Exhibit 99.1 Microsoft Announces First Quarter Results REDMOND, Wash. — October
Exhibit 99.1 Microsoft Announces First Quarter Results REDMOND, Wash. — October 28, 2026 — Microsoft Corp. today announced the following results for the quarter ended September 30, 2026, as compared to the corresponding period of last fiscal year: • Revenue was $92.3 billion and increased 19% • Operating income was $45.9 billion and increased 21% (up 22% in constant currency) • Net income was $36.6 billion and increased 32% on a GAAP basis, and was $36.4 billion and increased 18% (up 19% in constant currency) on a non-GAAP basis • Diluted earnings per share was $4.92 and increased 32% on a GAAP basis, and was $4.89 and increased 18% (up 19% in constant currency) on a non-GAAP basis • Non-GAAP results exclude the impact from investments in OpenAI, explained in the Non-GAAP Definition section below “We are delivering greater capability, choice, control, and cost efficiency for customers across our entire stack,” said Satya Nadella, chairman and chief executive officer of Microsoft. “By helping organizations build and own their own intelligence, and earning trust through agent safety and security, we are translating our innovation into growing adoption and real-world impact across every industry.” “We delivered a strong start to the fiscal year with Microsoft Cloud revenue of $63.9 billion, with growth accelerating to 30% (up 31% in constant currency) year-over-year,” said Amy Hood, executive vice president and chief financial officer of Microsoft. “Results exceeded expectations across revenue, operating income, and earnings per share.” The following table adjusts for the impact from investments in OpenAI and reconciles our financial results reported in accordance with generally accepted accounting principles (GAAP) to non-GAAP financial results. Additional information regarding our non-GAAP definition is provided below. All growth comparisons relate to the corresponding period in the last fiscal year.
*Impact from OpenAI adjusts for the impact from investments in OpenAI Business Highlights Revenue in Agents and Infra was $76.8 billion and increased 25%, with the following business highlights: • Commercial remaining performance obligation increased 73% to $677 billion • Microsoft Cloud revenue was $63.9 billion and increased 30% (up 31% in constant currency) • Azure revenue increased 48% • Microsoft 365 commercial cloud revenue increased 18% (up 19% in constant currency) on an adjusted basis, normalized for a 1-point benefit from in-period revenue recognition in the prior year, and increased 17% (up 18% in constant currency) on a reported basis • Microsoft 365 consumer cloud revenue increased 17% (up 16% in constant currency) • Industry solutions cloud revenue increased 10% Revenue in Devices and Consumer was $15.5 billion and decreased 3%, with the following business highlights:
Search and advertising revenue excluding traffic acquisition costs increased 12%
Microsoft returned $10.2 billion to shareholders in the form of dividends and share repurchases in the first quarter of fiscal year 2027.
Microsoft will provide forward-looking guidance in connection with this quarterly earnings announcement on its earnings conference call and webcast.
Every quarter Microsoft delivers hundreds of products, services, and enhancements. These releases are driven by years of significant research and development investments, to empower customers with greater productivity, security, and differentiated value.
This momentum is reflected in stories that showcase how our technology isshaping industries and driving customer success. We share innovation updates on our product blogs acrossAzure,Microsoft 365, and more on ourOfficial Microsoft blog.
Satya Nadella, chairman and chief executive officer, Amy Hood, executive vice president and chief financial officer, Alice Jolla, chief accounting officer, Brian DeFoe, deputy general counsel and corporate secretary, and Jonathan Neilson, vice president of investor relations, will host a conference call and webcast at 2:30 p.m. Pacific time (5:30 p.m. Eastern time) today to discuss details of the company’s performance for the quarter and certain forward-looking information. The session may be accessed athttp://www.microsoft.com/en- us/investor. Participants can also dial into the conference call at (877) 407-0666 or +1 (201) 689-8023 for international, no password required. The webcast will be available for replay through the close of business on October 28, 2027.
