Microsoft Corp. (MSFT) Q1 2026 Financial Results Summary
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Microsoft Corporation (MSFT) Q1 2026 Financial Results Summary
Release Date: October 29, 2025
Microsoft Corporation reported its financial results for the quarter ended September 30, 2025. Here are the key takeaways from the report:
Financial Performance Highlights:
- Total Revenue:
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$77.7 billion, an increase of 18% (up 17% in constant currency) compared to $65.6 billion in Q1 2025.
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Operating Income:
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$38.0 billion, up 24% (up 22% in constant currency) from $30.6 billion in Q1 2025.
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Net Income:
- GAAP: $27.7 billion, up 12% from $24.7 billion in Q1 2025.
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Non-GAAP: $30.8 billion, an increase of 22% (up 21% in constant currency), compared to $25.2 billion in Q1 2025.
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Earnings Per Share (EPS):
- GAAP: $3.72, up 13% from $3.30 in Q1 2025.
- Non-GAAP: $4.13, an increase of 23% (up 21% in constant currency) from $3.37 in Q1 2025.
Segment Results:
- Microsoft Cloud:
- Revenue: $49.1 billion, increased by 26% (up 25% in constant currency).
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Commercial remaining performance obligation increased 51% to $392 billion.
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Productivity and Business Processes:
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Revenue of $33.0 billion, a rise of 17% (up 14% in constant currency).
- Microsoft 365 Commercial cloud revenue increased by 17% (up 15% in constant currency).
- Microsoft 365 Consumer cloud revenue saw a 26% increase (up 25% in constant currency).
- LinkedIn revenue rose by 10% (up 9% in constant currency).
- Dynamics 365 revenue also grew by 18% (up 16% in constant currency).
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Intelligent Cloud:
- Revenue was $30.9 billion, up 28% (up 27% in constant currency).
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Azure and other cloud services revenue grew by 40% (up 39% in constant currency).
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More Personal Computing:
- Revenue stood at $13.8 billion, an increase of 4%.
- Windows OEM and Devices revenue increased by 6%.
- Xbox content and services revenue showed a marginal increase of 1%.
- Search and news advertising revenue excluding traffic acquisition costs rose by 16% (up 15% in constant currency).
Capital Return to Shareholders:
- Microsoft returned $10.7 billion to shareholders through share repurchases and dividends in Q1 2026.
Other Highlights:
- Satya Nadella, CEO, stated that cloud and AI investments are pivotal to Microsoft’s strategy and are driving broad customer adoption.
- Amy Hood, CFO, noted that the strong start to the fiscal year exceeded expectations in revenue, operating income, and earnings per share.
Non-GAAP Financial Measures:
- Non-GAAP results exclude $(3.1 billion) in losses from investments in OpenAI.
Cash Flow and Investments:
- Cash from Operations: $45.1 billion for the quarter compared to $34.2 billion in Q1 2025.
- Investments: Additions to property and equipment amounted to $19.4 billion.
Market Position:
- Microsoft continues to emphasize its commitment to AI and cloud technologies, positioning itself strongly for future opportunities in these sectors.
Overall, Microsoft delivered strong financial results in Q1 2026, showcasing significant growth across its cloud services and commitments to innovation in AI technology.
Here are the extracted tables in HTML format:
MICROSOFT CORPORATION INCOME STATEMENTS (In millions, except per share amounts) (Unaudited)
| 2025 | 2024 | |
|---|---|---|
| Revenue: | ||
| Product | $15,922 | $15,272 |
| Service and other | 61,751 | 50,313 |
| Total revenue | 77,673 | 65,585 |
| Cost of revenue: | ||
| Product | 2,922 | 3,294 |
| Service and other | 21,121 | 16,805 |
| Total cost of revenue | 24,043 | 20,099 |
| Gross margin | 53,630 | 45,486 |
| Research and development | 8,146 | 7,544 |
| Sales and marketing | 5,717 | 5,717 |
| General and administrative | 1,806 | 1,673 |
| Operating income | 37,961 | 30,552 |
| Other expense, net | -3,660 | -283 |
| Income before income taxes | 34,301 | 30,269 |
| Provision for income taxes | 6,554 | 5,602 |
| Net income | $27,747 | $24,667 |
| Earnings per share: | ||
| Basic | $3.73 | $3.32 |
| Diluted | $3.72 | $3.30 |
| Weighted average shares outstanding: | ||
| Basic | 7,433 | 7,433 |
| Diluted | 7,466 | 7,470 |
BALANCE SHEETS (In millions) (Unaudited)
| September 30, | June 30, | |
|---|---|---|
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $28,849 | $30,242 |
| Short-term investments | 73,163 | 64,323 |
| Total cash, cash equivalents, and | 102,012 | 94,565 |
| short-term investments | ||
| Accounts receivable, net of allowance | 52,894 | 69,905 |
| for doubtful accounts of $687 and $944 | ||
| Inventories | 1,130 | 938 |
| Other current assets | 33,030 | 25,723 |
| Total current assets | 189,066 | 191,131 |
| Property and equipment, net of | ||
| accumulated depreciation of $98,880 and | 230,861 | 204,966 |
| $93,653 | ||
| Operating lease right-of-use assets | 24,791 | 24,823 |
| Equity and other investments | 11,465 | 15,405 |
| Goodwill | 119,497 | 119,509 |
| Intangible assets, net | 21,236 | 22,604 |
| Other long-term assets | 39,435 | 40,565 |
| Total assets | $636,351 | $619,003 |
| Liabilities and stockholders’ equity | ||
| Current liabilities: | ||
| Accounts payable | $32,580 | $27,724 |
| Current portion of long-term debt | 7,832 | 2,999 |
| Accrued compensation | 9,201 | 13,709 |
| Short-term income taxes | 3,655 | 7,211 |
| Short-term unearned revenue | 58,987 | 64,555 |
| Other current liabilities | 22,741 | 25,020 |
| Total current liabilities | 134,996 | 141,218 |
| Long-term debt | 35,376 | 40,152 |
| Long-term income taxes | 26,569 | 25,986 |
| Long-term unearned revenue | 2,546 | 2,710 |
| Deferred income taxes | 2,852 | 2,835 |
| Operating lease liabilities | 17,348 | 17,437 |
| Other long-term liabilities | 53,588 | 45,186 |
| Total liabilities | 273,275 | 275,524 |
| Commitments and contingencies | ||
| Stockholders’ equity: | ||
| Common stock and paid-in capital – | 110,964 | 109,095 |
| shares authorized 24,000; outstanding | ||
| 7,434 and 7,434 | ||
| Retained earnings | 254,873 | 237,731 |
| Accumulated other comprehensive loss | -2,761 | -3,347 |
| Total stockholders’ equity | 363,076 | 343,479 |
| Total liabilities and stockholders’ | $636,351 | $619,003 |
| equity |