# MICROSOFT CORP (MSFT)

Informational only - not investment advice.

CIK: 0000789019
SIC: 7372 Services-Prepackaged Software
SIC breadcrumb: [Services](/division/I/) > [Business Services](/major-group/73/) > [SIC 7372 Services-Prepackaged Software](/industry/7372/)
Latest 10-K filed: 2026-07-29
SEC page: https://www.sec.gov/edgar/browse/?CIK=789019
Filing source: https://www.sec.gov/Archives/edgar/data/789019/000119312526323660/msft-20260630.htm

## At a glance

FY2026 · period end 2026-06-30 · filed 2026-07-29 · accession 0001193125-26-323660 · source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000789019.json

| Metric | Value | FY | Provenance |
| --- | ---: | ---: | --- |
| Revenue | 331,839,000,000 USD | 2026 | verified |
| Net income | 133,749,000,000 USD | 2026 | verified |
| Assets | 758,376,000,000 USD | 2026 | verified |
| Free cash flow | 66,987,000,000 USD | 2026 | computed |
| Net margin | 40.31% | 2026 | computed |
| Operating margin | 46.78% | 2026 | computed |
| Revenue YoY | +17.79% | 2026 | computed |
| ROE | 30.23% | 2026 | computed |

Computed values are grepcent-computed from the verified facts above and may differ from ratios the company itself reports. Free cash flow = operating cash flow − capital expenditures. Net margin = net income ÷ revenue. Operating margin = operating income ÷ revenue. Revenue YoY = FY2026 revenue ÷ FY2025 revenue − 1 (consecutive fiscal years only). ROE = net income ÷ period-end stockholders' equity.

Peer groups: [Big-tech megacap platforms](/compare/big-tech/) · SIC 7372 Services-Prepackaged Software

No market price, no rating, no forecast on this site. Not investment advice.

## Peer comparisons including MSFT

- Big-tech megacap platforms: [peer review](/compare/big-tech/) · [market-risk page](/compare/big-tech/risk/)

### Peer percentile fingerprint

| Ratio | MSFT | Peer median | Percentile | N |
| --- | ---: | ---: | ---: | ---: |
| Net margin | 40.3% | 1.5% | 99 | 122 |
| Operating margin | 46.8% | 1.3% | 99 | 121 |
| Revenue growth | 17.8% | 13.5% | 66 | 124 |
| FCF margin | 20.2% | 19.3% | 55 | 120 |
| ROE | 30.2% | 2.0% | 88 | 112 |
| ROA | 17.6% | 0.9% | 92 | 124 |
| Liabilities / equity | 0.71 | 0.91 | 36 | 113 |
| Current ratio | 1.23 | 1.57 | 33 | 124 |

Percentile = share of the N covered peers reporting that ratio whose value is lower (ties counted half); computed among grepcent-covered companies in SIC industry 7372 Services-Prepackaged Software, not the whole market. A higher percentile means a higher value of the ratio, not a better company. Ratios with fewer than 8 reporting peers are omitted. Latest reported values per company; fiscal periods may differ. Descriptive arithmetic - not a score, rating, or ranking.

## Selected Fundamentals
| Metric | Value | Unit | FY | Filed |
| --- | ---: | --- | ---: | --- |
| Revenue | 331839000000 | USD | 2026 | 2026-07-29 |
| Net income | 133749000000 | USD | 2026 | 2026-07-29 |
| Assets | 758376000000 | USD | 2026 | 2026-07-29 |

## Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-07-29. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000789019.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