Impact from investments in OpenAI.In the first quarter of fiscal year 2027, net income and diluted earnings per share were impacted by net gains from investments in OpenAI, which resulted in an increase in net income and diluted earnings per share of $207 million and $0.03, respectively. In the first quarter of fiscal year 2026, net income and diluted earnings per share were impacted by net losses from investments in OpenAI, which resulted in a decrease in net income and diluted earnings per share of $3.1 billion and $0.41, respectively.
Microsoft has provided non-GAAP financial measures related to the impact from investments in OpenAI to aid investors in better understanding our performance. Microsoft believes these non-GAAP measures assist investors by providing additional insight into its operational performance and help clarify trends affecting its business. For comparability of reporting, management considers non-GAAP measures in conjunction with GAAP financial results in evaluating business performance. The non-GAAP financial measures presented in this release should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP. Constant Currency Microsoft presents constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars using the average exchange rates from the comparative period rather than the actual exchange rates in effect during the respective periods. All growth comparisons relate to the corresponding period in the last fiscal year. Microsoft has provided this non-GAAP financial information to aid investors in better understanding our performance. The non-GAAP financial measures presented in this release should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP. Financial Performance Constant Currency Reconciliation
Three Months Ended September 30, 2026 2025 Percentage Percentage Change Y/Y Change Y/Y ($ in As Reported As Constant Constant millions) (GAAP) Reported GAAP Currency Currency (GAAP) Impact Agents $76,795 $61,672 25% $(290) 25% and Infra Devices and $15,484 $16,001 (3)% $(19) (3)% Consumer
We have recast certain prior period amounts to conform to the way we internally manage and monitor our business, which reflects the fiscal year 2027 changes to our segments announced in September 2026. Selected Product and Service Information Constant Currency Reconciliation
Three Months Ended September 30, 2026 ────────────────────────────────────────────────────────────────────────────── Percentage Change Constant Currency Percentage Change Y/Y (GAAP) Impact Y/Y Constant Currency Commercial remaining 73% 0% 73% performance obligation Microsoft Cloud 30% 1% 31% revenue Azure revenue 48% 0% 48% Microsoft 365 commercial cloud 17% 1% 18% revenue Microsoft 365 consumer cloud 17% (1)% 16% revenue Industry solutions cloud 10% 0% 10% revenue Search and advertising revenue excluding 12% 0% 12% traffic acquisition costs XBOX content and (2)% 1% (1)% services revenue Windows OEM and (22)% 0% (22)% devices revenue
About Microsoft Microsoft (Nasdaq “MSFT” @microsoft) creates platforms and tools powered by AI to deliver innovative solutions that meet the evolving needs of our customers. The technology company is committed to making AI available broadly and doing so responsibly, with a mission to empower every person and every organization on the planet to achieve more. Forward-Looking Statements
Statements in this release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors such as:
intense competition in all of our markets that could adversely affect our results of operations;
substantial investments in cloud and AI strategy that depend on customer demand, technological developments, competitive dynamics, and regulatory condition;
development, delivery, and maintenance of competitive cloud-based and AI products and services that achieve broad customer adoption and sustainable revenue growth;
significant investments in products and services that may not achieve expected returns;
acquisitions, joint ventures, and strategic alliances that could have an adverse effect on our business;
cyberattacks and security vulnerabilities that could lead to reduced revenue, increased costs, liability claims, or harm to our reputation or competitive position;
disclosure and misuse of personal data that could cause liability and harm to our reputation;
the possibility that we may not be able to protect information in our products and services from use by others;
products and services, how they are used by customers, and how third-party products and services interact with them, presenting security, privacy, and execution risks;
issues about the development, deployment, and use of AI that may result in reputational or competitive harm, or liability;
excessive outages, disruptions, or capacity constraints of our services if we fail to maintain an adequate operations infrastructure or secure resources necessary to support it;
potential consequences of new, existing, and evolving legal and regulatory requirements;
an inability to protect and utilize our intellectual property may harm our business and operating results;
damage to our reputation or our brands that may harm our business and results of operations;
exposure to increased economic and operational uncertainties from operating a global business, including the effects of foreign currency exchange; and
the dependence of our business on our ability to attract and retain talented employees.
