Three Months Ended June 30, 2026
Filed Jul 29, 2026Microsoft 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.