| Metric | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenue | 96,571,000,000 | 110,360,000,000 | 125,843,000,000 | 143,015,000,000 | 168,088,000,000 | 198,270,000,000 | 211,915,000,000 | 245,122,000,000 | 281,724,000,000 | 331,839,000,000 |
| Net income | 25,489,000,000 | 16,571,000,000 | 39,240,000,000 | 44,281,000,000 | 61,271,000,000 | 72,738,000,000 | 72,361,000,000 | 88,136,000,000 | 101,832,000,000 | 133,749,000,000 |
| Operating income | 29,025,000,000 | 35,058,000,000 | 42,959,000,000 | 52,959,000,000 | 69,916,000,000 | 83,383,000,000 | 88,523,000,000 | 109,433,000,000 | 128,528,000,000 | 155,237,000,000 |
| Gross profit | 62,310,000,000 | 72,007,000,000 | 82,933,000,000 | 96,937,000,000 | 115,856,000,000 | 135,620,000,000 | 146,052,000,000 | 171,008,000,000 | 193,893,000,000 | 225,465,000,000 |
| Diluted EPS | 3.25 | 2.13 | 5.06 | 5.76 | 8.05 | 9.65 | 9.68 | 11.80 | 13.64 | 17.95 |
| Operating cash flow | 39,507,000,000 | 43,884,000,000 | 52,185,000,000 | 60,675,000,000 | 76,740,000,000 | 89,035,000,000 | 87,582,000,000 | 118,548,000,000 | 136,162,000,000 | 182,935,000,000 |
| Capital expenditures | 8,129,000,000 | 11,632,000,000 | 13,925,000,000 | 15,441,000,000 | 20,622,000,000 | 23,886,000,000 | 28,107,000,000 | 44,477,000,000 | 64,551,000,000 | 115,948,000,000 |
| Dividends paid | 11,845,000,000 | 12,699,000,000 | 13,811,000,000 | 15,137,000,000 | 16,521,000,000 | 18,135,000,000 | 19,800,000,000 | 21,771,000,000 | 24,082,000,000 | 26,445,000,000 |
| Share buybacks | 11,788,000,000 | 10,721,000,000 | 19,543,000,000 | 22,968,000,000 | 27,385,000,000 | 32,696,000,000 | 22,245,000,000 | 17,254,000,000 | 18,420,000,000 | 22,271,000,000 |
| Assets | 250,312,000,000 | 258,848,000,000 | 286,556,000,000 | 301,311,000,000 | 333,779,000,000 | 364,840,000,000 | 411,976,000,000 | 512,163,000,000 | 619,003,000,000 | 758,376,000,000 |
| Liabilities | 162,601,000,000 | 176,130,000,000 | 184,226,000,000 | 183,007,000,000 | 191,791,000,000 | 198,298,000,000 | 205,753,000,000 | 243,686,000,000 | 275,524,000,000 | 315,989,000,000 |
| Stockholders' equity | 87,711,000,000 | 82,718,000,000 | 102,330,000,000 | 118,304,000,000 | 141,988,000,000 | 166,542,000,000 | 206,223,000,000 | 268,477,000,000 | 343,479,000,000 | 442,387,000,000 |
| Cash and cash equivalents | 7,663,000,000 | 11,946,000,000 | 11,356,000,000 | 13,576,000,000 | 14,224,000,000 | 13,931,000,000 | 34,704,000,000 | 18,315,000,000 | 30,242,000,000 | 20,935,000,000 |
| Free cash flow | 31,378,000,000 | 32,252,000,000 | 38,260,000,000 | 45,234,000,000 | 56,118,000,000 | 65,149,000,000 | 59,475,000,000 | 74,071,000,000 | 71,611,000,000 | 66,987,000,000 |

### Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

| Metric | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | 2026 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Net margin | 26.39% | 15.02% | 31.18% | 30.96% | 36.45% | 36.69% | 34.15% | 35.96% | 36.15% | 40.31% |
| Operating margin | 30.06% | 31.77% | 34.14% | 37.03% | 41.59% | 42.06% | 41.77% | 44.64% | 45.62% | 46.78% |
| Return on equity | 29.06% | 20.03% | 38.35% | 37.43% | 43.15% | 43.68% | 35.09% | 32.83% | 29.65% | 30.23% |
| Return on assets | 10.18% | 6.40% | 13.69% | 14.70% | 18.36% | 19.94% | 17.56% | 17.21% | 16.45% | 17.64% |
| Liabilities / equity | 1.85 | 2.13 | 1.80 | 1.55 | 1.35 | 1.19 | 1.00 | 0.91 | 0.80 | 0.71 |
| Current ratio | 2.92 | 2.90 | 2.53 | 2.52 | 2.08 | 1.78 | 1.77 | 1.27 | 1.35 | 1.23 |

## As-reported value updates

6 tracked differences above grepcent's stated thresholds were found between the earliest XBRL-filed value and the value currently on file for the same fiscal period.