For more information about risks and uncertainties associated with Microsoft’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of Microsoft’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Microsoft’s Investor Relations department at (800) 285-7772 or at Microsoft’s Investor Relations website athttp://www.microsoft.com/en-us/investor.
All information in this release is as of September 30, 2026. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.
Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center athttp://www.microsoft.com/news. Web links, telephone numbers, and titles were correct at time of publication, but may since have changed. Shareholder and financial information, as well as today’s 2:30 p.m. Pacific time conference call with investors and analysts, is available athttp://www.microsoft.com/en-us/investor. MICROSOFT CORPORATION INCOME STATEMENTS (In millions, except per share amounts) (Unaudited)
Three Months Ended September 30, 2026 2025 Revenue: Product $14,631 $15,922 Service and other 77,648 61,751 Total revenue 92,279 77,673 Cost of revenue: Product 2,471 2,922 Service and other 27,249 21,121 Total cost of revenue 29,720 24,043 Gross margin 62,559 53,630 Research and development 9,047 8,146 Sales and marketing 5,716 5,717 General and administrative 1,881 1,806 Operating income 45,915 37,961 Other income (expense), net 38 -3,660 Income before income taxes 45,953 34,301 Provision for income taxes 9,324 6,554 Net income $36,629 $27,747 Earnings per share: Basic $4.93 $3.73 Diluted $4.92 $3.72 Weighted average shares outstanding: Basic 7,426 7,433 Diluted 7,446 7,466
Three Months Ended September 30, 2026 2025 Net income $36,629 $27,747 Other comprehensive income (loss), net of tax:
Net change related to derivatives 3 -3 Net change related to investments -559 687 Translation adjustments and other -17 -98 Other comprehensive income (loss) -573 586 Comprehensive income $36,056 $28,333
September 30, June 30, 2026 2026 ─────────────────────────────────────────────────────────────────────── Assets Current assets: Cash and cash equivalents $20,281 $20,935 Short-term investments 44,228 55,908 Total cash, cash equivalents, and 64,509 76,843 short-term investments Accounts receivable, net of allowance 62,084 80,876 for doubtful accounts of $728 and $1,040 Inventories 1,835 1,397 Other current assets 57,709 48,594 Total current assets 186,137 207,710 Property and equipment, net of accumulated depreciation of $127,208 and 346,844 313,076 $118,691 Operating lease right-of-use assets 30,178 24,177 Equity and other investments 37,808 36,348 Goodwill 119,646 119,651 Intangible assets, net 17,751 18,609 Other long-term assets 41,039 38,805 Total assets $779,403 $758,376 Liabilities and stockholders' equity Current liabilities: Accounts payable $42,625 $42,416 Current portion of long-term debt 4,391 9,227 Accrued compensation 10,156 14,945 Short-term income taxes 1,447 2,534 Short-term unearned revenue 66,866 72,965 Other current liabilities 26,483 26,738 Total current liabilities 151,968 168,825 Long-term debt 31,090 31,067 Long-term income taxes 29,235 28,647 Long-term unearned revenue 2,697 2,747 Deferred income taxes 3,174 3,054 Operating lease liabilities 21,719 16,532 Other long-term liabilities 69,011 65,117 Total liabilities 308,894 315,989 Commitments and contingencies Stockholders' equity: Common stock and paid-in capital - shares authorized 24,000; outstanding 119,571 117,406 7,427 and 7,427 Retained earnings 354,795 328,265 Accumulated other comprehensive loss -3,857 -3,284 Total stockholders' equity 470,509 442,387 Total liabilities and stockholders' $779,403 $758,376 equity
