Microsoft Corp (MSFT) Q3 2026 Financial Results Summary

Release Date: April 29, 2026

Microsoft Corp announced its financial results for the third quarter ended March 31, 2026. Here’s a summary comparing the results to the same period of the previous fiscal year:

Key Financial Metrics

• Revenue: $82.9 billion
  • Increased 18% (up 15% in constant currency)
• Operating Income: $38.4 billion
  • Increased 20% (up 16% in constant currency)
• Net Income: $31.8 billion
  • Increased 23% on a GAAP basis
  • Increased 20% (up 18% in constant currency) on a non-GAAP basis
• Diluted Earnings Per Share: $4.27
  • Increased 23% on a GAAP basis
  • Increased 21% (up 18% in constant currency) on a non-GAAP basis

Performance Highlights

• Microsoft Cloud revenue:
  • $54.5 billion, increased 29% (up 25% in constant currency)
  • Commercial remaining performance obligation increased 99% to $627 billion
• Revenue in Productivity and Business Processes:
  • $35.0 billion, increased 17% (up 13% in constant currency)
  • Microsoft 365 Commercial cloud revenue increased 19% (up 15% in constant currency)
  • Microsoft 365 Consumer cloud revenue increased 33% (up 29% in constant currency)
  • LinkedIn revenue increased 12% (up 9% in constant currency)
  • Dynamics 365 revenue increased 22% (up 17% in constant currency)
• Revenue in Intelligent Cloud:
  • $34.7 billion, increased 30% (up 28% in constant currency)
  • Azure and other cloud services revenue increased 40% (up 39% in constant currency)
• Revenue in More Personal Computing:
  • $13.2 billion, decreased 1% (down 3% in constant currency)
  • Windows OEM and Devices revenue decreased 2% (down 3% in constant currency)
  • Xbox content and services revenue decreased 5% (down 7% in constant currency)
  • Search advertising revenue excluding traffic acquisition costs increased 12% (up 9% in constant currency)

Shareholder Returns

Microsoft returned $10.2 billion to shareholders in the form of dividends and share repurchases during the third quarter of fiscal year 2026.

Non-GAAP Financials

Non-GAAP results exclude the impact from investments in OpenAI. In Q3 2026, net losses from these investments resulted in a decrease in net income of $14 million and had minimal impact on earnings per share. Comparatively, in Q3 2025, losses from OpenAI resulted in a net income decrease of $583 million and a $0.08 drop in diluted earnings per share.

Business Outlook

Microsoft plans to provide forward-looking guidance on its earnings conference call and webcast, reaffirming its commitment to delivering cloud and AI infrastructure and solutions.

Conclusion

Microsoft's Q3 2026 results reflect a strong momentum driven by its cloud and AI offerings, showcasing solid growth in various business segments despite the mixed performance in its More Personal Computing area. The company appears well-positioned for future prospects with significant shareholder returns and continuous innovation in its products and services.

Note: The following tables present amounts in millions.

Microsoft Corporation Income Statements (In millions, except per share amounts)	Three Months Ended March 31, 2026	Three Months Ended March 31, 2025	Nine Months Ended March 31, 2026	Nine Months Ended March 31, 2025
Revenue: Product	$15,089	$15,319	$47,462	$46,810
Revenue: Service and other	$67,797	$54,747	$194,370	$158,473
Total revenue	$82,886	$70,066	$241,832	$205,283
Cost of revenue: Product	$2,733	$3,037	$9,160	$10,187
Cost of revenue: Service and other	$24,095	$18,882	$67,689	$53,630
Total cost of revenue	$26,828	$21,919	$76,849	$63,817
Gross margin	$56,058	$48,147	$164,983	$141,466
Research and development	$8,915	$8,198	$25,565	$23,659
Sales and marketing	$6,814	$6,212	$19,115	$18,369
General and administrative	$1,931	$1,737	$5,669	$5,233
Operating income	$38,398	$32,000	$114,634	$94,205
Other income (expense), net	$942	$-623	$7,253	$-3,194
Income before income taxes	$39,340	$31,377	$121,887	$91,011
Provision for income taxes	$7,562	$5,553	$23,904	$16,412
Net income	$31,778	$25,824	$97,983	$74,599
Earnings per share: Basic	$4.28	$3.47	$13.19	$10.03
Earnings per share: Diluted	$4.27	$3.46	$13.14	$9.99
Weighted average shares outstanding: Basic	7,426	7,434	7,430	7,434
Weighted average shares outstanding: Diluted	7,445	7,461	7,457	7,466

Balance Sheets (In millions) (Unaudited)	March 31, 2026	June 30, 2025
Assets: Current assets: Cash and cash equivalents	$32,105	$30,242
Assets: Current assets: Short-term investments	$46,167	$64,323
Assets: Current assets: Total cash, cash equivalents, and short-term investments	$78,272	$94,565
Assets: Current assets: Accounts receivable, net of allowance for doubtful accounts of $794 and $944	$60,041	$69,905
Assets: Current assets: Inventories	$1,219	$938
Assets: Current assets: Other current assets	$35,797	$25,723
Assets: Current assets: Total current assets	$175,329	$191,131
Assets: Property and equipment, net of accumulated depreciation of $111,723 and $93,653	$283,228	$204,966
Assets: Operating lease right-of-use assets	$24,403	$24,823
Assets: Equity and other investments	$33,683	$15,405
Assets: Goodwill	$119,661	$119,509
Assets: Intangible assets, net	$19,325	$22,604
Assets: Other long-term assets	$38,599	$40,565
Assets: Total assets	$694,228	$619,003
Liabilities and stockholders' equity: Current liabilities: Accounts payable	$37,513	$27,724
Liabilities and stockholders' equity: Current liabilities: Current portion of long-term debt	$8,839	$2,999
Liabilities and stockholders' equity: Current liabilities: Accrued compensation	$11,270	$13,709
Liabilities and stockholders' equity: Current liabilities: Short-term income taxes	$3,563	$7,211
Liabilities and stockholders' equity: Current liabilities: Short-term unearned revenue	$50,924	$64,555
Liabilities and stockholders' equity: Current liabilities: Other current liabilities	$24,552	$25,020
Liabilities and stockholders' equity: Current liabilities: Total current liabilities	$136,661	$141,218
Liabilities and stockholders' equity: Long-term debt	$31,423	$40,152
Liabilities and stockholders' equity: Long-term income taxes	$27,941	$25,986
Liabilities and stockholders' equity: Long-term unearned revenue	$2,753	$2,710
Liabilities and stockholders' equity: Deferred income taxes	$2,899	$2,835
Liabilities and stockholders' equity: Operating lease liabilities	$16,703	$17,437
Liabilities and stockholders' equity: Other long-term liabilities	$61,481	$45,186
Liabilities and stockholders' equity: Total liabilities	$279,861	$275,524
Liabilities and stockholders' equity: Stockholders' equity: Common stock and paid-in capital - shares authorized 24,000; outstanding 7,429 and 7,434	$115,069	$109,095
Liabilities and stockholders' equity: Stockholders' equity: Retained earnings	$302,526	$237,731
Liabilities and stockholders' equity: Stockholders' equity: Accumulated other comprehensive loss	$-3,228	$-3,347
Liabilities and stockholders' equity: Stockholders' equity: Total stockholders' equity	$414,367	$343,479
Liabilities and stockholders' equity: Total liabilities and stockholders' equity	$694,228	$619,003

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