01—Abstract
Summary
Summary of the 10-Q filed April 29, 2026. Cited figures are marked; the original filing is the authoritative source.
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 billiona 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 billionb 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 billionc 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.
02—Key points
Key Highlights
- Total 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.
- Net 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.
- Microsoft Cloud revenue surged 29% to $54.5 billion for the three months ended March 31, 2026.
- Intelligent Cloud segment revenue increased 30% to $34.7 billion for the three months ended March 31, 2026, driven by Azure and other cloud services.
- Productivity and Business Processes segment revenue grew 17% to $35.0 billion for the three months ended March 31, 2026, supported by Microsoft 365.
- The company continues significant investments in AI infrastructure and talent, which impacted gross margin percentages.
- Microsoft returned $10.2 billion to shareholders through share repurchases and dividends in the third quarter of fiscal year 2026.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2026, Microsoft Corp kept $0.38.
- Revenue$82.89B100.0%
- Cost of revenue−$26.83B32.4%
- Gross profit$56.06B67.6%
- Operating costs−$17.66B21.3%
- Operating income$38.40B46.3%
- Interest, other & tax−$6.62B8.0%
- Net income$31.78B38.3%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2026filed April 29, 2026Financial Statements
Q3 FY2026 against Q3 FY2025
| Line item | Q3 FY2026Q3 FY2025 | Change |
|---|---|---|
| Revenue | $82.89B$70.07B | +18.3% |
| Cost of Revenue | $26.83B$21.92B | +22.4% |
| Gross Profit | $56.06B$48.15B | +16.4% |
| R&D Expenses | $8.91B$8.20B | +8.7% |
| Operating Expenses | $17.66B$16.15B | +9.4% |
| Operating Income | $38.40B$32.00B | +20.0% |
| Net Income | $31.78B$25.82B | +23.1% |
| EPS (Basic) | $4.28$3.47 | +23.3% |
| EPS (Diluted) | $4.27$3.46 | +23.4% |
| Shares Outstanding (Basic) | 7.43B7.43B | −0.1% |
| Shares Outstanding (Diluted) | 7.45B7.46B | −0.2% |
05—Questions
Frequently Asked Questions
What were the main drivers of revenue growth in the third quarter of fiscal year 2026?
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%.
How are investments in Artificial Intelligence (AI) impacting Microsoft's financial performance?
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.
What is the company's strategy for returning capital to shareholders?
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.
What are the key segments contributing to Microsoft's revenue?
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.
06—Continue