Deferred revenue, or orders signed but not yet booked as sales, fell $768 million in the first quarter ended Sept. 30. Microsoft, the world's largest software maker, had forecast a decline of $200 million to $300 million from the fourth quarter.

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Deferred revenue, an asset on the balance sheet, comes from multiyear contracts in which Microsoft recognizes sales over the term of the agreement. Microsoft had a glut of new two- and three- year licenses last year as customers signed orders ahead of a deadline for a licensing change.