Ledger: /company/MSFT/revisions/


## Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-07-29. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0000789019.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

| Quarter | End date | Revenue | Net income | Diluted EPS | Method |
| --- | --- | ---: | ---: | ---: | --- |
| 2023-Q1 | 2022-09-30 |  |  | 2.35 | reported discrete quarter |
| 2023-Q2 | 2022-12-31 |  |  | 2.20 | reported discrete quarter |
| 2023-Q3 | 2023-03-31 |  |  | 2.45 | reported discrete quarter |
| 2024-Q1 | 2023-09-30 | 56,517,000,000 | 22,291,000,000 | 2.99 | reported discrete quarter |
| 2024-Q2 | 2023-12-31 | 62,020,000,000 | 21,870,000,000 | 2.93 | reported discrete quarter |
| 2024-Q3 | 2024-03-31 | 61,858,000,000 | 21,939,000,000 | 2.94 | reported discrete quarter |
| 2024-Q4 | 2024-06-30 | 64,727,000,000 | 22,036,000,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2025-Q1 | 2024-09-30 | 65,585,000,000 | 24,667,000,000 | 3.30 | reported discrete quarter |
| 2025-Q2 | 2024-12-31 | 69,632,000,000 | 24,108,000,000 | 3.23 | reported discrete quarter |
| 2025-Q3 | 2025-03-31 | 70,066,000,000 | 25,824,000,000 | 3.46 | reported discrete quarter |
| 2025-Q4 | 2025-06-30 | 76,441,000,000 | 27,233,000,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2026-Q1 | 2025-09-30 | 77,673,000,000 | 27,747,000,000 | 3.72 | reported discrete quarter |
| 2026-Q2 | 2025-12-31 | 81,273,000,000 | 38,458,000,000 | 5.16 | reported discrete quarter |
| 2026-Q3 | 2026-03-31 | 82,886,000,000 | 31,778,000,000 | 4.27 | reported discrete quarter |
| 2026-Q4 | 2026-06-30 | 90,007,000,000 | 35,766,000,000 |  | derived Q4 = FY annual - nine-month YTD |

## Filed narrative (10-K & 10-Q)

## Business

Verbatim Item 1 Business section from MSFT's latest 10-K: [/company/MSFT/business/](/company/MSFT/business/).

## Risk Factors

Verbatim Item 1A Risk Factors from MSFT's latest 10-K: [/company/MSFT/risk-factors/](/company/MSFT/risk-factors/).

## Latest quarter (10-Q)

Latest 10-Q source: https://www.sec.gov/Archives/edgar/data/789019/000119312526191507/msft-20260331.htm

Extracted structurally from real Item 2 body heading to real Item 3/4 boundary.
Confidence: high
Filing date: 2026-04-29
Report date: 2026-03-31

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Note About Forward-Looking Statements

This report includes estimates, projections, statements relating to our business plans, objectives, and expected operating results that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may appear throughout this report, including the following sections: “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” (Part II, Item 1A of this Form 10-Q). These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties that may cause actual results to differ materially. We describe risks and uncertainties that could cause actual results and events to differ materially in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Quantitative and Qualitative Disclosures About Market Risk” (Part I, Item 3 of this Form 10-Q), and “Risk Factors”. We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand the results of operations and financial condition of Microsoft Corporation. MD&A is provided as a supplement to, and should be read in conjunction with, our Annual Report on Form 10-K for the year ended June 30, 2025, and our consolidated financial statements and the accompanying Notes to Financial Statements (Part I, Item 1 of this Form 10-Q).

OVERVIEW

Microsoft is a technology company committed to making digital technology and artificial intelligence (“AI”) available broadly and doing so responsibly, with a mission to empower every person and every organization on the planet to achieve more. We create platforms and tools, powered by AI, that deliver innovative solutions that meet the evolving needs of our customers.

We generate revenue by offering a wide range of cloud-based solutions, content, and other services to people and businesses; licensing and supporting an array of software products; delivering relevant online advertising to a global audience; and designing and selling devices. Our most significant expenses are related to compensating employees; supporting and investing in our cloud-based services, including datacenter operations; designing, manufacturing, marketing, and selling our other products and services; and income taxes.

Highlights from the third quarter of fiscal year 2026 compared with the third quarter of fiscal year 2025 included:

•
Microsoft Cloud revenue increased 29% to $54.5 billion.