Three Months Ended September 30, 2026 2025 Operations Net income $36,629 $27,747 Adjustments to reconcile net income to net cash from operations: Depreciation, amortization, and other 11,744 8,147 Stock-based compensation expense 3,134 2,983 Net recognized losses (gains) on -231 3,907 investments and derivatives Deferred income taxes 4,609 2,491 Changes in operating assets and liabilities: Accounts receivable 17,104 16,490 Inventories -436 -192 Other current assets -1,903 -1,162 Other long-term assets -6,389 -394 Accounts payable 525 -614 Unearned revenue -5,942 -5,418 Income taxes -556 -2,944 Other current liabilities -4,528 -5,507 Other long-term liabilities 4,240 -477 Net cash from operations 58,000 45,057 Financing Repayments of debt -4,850 0 Common stock issued 598 689 Common stock repurchased -4,379 -5,650 Common stock cash dividends paid -6,757 -6,169 Other, net -1,252 -669 Net cash used in financing -16,640 -11,799 Investing Additions to property and equipment -39,367 -19,394 Acquisition of companies, net of cash acquired and divestitures, and purchases -397 -578 of intangible and other assets Purchases of investments -5,394 -17,671 Maturities of investments 5,672 6,031 Sales of investments 10,470 3,262 Other, net -12,949 -6,209 Net cash used in investing -41,965 -34,559 Effect of foreign exchange rates on cash -49 -92 and cash equivalents Net change in cash and cash equivalents -654 -1,393 Cash and cash equivalents, beginning of 20,935 30,242 period Cash and cash equivalents, end of period $20,281 $28,849
We have recast certain prior period amounts to conform to the current period presentation.
We have recast certain prior period amounts to conform to the way we internally manage and monitor our business, which reflects the fiscal year 2027 changes to our segments announced in September 2026.
Three Months Ended September 30, 2026 2025 Azure $33,165 $22,384 Microsoft 365 cloud 27,778 23,694 Productivity and server licensing 8,407 8,678 Search and advertising 6,554 5,942 XBOX 5,379 5,508 Industry solutions 5,337 4,894 Windows OEM and devices 3,551 4,551 Frontier and support services 2,108 2,022 Total revenue $92,279 $77,673
We have recast certain prior period amounts to conform to the way we internally manage and monitor our business, which reflects the fiscal year 2027 changes to our segments announced in September 2026.
Full text with the tables
Exhibit 99.1 Microsoft Announces First Quarter Results REDMOND, Wash. — October
28, 2026 — Microsoft Corp. today announced the following results for the quarter
ended September 30, 2026, as compared to the corresponding period of last fiscal
year: • Revenue was $92.3 billion and increased 19% • Operating income was $45.9
billion and increased 21% (up 22% in constant currency) • Net income was $36.6
billion and increased 32% on a GAAP basis, and was $36.4 billion and increased
18% (up 19% in constant currency) on a non-GAAP basis • Diluted earnings per
share was $4.92 and increased 32% on a GAAP basis, and was $4.89 and increased
18% (up 19% in constant currency) on a non-GAAP basis • Non-GAAP results exclude
the impact from investments in OpenAI, explained in the Non-GAAP Definition
section below “We are delivering greater capability, choice, control, and cost
efficiency for customers across our entire stack,” said Satya Nadella, chairman
and chief executive officer of Microsoft. “By helping organizations build and
own their own intelligence, and earning trust through agent safety and security,
we are translating our innovation into growing adoption and real-world impact
across every industry.” “We delivered a strong start to the fiscal year with
Microsoft Cloud revenue of $63.9 billion, with growth accelerating to 30% (up
31% in constant currency) year-over-year,” said Amy Hood, executive vice
president and chief financial officer of Microsoft. “Results exceeded
expectations across revenue, operating income, and earnings per share.” The
following table adjusts for the impact from investments in OpenAI and reconciles
our financial results reported in accordance with generally accepted accounting
principles (GAAP) to non-GAAP financial results. Additional information
regarding our non-GAAP definition is provided below. All growth comparisons
relate to the corresponding period in the last fiscal year.
