumptions are inherently uncertain as they pertain to forward-looking views of our business and market conditions. The judgments made in this valuation process could materially impact our consolidated financial statements.
## Statement Of Management'S Responsibility For Financial Statements
Management is responsible for the preparation of the consolidated financial statements and related information that are presented in this report. The consolidated financial statements, which include amounts based on management's estimates and judgments, have been prepared in conformity with accounting principles generally accepted in the United States of America.
The Company designs and maintains accounting and internal control systems to provide reasonable assurance at reasonable cost that assets are safeguarded against loss from unauthorized use or disposition, and that the financial records are reliable for preparing consolidated financial statements and maintaining accountability for assets. These systems are augmented by written policies, an organizational structure providing division of responsibilities, careful selection and training of qualified personnel, and a program of internal audits.
The Company engaged Deloitte & Touche LLP, an independent registered public accounting firm, to audit and render an opinion on the consolidated financial statements and internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States).
The Board of Directors, through its Audit Committee, consisting solely of independent directors of the Company, meets periodically with management, internal auditors, and our independent registered public accounting firm to ensure that each is meeting its responsibilities and to discuss matters concerning internal controls and financial reporting. Deloitte & Touche LLP and the internal auditors each have full and free access to the Audit Committee.
Satya Nadella Chief Executive Officer Amy E. Hood Executive Vice President and Chief Financial Officer Alice L. Jolla Corporate Vice President and Chief Accounting Officer
# Item 7A. Quantitative And Qualitative Disclosures About Market Risk
## Risks
We are exposed to economic risk from foreign exchange rates, interest rates, credit risk, and equity prices. We use derivatives instruments to manage these risks, however, they may still impact our consolidated financial statements.
## Foreign Currencies
Certain forecasted transactions, assets, and liabilities are exposed to foreign currency risk. We monitor our foreign currency exposures daily to maximize the economic effectiveness of our foreign currency positions, including hedges. Principal currency exposures include the Euro, Japanese yen, British pound, Canadian dollar, and Australian dollar.
## Interest Rate
Securities held in our fixed-income portfolio are subject to different interest rate risks based on their maturities. We manage the average maturity of the fixed-income portfolio to achieve economic returns that correlate to certain global fixed-income indices.
## Credit
Our fixed-income portfolio is diversified and consists primarily of investment-grade securities. We manage credit exposures relative to broad-based indices to facilitate portfolio diversification.
## Equity
Securities held in our equity investments portfolio are subject to price risk.
## Sensitivity Analysis
The following table sets forth the potential loss in future earnings or fair values, including associated derivatives, resulting from hypothetical changes in relevant market rates or prices:
| (In millions) | June 30, | | |
|--------------------------------|----------------------------------------------------------|--------------------|------------------|
| Risk Categories | Hypothetical Change | 2024 | Impact |
| Foreign currency - Revenue | 10% decrease in foreign exchange rates | $ | (9,605) Earnings |
| Foreign currency - Investments | 10% decrease in foreign exchange rates | (38) Fair Value | |
| Interest rate | 100 basis point increase in U.S. treasury interest rates | (1,343) Fair Value | |
| Credit | 100 basis point increase in credit spreads | (318) Fair Value | |
| Equity | 10% decrease in equity market prices | (1,078) Earnings | |
## Item 8. Financial Statements And Supplementary Data Income Statements
| (In millions, except per share amounts) Year Ended June 30, | | 2024 | 2023 | 2022 | |
|---------------------------------------------------------------|---------|----------|---------|--------|--------|
| Revenue: Product | $ | 64,773 $ | 64,699 | $ | 72,732 |
| Service and other | 180,349 | 147,216 | 125,538 | | |
| Total revenue | 245,122 | 211,915 | 198,270 | | |
| Cost of revenue: Product | 15,272 | 17,804 | 19,064 | | |
