Item 7

  

Debt Proceeds

We issue debt to take advantage of favorable pricing and liquidity in the debt markets, reflecting our credit rating. The proceeds of these issuances were or will be used for general corporate purposes, which may include, among other things, funding for working capital, capital expenditures, repurchases of capital stock, acquisitions, and repayment of existing debt. Refer to Note 10 – Debt of the Notes to Financial Statements (Part II, Item 8 of this Form 10-K).

Unearned Revenue

Unearned revenue comprises mainly unearned revenue related to volume licensing programs, which may include cloud services and Software Assurance (“SA”). 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 other offerings for which we have been paid in advance and earn the revenue when we transfer control of the product or service. Refer to Note 1 – Accounting Policies of the Notes to Financial Statements (Part II, Item 8 of this Form 10-K).

The following table outlines the expected future recognition of unearned revenue as of June 30, 2025:

| --- | --- | --- |
| (In millions) |  |  |
| Three Months Ending |  |  |
| September 30, 2025 | $ | 25,191 |
| December 31, 2025 |  | 19,733 |
| March 31, 2026 |  | 13,742 |
| June 30, 2026 |  | 5,889 |
| Thereafter |  | 2,710 |
| Total | $ | 67,265 |

If our customers choose to license cloud-based versions of our products and services rather than licensing transaction-based products and services, the associated revenue will shift from being recognized at the time of the transaction to being recognized over the subscription period or upon consumption, as applicable. Refer to Note 12 – Unearned Revenue of the Notes to Financial Statements (Part II, Item 8 of this Form 10-K).

Material Cash Requirements and Other Obligations

Contractual Obligations

The following table summarizes the payments due by fiscal year for our outstanding contractual obligations as of June 30, 2025:

> **(In millions)**
>
> 2026 / 2026 / Thereafter / Thereafter / Total / Total
>
> Long-term debt:  (a)
> Principal payments ...................... $ / 3,000 / $ / 46,206 / $ / 49,206
> Interest payments ....................... 1,509 / 25,527 / 27,036
> Construction commitments  (b) ........... 26,859 / 5,290 / 32,149
> Operating and finance leases, including imputed interest  (c) ... 12,798 / 165,903 / 178,701
> Purchase commitments  (d) ............... 103,940 / 6,013 / 109,953
> Total ................................... $ / 148,106 / $ / 248,939 / $ / 397,045

  (a)  Refer to Note 10 – Debt of the Notes to Financial Statements (Part II, Item 8 of this Form 10-K).

  (b)  Refer to Note 6 – Property and Equipment of the Notes to Financial Statements (Part II, Item 8 of this Form 10-K).

  (c)  Refer to Note 13 – Leases of the Notes to Financial Statements (Part II, Item 8 of this Form 10-K).

  (d)  Purchase commitments primarily relate to datacenters and include open purchase orders and take-or-pay contracts that are not presented as construction commitments above.

  

44

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PART II