Th…
Mo…
En…
Se…
30,
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2026 2025 Cha… Chan…
Y/Y Y/Y
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*Impact from OpenAI adjusts for the impact from investments in OpenAI Business
Highlights Revenue in Agents and Infra was $76.8 billion and increased 25%, with
the following business highlights: • Commercial remaining performance obligation
increased 73% to $677 billion • Microsoft Cloud revenue was $63.9 billion and
increased 30% (up 31% in constant currency) • Azure revenue increased 48% •
Microsoft 365 commercial cloud revenue increased 18% (up 19% in constant
currency) on an adjusted basis, normalized for a 1-point benefit from in-period
revenue recognition in the prior year, and increased 17% (up 18% in constant
currency) on a reported basis • Microsoft 365 consumer cloud revenue increased
17% (up 16% in constant currency) • Industry solutions cloud revenue increased
10%
Revenue in Devices and Consumer was $15.5 billion and decreased 3%, with the
following business highlights:
Search and advertising revenue excluding traffic acquisition costs increased 12%
XBOX content and services revenue decreased 2% (down 1% in constant currency)
Windows OEM and Devices revenue decreased 22%
Microsoft returned $10.2 billion to shareholders in the form of dividends and
share repurchases in the first quarter of fiscal year 2027.
Business Outlook
Microsoft will provide forward-looking guidance in connection with this
quarterly earnings announcement on its earnings conference call and webcast.
Quarterly Highlights, Product Releases, and Customer Stories
Every quarter Microsoft delivers hundreds of products, services, and
enhancements. These releases are driven by years of significant research and
development investments, to empower customers with greater productivity,
security, and differentiated value.
This momentum is reflected in stories that showcase how our technology isshaping
industries and driving customer success. We share innovation updates on our
product blogs acrossAzure,Microsoft 365, and more on ourOfficial Microsoft blog.
Webcast Details
Satya Nadella, chairman and chief executive officer, Amy Hood, executive vice
president and chief financial officer, Alice Jolla, chief accounting officer,
Brian DeFoe, deputy general counsel and corporate secretary, and Jonathan
Neilson, vice president of investor relations, will host a conference call and
webcast at 2:30 p.m. Pacific time (5:30 p.m. Eastern time) today to discuss
details of the company’s performance for the quarter and certain forward-looking
information. The session may be accessed athttp://www.microsoft.com/en-
us/investor. Participants can also dial into the conference call at (877)
407-0666 or +1 (201) 689-8023 for international, no password required. The
webcast will be available for replay through the close of business on October
28, 2027.
Non-GAAP Definition
Impact from investments in OpenAI.In the first quarter of fiscal year 2027, net
income and diluted earnings per share were impacted by net gains from
investments in OpenAI, which resulted in an increase in net income and diluted
earnings per share of $207 million and $0.03, respectively. In the first quarter
of fiscal year 2026, net income and diluted earnings per share were impacted by
net losses from investments in OpenAI, which resulted in a decrease in net
income and diluted earnings per share of $3.1 billion and $0.41, respectively.
Microsoft has provided non-GAAP financial measures related to the impact from
investments in OpenAI to aid investors in better understanding our performance.
Microsoft believes these non-GAAP measures assist investors by providing
additional insight into its operational performance and help clarify trends
affecting its business. For comparability of reporting, management considers
non-GAAP measures in conjunction with GAAP financial results in evaluating
business performance. The non-GAAP financial measures presented in this release
should not be considered as a substitute for, or superior to, the measures of
financial performance prepared in accordance with GAAP.
Constant Currency Microsoft presents constant currency information to provide a
framework for assessing how our underlying businesses performed excluding the
effect of foreign currency rate fluctuations. To present this information,
current and comparative prior period results for entities reporting in
currencies other than United States dollars are converted into United States
dollars using the average exchange rates from the comparative period rather than
the actual exchange rates in effect during the respective periods. All growth
comparisons relate to the corresponding period in the last fiscal year.
Microsoft has provided this non-GAAP financial information to aid investors in
better understanding our performance. The non-GAAP financial measures presented
in this release should not be considered as a substitute for, or superior to,
the measures of financial performance prepared in accordance with GAAP.
