MICROSOFT CORP (MSFT): Results of Operations and Financial Condition
MICROSOFT CORP (MSFT) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 Microsoft Cloud and AI Strength Fuels Fourth Quarter Results REDMOND, Wash. — July 29, 2026 — Microsoft Corp. today announced the following results for the quarter ended June 30, 2026, as compared to the corresponding period of last fiscal year: • Revenue was $90.0 b
How this was made
The 30-second read
Why it matters
The filing discloses quarterly and full-year financial performance, segment growth, and AI-related business highlights (Azure surpassing $100B, Copilot paid seats over 30M), plus specific discrete items versus prior guidance.
Market read
Traders can update earnings positioning based on reported revenue, operating income, EPS growth, and AI monetization metrics, with attention to discrete items and non-GAAP adjustments.
What to watch
Investors may scrutinize the sustainability of Azure growth and the conversion rate of Copilot seats into durable revenue, beyond headline seat counts.
Microsoft Cloud and AI Strength Fuels Fourth Quarter Results
Fourth-quarter revenue increased 18%, operating income increased 18%, GAAP net income increased 31%, and Azure and other cloud services revenue increased 43%. Microsoft Cloud revenue increased 27%, while the company returned $10.2 billion to shareholders.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| RevenueGAAP | $90.0 billion | – | 18% |
| Revenue constant currency growthnon-GAAP | 17% | – | 17% |
| Operating incomeGAAP | $40.6 billion | – | 18% |
| Net incomeGAAP | $35.8 billion | – | 31% |
| Net incomenon-GAAP | $35.3 billion | – | 22% |
| Diluted earnings per shareGAAP | $4.81 | – | 32% |
| Diluted earnings per sharenon-GAAP | $4.74 | – | 23% |
| Microsoft Cloud revenueother | $59.3 billion | – | 27% |
| Commercial remaining performance obligationother | $678 billion | – | 84% |
| Fiscal year revenueGAAP | $331.8 billion | – | 18% |
| Fiscal year operating incomeGAAP | $155.2 billion | – | 21% |
| Fiscal year net incomeGAAP | $133.7 billion | – | 31% |
| Fiscal year net incomenon-GAAP | $128,786 | – | 22% |
| Fiscal year diluted earnings per shareGAAP | $17.95 | – | 32% |
| Fiscal year diluted earnings per sharenon-GAAP | $17.28 | – | 22% |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Productivity and Business ProcessesMicrosoft 365 Commercial cloud revenue increased 14% on a reported basis; Microsoft 365 Consumer cloud revenue increased 24%; LinkedIn revenue increased 12%; and Dynamics 365 revenue increased 13%. | $37.8 billion | – | 14% |
| Intelligent CloudAzure and other cloud services revenue increased 43%. | $39.3 billion | – | 32% |
| More Personal ComputingWindows OEM and Devices revenue decreased 7% and XBOX content and services revenue decreased 10%, partially offset by Search advertising revenue excluding traffic acquisition costs, which increased 10%. | $12.9 billion | – | (4)% |
Capital returns
- Microsoft returned $10.2 billion to shareholders in the form of dividends and share repurchases in the fourth quarter of fiscal year 2026.
What drove it
- Microsoft Cloud revenue was $59.3 billion and increased 27%.
- Commercial remaining performance obligation increased 84% to $678 billion.
- Azure and other cloud services revenue increased 43%.
- Microsoft 365 Consumer cloud revenue increased 24%.
- Search advertising revenue excluding traffic acquisition costs increased 10%.
Concerns
- More Personal Computing revenue was $12.9 billion and decreased 4%.
- Windows OEM and Devices revenue decreased 7%.
- XBOX content and services revenue decreased 10%.
- Several discrete items impacted quarterly results compared with forward-looking guidance, including a $3.2 billion gain from the investment in Anthropic, lower-than-expected Voluntary Retirement Program expenses, severance expense, and impairment charges in XBOX.
- GAAP net income and diluted earnings per share included a $480 million and $0.07 impact, respectively, from investments in OpenAI.
What to watch
- Forward-looking guidance to be provided on the earnings conference call and webcast.
- Azure and other cloud services revenue growth.
- Commercial remaining performance obligation.
- Performance in Windows OEM and Devices and XBOX content and services.
- The impact from investments in OpenAI and discrete items affecting earnings.
Analysis
Microsoft closed fiscal year 2026 with broad top-line and earnings growth. Fourth-quarter revenue was $90.0 billion, up 18%, while operating income was $40.6 billion, also up 18%. GAAP net income rose 31% to $35.8 billion and GAAP diluted earnings per share rose 32% to $4.81. On a non-GAAP basis excluding the impact from investments in OpenAI, net income was $35.3 billion, up 22%, and diluted earnings per share was $4.74, up 23%.