| Service and other | 58,842 | 48,059 | 43,586 | | |
| Total cost of revenue | 74,114 | 65,863 | 62,650 | | |
| Gross margin | 171,008 | 146,052 | 135,620 | | |
| Research and development | 29,510 | 27,195 | 24,512 | | |
| Sales and marketing | 24,456 | 22,759 | 21,825 | | |
| General and administrative | | 7,609 | 7,575 | 5,900 | |
| Operating income | 109,433 | 88,523 | 83,383 | | |
| Other income (expense), net | (1,646) | 788 | 333 | | |
| Income before income taxes | 107,787 | 89,311 | 83,716 | | |
| Provision for income taxes | 19,651 | 16,950 | 10,978 | | |
| Net income | $ | 88,136 $ | 72,361 | $ | 72,738 |
| Earnings per share: Basic | $ | 11.86 $ | 9.72 | $ | 9.70 |
| Diluted | $ | 11.80 $ | 9.68 | $ | 9.65 |
| Weighted average shares outstanding: Basic | | 7,431 | 7,446 | 7,496 | |
| Diluted | | 7,469 | 7,472 | 7,540 | |
| Refer to accompanying notes. | | | | | | | P | < |
* Loss: [TripletLoss](https://sbert.net/docs/package_reference/sentence_transformer/losses.html#tripletloss) with these parameters:
```json
{
"distance_metric": "TripletDistanceMetric.EUCLIDEAN",
"triplet_margin": 5
}
```
### Training Hyperparameters
#### Non-Default Hyperparameters
- `per_device_train_batch_size`: 16
- `per_device_eval_batch_size`: 16
- `num_train_epochs`: 10
- `multi_dataset_batch_sampler`: round_robin
#### All Hyperparameters
Click to expand
- `overwrite_output_dir`: False
- `do_predict`: False
- `eval_strategy`: no
- `prediction_loss_only`: True
- `per_device_train_batch_size`: 16
- `per_device_eval_batch_size`: 16
- `per_gpu_train_batch_size`: None
- `per_gpu_eval_batch_size`: None
- `gradient_accumulation_steps`: 1
- `eval_accumulation_steps`: None
- `torch_empty_cache_steps`: None
- `learning_rate`: 5e-05
- `weight_decay`: 0.0
- `adam_beta1`: 0.9
- `adam_beta2`: 0.999
- `adam_epsilon`: 1e-08
- `max_grad_norm`: 1
- `num_train_epochs`: 10
- `max_steps`: -1
- `lr_scheduler_type`: linear
- `lr_scheduler_kwargs`: {}
- `warmup_ratio`: 0.0
- `warmup_steps`: 0
- `log_level`: passive
- `log_level_replica`: warning
- `log_on_each_node`: True
- `logging_nan_inf_filter`: True
- `save_safetensors`: True
- `save_on_each_node`: False
- `save_only_model`: False
- `restore_callback_states_from_checkpoint`: False
- `no_cuda`: False
- `use_cpu`: False
- `use_mps_device`: False
- `seed`: 42
- `data_seed`: None
- `jit_mode_eval`: False
- `use_ipex`: False
- `bf16`: False
- `fp16`: False
- `fp16_opt_level`: O1
- `half_precision_backend`: auto
- `bf16_full_eval`: False
- `fp16_full_eval`: False
- `tf32`: None
- `local_rank`: 0
- `ddp_backend`: None
- `tpu_num_cores`: None
- `tpu_metrics_debug`: False
- `debug`: []
- `dataloader_drop_last`: False
- `dataloader_num_workers`: 0
- `dataloader_prefetch_factor`: None
- `past_index`: -1
- `disable_tqdm`: False
- `remove_unused_columns`: True
- `label_names`: None
- `load_best_model_at_end`: False
- `ignore_data_skip`: False
- `fsdp`: []
- `fsdp_min_num_params`: 0
- `fsdp_config`: {'min_num_params': 0, 'xla': False, 'xla_fsdp_v2': False, 'xla_fsdp_grad_ckpt': False}
- `fsdp_transformer_layer_cls_to_wrap`: None
- `accelerator_config`: {'split_batches': False, 'dispatch_batches': None, 'even_batches': True, 'use_seedable_sampler': True, 'non_blocking': False, 'gradient_accumulation_kwargs': None}
- `deepspeed`: None
- `label_smoothing_factor`: 0.0
- `optim`: adamw_torch
- `optim_args`: None
- `adafactor`: False
- `group_by_length`: False
- `length_column_name`: length
- `ddp_find_unused_parameters`: None
- `ddp_bucket_cap_mb`: None
- `ddp_broadcast_buffers`: False
- `dataloader_pin_memory`: True
- `dataloader_persistent_workers`: False
- `skip_memory_metrics`: True
- `use_legacy_prediction_loop`: False
- `push_to_hub`: False
- `resume_from_checkpoint`: None
- `hub_model_id`: None
- `hub_strategy`: every_save
- `hub_private_repo`: False
- `hub_always_push`: False
- `gradient_checkpointing`: False
- `gradient_checkpointing_kwargs`: None
- `include_inputs_for_metrics`: False
- `eval_do_concat_batches`: True
- `fp16_backend`: auto
- `push_to_hub_model_id`: None
- `push_to_hub_organization`: None
- `mp_parameters`:
- `auto_find_batch_size`: False
- `full_determinism`: False
- `torchdynamo`: None
- `ray_scope`: last
- `ddp_timeout`: 1800
- `torch_compile`: False
- `torch_compile_backend`: None
- `torch_compile_mode`: None
- `dispatch_batches`: None
- `split_batches`: None
- `include_tokens_per_second`: False
- `include_num_input_tokens_seen`: False
- `neftune_noise_alpha`: None
- `optim_target_modules`: None
- `batch_eval_metrics`: False
- `eval_on_start`: False
- `use_liger_kernel`: False
- `eval_use_gather_object`: False
- `batch_sampler`: batch_sampler
- `multi_dataset_batch_sampler`: round_robin