10-QPeriod: Q3 FY2026

MICROSOFT CORP Quarterly Report for Q3 Ended Mar 31, 2026

Filed April 29, 2026For Securities:MSFT

Summary

Microsoft Corporation (MSFT) reported strong financial results for the third quarter and the first nine months of fiscal year 2026, ending March 31, 2026. Total revenue increased by 18% year-over-year for both periods, reaching $82.9 billion for the quarter and $241.8 billion for the nine months. Net income also saw significant growth, up 23% to $31.8 billion for the quarter and 31% to $98.0 billion for the nine months. This performance was largely driven by robust growth in the Microsoft Cloud segment, which saw revenue increase by 29% to $54.5 billion for the quarter. The Intelligent Cloud segment, propelled by Azure, also demonstrated strong revenue growth of 30% to $34.7 billion for the quarter. While the More Personal Computing segment experienced a slight revenue dip of 1%, the company's strategic investments in AI infrastructure and product development continue to be a key focus, impacting gross margin percentages across segments due to increased compute capacity and AI usage costs. The company continues to prioritize returning capital to shareholders, with significant share repurchases and dividend payments. As of March 31, 2026, $44.0 billion remained authorized under its share repurchase program. Microsoft's strong financial position and consistent revenue growth across its core segments, particularly in cloud services, position it favorably amidst evolving market dynamics and ongoing investments in artificial intelligence.

Financial Highlights

54 data points
Beta

Revenue

$82.89B

67.6% Gross Margin

Net Income

$31.78B

38.3% Net Margin

EPS (Diluted)

$4.27

Total Assets

$694.23B

Cash & Equivalents

$32.10B

Free Cash Flow

$15.80B

Financial Statements
Beta
Revenue$82.89B
Cost of Revenue$26.83B
Gross Profit$56.06B
R&D Expenses$8.91B
Operating Expenses$17.66B
Operating Income$38.40B
Net Income$31.78B
EPS (Basic)$4.28
EPS (Diluted)$4.27
Shares Outstanding (Basic)7.43B
Shares Outstanding (Diluted)7.45B

Key Highlights

  • 1Total revenue increased 18% to $82.9 billion for the three months ended March 31, 2026, and 18% to $241.8 billion for the nine months ended March 31, 2026.
  • 2Net income grew 23% to $31.8 billion for the three months ended March 31, 2026, and 31% to $98.0 billion for the nine months ended March 31, 2026.
  • 3Microsoft Cloud revenue surged 29% to $54.5 billion for the three months ended March 31, 2026.
  • 4Intelligent Cloud segment revenue increased 30% to $34.7 billion for the three months ended March 31, 2026, driven by Azure and other cloud services.
  • 5Productivity and Business Processes segment revenue grew 17% to $35.0 billion for the three months ended March 31, 2026, supported by Microsoft 365.
  • 6The company continues significant investments in AI infrastructure and talent, which impacted gross margin percentages.
  • 7Microsoft returned $10.2 billion to shareholders through share repurchases and dividends in the third quarter of fiscal year 2026.

Frequently Asked Questions

Revenue growth was primarily driven by the Microsoft Cloud segment, which saw a 29% increase. Specifically, the Intelligent Cloud segment, led by Azure and other cloud services, grew 30%, and the Productivity and Business Processes segment, bolstered by Microsoft 365 Commercial and Consumer offerings, grew 17%.

Microsoft is making significant investments in AI infrastructure and talent. These investments are contributing to increased operating expenses and a decrease in gross margin percentages across segments, particularly due to the compute capacity and usage costs associated with AI services. However, AI is also being integrated into products, driving growth in segments like Microsoft 365 Commercial.

Microsoft continues to return capital to shareholders through share repurchases and dividends. In the third quarter of fiscal year 2026, the company returned $10.2 billion to shareholders via these methods. As of March 31, 2026, $44.0 billion remained available under the current share repurchase authorization.

Microsoft's revenue is primarily generated from three segments: Productivity and Business Processes (including Microsoft 365, LinkedIn, Dynamics), Intelligent Cloud (including Azure and server products), and More Personal Computing (including Windows, Surface, and Xbox). The Productivity and Business Processes and Intelligent Cloud segments showed significant year-over-year revenue growth in the reported periods.