Cloud was the central growth driver. Microsoft Cloud revenue was $59.3 billion, up 27%, and commercial remaining performance obligation increased 84% to $678 billion. Intelligent Cloud was the fastest-growing reportable segment, with revenue of $39.3 billion, up 32%, supported by 43% growth in Azure and other cloud services revenue. Productivity and Business Processes revenue increased 14% to $37.8 billion, with growth across Microsoft 365 Consumer cloud, LinkedIn, and Dynamics 365.
Growth was not uniform across the portfolio. More Personal Computing revenue declined 4% to $12.9 billion. Windows OEM and Devices revenue declined 7%, while XBOX content and services revenue declined 10%. Search advertising revenue excluding traffic acquisition costs increased 10%, providing an area of growth within the segment but not offsetting the reported segment decline.
Reported earnings included discrete effects relative to the company's April 29, 2026 forward-looking guidance. Microsoft cited a $3.2 billion gain from its investment in Anthropic and lower-than-expected Voluntary Retirement Program expenses, partly offset by severance expense and impairment charges in XBOX. The company stated these items generated a benefit of $0.27 on diluted earnings per share and that, after adjusting for these items, it exceeded expectations across revenue, operating income, and diluted earnings per share.
For the full fiscal year, revenue was $331.8 billion, up 18%, operating income was $155.2 billion, up 21%, and GAAP diluted earnings per share was $17.95, up 32%. Microsoft returned $10.2 billion to shareholders through dividends and share repurchases during the fourth quarter. The release did not provide numerical forward guidance, stating that guidance would be provided on the earnings conference call and webcast.
Management, verbatim
We are advancing the frontier on the cost-to-outcome curve, ensuring every customer can turn tokens into business results. This year, Azure revenue surpassed $100 billion for the first time, and Microsoft 365 Copilot reached over 30 million paid seats, reflecting the confidence customers are placing in us to power their AI transformation.
Satya Nadella, chairman and chief executive officer
We delivered a strong quarter to close out the fiscal year, highlighted by Microsoft Cloud revenue of $59.3 billion, up 27% year-over-year.
Amy Hood, executive vice president and chief financial officer
Not in the filing
stated, not guessed- Quarterly gross margin
- Quarterly operating expenses
- Quarterly tax rate
- Quarterly operating cash flow
- Quarterly free cash flow
- Cash and cash equivalents
- Debt
- Separate dividend amount
- Separate share repurchase amount
- Numerical forward revenue guidance
- Numerical forward gross-margin guidance
- Numerical forward operating-expense guidance
- Numerical forward tax-rate guidance
- Prior-quarter comparisons for reported metrics
- Prior-year revenue amounts for Microsoft Cloud revenue and commercial remaining performance obligation
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
This is Microsoft’s SEC 8-K (Item 2.02) with Exhibit 99.1 covering quarter ended June 30, 2026 results and related non-GAAP reconciliation.
Ticker impact
Microsoft reports FY26 and Q4 results, including Azure revenue growth and Copilot paid seats, plus GAAP-to-non-GAAP adjustments tied to OpenAI investments.
Likely supportive for near-term sentiment given revenue, operating income, and EPS growth, with focus on Azure and Copilot seat momentum.
The filing provides concrete quarterly and annual financial datapoints, segment growth rates, and specific AI/Copilot adoption metrics, which typically drive earnings positioning and post-earnings repricing.
Market effects
Reinforces AI cloud demand read-through for large-cap enterprise software and hyperscale cloud peers, especially around Azure and Copilot monetization.
US large-cap tech sentiment supportive; may influence broader North American software and cloud complex positioning.
Global enterprise AI spending narrative supported by reported Azure scale and Microsoft 365 Copilot paid-seat growth.
Counterpoint
Non-GAAP results exclude OpenAI investment impacts; discrete items (Anthropic gain and Xbox-related charges) may mask underlying cost or product momentum variability.
Key entities
- companyMicrosoft Corp.
Reports Q4 and FY26 results, including Azure and Microsoft 365 Copilot paid-seat growth, and provides GAAP-to-non-GAAP adjustments tied to OpenAI investments.
- companyAnthropic
Microsoft cites a $3.2B gain from its investment in Anthropic as a discrete item impacting results versus guidance.
- companyOpenAI
Microsoft adjusts non-GAAP results to exclude impacts from investments in OpenAI.
