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:

  • $77.7 billion, an increase of 18% (up 17% in constant currency) compared to $65.6 billion in Q1 2025.

  • Operating Income:

  • $38.0 billion, up 24% (up 22% in constant currency) from $30.6 billion in Q1 2025.

  • Net Income:

  • GAAP: $27.7 billion, up 12% from $24.7 billion in Q1 2025.

  • Non-GAAP: $30.8 billion, an increase of 22% (up 21% in constant currency), compared to $25.2 billion in Q1 2025.

  • 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).

  • Commercial remaining performance obligation increased 51% to $392 billion.

  • Productivity and Business Processes:

  • 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).

  • Intelligent Cloud:

  • Revenue was $30.9 billion, up 28% (up 27% in constant currency).

  • Azure and other cloud services revenue grew by 40% (up 39% in constant currency).

  • 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

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