Financial Performance Constant Currency Reconciliation
Three
Mont…
Ended
Sept…
30,
Perc… Perce…
2026 2025 Chan… Change
Y/Y Y/Y
($ in
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exce… Repo… Adjus… Repo… Adjus… GAAP Non-G… Curr… Const… Cons…
per (GAA… (non-… (GAA… (non-… Impa… Curre… Curr…
share
amou…
Reve… $92,… - $77,… - 19% - $(30… 19% -
Oper… $45,… - $37,… - 21% - $(29… 22% -
inco…
Net $36,… $36,4… $27,… $30,8… 32% 18% $(24… 33% 19%
inco…
Dilu…
earn… $4.92 $4.89 $3.72 $4.13 32% 18% $(0.… 33% 19%
per
share
Segment Revenue Constant Currency Reconciliation
Three
Months
Ended
September
30,
2026 2025 Percentage Percentage
Change Y/Y Change Y/Y
($ in As Reported As Constant Constant
millions) (GAAP) Reported GAAP Currency Currency
(GAAP) Impact
Agents $76,795 $61,672 25% $(290) 25%
and Infra
Devices
and $15,484 $16,001 (3)% $(19) (3)%
Consumer
We have recast certain prior period amounts to conform to the way we internally
manage and monitor our business, which reflects the fiscal year 2027 changes to
our segments announced in September 2026. Selected Product and Service
Information Constant Currency Reconciliation
Three Months
Ended September
30, 2026
──────────────────────────────────────────────────────────────────────────────
Percentage Change Constant Currency Percentage Change
Y/Y (GAAP) Impact Y/Y Constant
Currency
Commercial
remaining 73% 0% 73%
performance
obligation
Microsoft Cloud 30% 1% 31%
revenue
Azure revenue 48% 0% 48%
Microsoft 365
commercial cloud 17% 1% 18%
revenue
Microsoft 365
consumer cloud 17% (1)% 16%
revenue
Industry
solutions cloud 10% 0% 10%
revenue
Search and
advertising
revenue excluding 12% 0% 12%
traffic
acquisition costs
XBOX content and (2)% 1% (1)%
services revenue
Windows OEM and (22)% 0% (22)%
devices revenue
About Microsoft Microsoft (Nasdaq “MSFT” @microsoft) creates platforms and tools
powered by AI to deliver innovative solutions that meet the evolving needs of
our customers. The technology company is committed to making AI available
broadly and doing so responsibly, with a mission to empower every person and
every organization on the planet to achieve more.
Forward-Looking Statements
Statements in this release that are “forward-looking statements” are based on
current expectations and assumptions that are subject to risks and
uncertainties. Actual results could differ materially because of factors such
as:
intense competition in all of our markets that could adversely affect our
results of operations;
substantial investments in cloud and AI strategy that depend on customer demand,
technological developments, competitive dynamics, and regulatory condition;
development, delivery, and maintenance of competitive cloud-based and AI
products and services that achieve broad customer adoption and sustainable
revenue growth;
significant investments in products and services that may not achieve expected
returns;
acquisitions, joint ventures, and strategic alliances that could have an adverse
effect on our business;
cyberattacks and security vulnerabilities that could lead to reduced revenue,
increased costs, liability claims, or harm to our reputation or competitive
position;
disclosure and misuse of personal data that could cause liability and harm to
our reputation;
the possibility that we may not be able to protect information in our products
and services from use by others;
abuse of our platforms that may harm our reputation or user engagement;
products and services, how they are used by customers, and how third-party
products and services interact with them, presenting security, privacy, and
execution risks;
issues about the development, deployment, and use of AI that may result in
reputational or competitive harm, or liability;
inability to develop and expand adequate infrastructure;
supply or other quality problems;
excessive outages, disruptions, or capacity constraints of our services if we
fail to maintain an adequate operations infrastructure or secure resources
necessary to support it;
potential consequences of new, existing, and evolving legal and regulatory
requirements;
claims against us that could result in adverse outcomes in legal disputes;
uncertainties relating to our business with government customers;
additional tax liabilities;
an inability to protect and utilize our intellectual property may harm our
business and operating results;
claims that Microsoft has infringed the intellectual property rights of others;
damage to our reputation or our brands that may harm our business and results of
operations;
adverse economic or market conditions that could harm our business;
catastrophic events or geopolitical conditions that could disrupt our business;
exposure to increased economic and operational uncertainties from operating a
global business, including the effects of foreign currency exchange; and
the dependence of our business on our ability to attract and retain talented
employees.
For more information about risks and uncertainties associated with Microsoft’s
business, please refer to the “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and “Risk Factors” sections of Microsoft’s
SEC filings, including, but not limited to, its annual report on Form 10-K and
quarterly reports on Form 10-Q, copies of which may be obtained by contacting
Microsoft’s Investor Relations department at (800) 285-7772 or at Microsoft’s
Investor Relations website athttp://www.microsoft.com/en-us/investor.
All information in this release is as of September 30, 2026. The company
undertakes no duty to update any forward-looking statement to conform the
statement to actual results or changes in the company’s expectations.
For more information, press only:
Microsoft Media Relations, WE Communications for Microsoft, (425)
638-7777,rrt@we-worldwide.com
For more information, financial analysts and investors only:
Jonathan Neilson, Vice President, Investor Relations, (425) 706-4400
Note to editors: For more information, news and perspectives from Microsoft,
please visit the Microsoft News Center athttp://www.microsoft.com/news. Web
links, telephone numbers, and titles were correct at time of publication, but
may since have changed. Shareholder and financial information, as well as
today’s 2:30 p.m. Pacific time conference call with investors and analysts, is
available athttp://www.microsoft.com/en-us/investor.
MICROSOFT CORPORATION INCOME STATEMENTS (In millions, except per share amounts)
(Unaudited)
Three Months Ended
September 30,
2026 2025
Revenue:
Product $14,631 $15,922
Service and other 77,648 61,751
Total revenue 92,279 77,673
Cost of revenue:
Product 2,471 2,922
Service and other 27,249 21,121
Total cost of revenue 29,720 24,043
Gross margin 62,559 53,630
Research and development 9,047 8,146
Sales and marketing 5,716 5,717
General and administrative 1,881 1,806
Operating income 45,915 37,961
Other income (expense), net 38 -3,660
Income before income taxes 45,953 34,301
Provision for income taxes 9,324 6,554
Net income $36,629 $27,747
Earnings per share:
Basic $4.93 $3.73
Diluted $4.92 $3.72
Weighted average shares outstanding:
Basic 7,426 7,433
Diluted 7,446 7,466
COMPREHENSIVE INCOME STATEMENTS (In millions) (Unaudited)
Three Months Ended
September 30,
2026 2025
Net income $36,629 $27,747
Other comprehensive income (loss), net
of tax:
Net change related to derivatives 3 -3
Net change related to investments -559 687
Translation adjustments and other -17 -98
Other comprehensive income (loss) -573 586
Comprehensive income $36,056 $28,333
BALANCE SHEETS (In millions) (Unaudited)
September 30, June 30,
2026 2026
───────────────────────────────────────────────────────────────────────
Assets
Current assets:
Cash and cash equivalents $20,281 $20,935
Short-term investments 44,228 55,908
Total cash, cash equivalents, and 64,509 76,843
short-term investments
Accounts receivable, net of allowance 62,084 80,876
for doubtful accounts of $728 and $1,040
Inventories 1,835 1,397
Other current assets 57,709 48,594
Total current assets 186,137 207,710
Property and equipment, net of
accumulated depreciation of $127,208 and 346,844 313,076
$118,691
Operating lease right-of-use assets 30,178 24,177
Equity and other investments 37,808 36,348
Goodwill 119,646 119,651
Intangible assets, net 17,751 18,609
Other long-term assets 41,039 38,805
Total assets $779,403 $758,376
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $42,625 $42,416
Current portion of long-term debt 4,391 9,227
Accrued compensation 10,156 14,945
Short-term income taxes 1,447 2,534
Short-term unearned revenue 66,866 72,965
Other current liabilities 26,483 26,738
Total current liabilities 151,968 168,825
Long-term debt 31,090 31,067
Long-term income taxes 29,235 28,647
Long-term unearned revenue 2,697 2,747
Deferred income taxes 3,174 3,054
Operating lease liabilities 21,719 16,532
Other long-term liabilities 69,011 65,117
Total liabilities 308,894 315,989
Commitments and contingencies
Stockholders' equity:
Common stock and paid-in capital -
shares authorized 24,000; outstanding 119,571 117,406
7,427 and 7,427
Retained earnings 354,795 328,265
Accumulated other comprehensive loss -3,857 -3,284
Total stockholders' equity 470,509 442,387
Total liabilities and stockholders' $779,403 $758,376
equity
CASH FLOWS STATEMENTS (In millions) (Unaudited)
Three Months Ended
September 30,
2026 2025
Operations
Net income $36,629 $27,747
Adjustments to reconcile net income to
net cash from operations:
Depreciation, amortization, and other 11,744 8,147
Stock-based compensation expense 3,134 2,983
Net recognized losses (gains) on -231 3,907
investments and derivatives
Deferred income taxes 4,609 2,491
Changes in operating assets and
liabilities:
Accounts receivable 17,104 16,490
Inventories -436 -192
Other current assets -1,903 -1,162
Other long-term assets -6,389 -394
Accounts payable 525 -614
Unearned revenue -5,942 -5,418
Income taxes -556 -2,944
Other current liabilities -4,528 -5,507
Other long-term liabilities 4,240 -477
Net cash from operations 58,000 45,057
Financing
Repayments of debt -4,850 0
Common stock issued 598 689
Common stock repurchased -4,379 -5,650
Common stock cash dividends paid -6,757 -6,169
Other, net -1,252 -669
Net cash used in financing -16,640 -11,799
Investing
Additions to property and equipment -39,367 -19,394
Acquisition of companies, net of cash
acquired and divestitures, and purchases -397 -578
of intangible and other assets
Purchases of investments -5,394 -17,671
Maturities of investments 5,672 6,031
Sales of investments 10,470 3,262
Other, net -12,949 -6,209
Net cash used in investing -41,965 -34,559
Effect of foreign exchange rates on cash -49 -92
and cash equivalents
Net change in cash and cash equivalents -654 -1,393
Cash and cash equivalents, beginning of 20,935 30,242
period
Cash and cash equivalents, end of period $20,281 $28,849
We have recast certain prior period amounts to conform to the current period
presentation.
SEGMENT RESULTS (In millions) (Unaudited)
Three Months Ended
September 30,
2026 2025
Agents and Infra
Revenue $76,795 $61,672
Cost of revenue 23,887 17,701
Operating expenses 12,350 11,253
Operating income $40,558 $32,718
Devices and Consumer
Revenue $15,484 $16,001
Cost of revenue 5,833 6,342
Operating expenses 4,294 4,416
Operating income $5,357 $5,243
Total
Revenue $92,279 $77,673
Cost of revenue 29,720 24,043
Operating expenses 16,644 15,669
Operating income $45,915 $37,961
We have recast certain prior period amounts to conform to the way we internally
manage and monitor our business, which reflects the fiscal year 2027 changes to
our segments announced in September 2026.
PRODUCT AND SERVICE OFFERINGS REVENUE (In millions) (Unaudited)
Three Months Ended
September 30,
2026 2025
Azure $33,165 $22,384
Microsoft 365 cloud 27,778 23,694
Productivity and server licensing 8,407 8,678
Search and advertising 6,554 5,942
XBOX 5,379 5,508
Industry solutions 5,337 4,894
Windows OEM and devices 3,551 4,551
Frontier and support services 2,108 2,022
Total revenue $92,279 $77,673
We have recast certain prior period amounts to conform to the way we internally
manage and monitor our business, which reflects the fiscal year 2027 changes to
our segments announced in September 2026.