•
Commercial remaining performance obligation increased 99% to $627 billion.

•
Microsoft 365 Commercial cloud revenue increased 19%.

•
Microsoft 365 Consumer cloud revenue increased 33%.

•
LinkedIn revenue increased 12%.

•
Dynamics 365 revenue increased 22%.

•
Azure and other cloud services revenue increased 40%.

•
Windows OEM and Devices revenue decreased 2%.

•
Xbox content and services revenue decreased 5%.

•
Search advertising (formerly Search and news advertising) revenue excluding traffic acquisition costs increased 12%.

31

PART I

Item 2

Industry Trends and Opportunities

Our industry is dynamic and highly competitive, with frequent changes in both technologies and business models. Each industry shift is an opportunity to conceive new products, new technologies, or new ideas that can further transform the industry and our business. At Microsoft, we push the boundaries of what is possible through a broad range of research and development activities that seek to identify and address the changing demands of customers and users, industry trends, and competitive forces.

We have a long-term strategic partnership with OpenAI which was originally established in 2019. In October 2025 and April 2026, we extended this partnership and continue to build on our shared vision to advance artificial intelligence responsibly and make its benefits broadly accessible. Microsoft is a major investor in OpenAI and will continue to receive revenue-sharing payments. We hold rights to OpenAI’s intellectual property, including models and infrastructure, for integration into our products.

Economic Conditions, Challenges, and Risks

The markets for software, devices, and cloud-based services are dynamic and highly competitive. Our competitors are developing new software and devices, while also deploying competing cloud-based services for consumers and businesses. The devices and form factors customers prefer evolve rapidly, influencing how users access services in the cloud and, in some cases, the user’s choice of which suite of cloud-based services to use. Aggregate demand for our software, services, and devices is also correlated to global macroeconomic and geopolitical factors, which remain dynamic. We must continue to evolve and adapt over an extended time in pace with this changing environment.

The investments we are making in cloud and AI infrastructure and devices will continue to increase our operating costs and may decrease our operating margins. We continue to identify and evaluate opportunities to expand our datacenter locations and increase our server capacity to meet the evolving needs of our customers, particularly given the growing demand for AI services. Our datacenters depend on the availability of permitted and buildable land, predictable energy, networking supplies, and servers, including graphics processing units and other components. Our devices are primarily manufactured by third-party contract manufacturers. For the majority of our products, we have the ability to use other manufacturers if a current vendor becomes unavailable or unable to meet our requirements. However, some of our products contain certain components for which there are very few qualified suppliers. Extended disruptions at these suppliers could impact our ability to manufacture devices on time to meet consumer demand.

Our success is highly dependent on our ability to attract and retain qualified employees. We hire a mix of university and industry talent worldwide. We compete for talented individuals globally by offering an exceptional working environment, broad customer reach, scale in resources, the ability to grow one’s career across many different products and businesses, and competitive compensation and benefits.

Our international operations provide a significant portion of our total revenue and expenses. Many of these revenue and expenses are denominated in currencies other than the U.S. dollar. As a result, changes in foreign exchange rates may significantly affect revenue and expenses. Fluctuations in the U.S. dollar relative to certain foreign currencies increased reported revenue and expenses from our international operations for the three and nine months ended March 31, 2026.

Further, global, regional, and local economic developments and changes in global trade policies such as restrictions on international trade, including tariffs and other controls on imports or exports, could result in increased supply chain challenges, cost volatility, and consumer and economic uncertainty which may adversely affect our results of operations.

Refer to Risk Factors (Part II, Item 1A of this Form 10-Q) for a discussion of these factors and other risks.

Seasonality

Our revenue fluctuates quarterly and is generally higher in the fourth quarter of our fiscal year. Fourth quarter revenue is driven by a higher volume of multi-year contracts executed during the period.

32

PART I

Item 2

Reportable Segments

We report our financial performance based on the following segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. The segment amounts included in MD&A are presented on a basis consistent with our internal management reporting.

Additional information on our reportable segments is contained in Note 16 – Segment Information and Geographic Data of the Notes to Financial Statements (Part I, Item 1 of this Form 10-Q).

Metrics

We use metrics in assessing the performance of our business and to make informed decisions regarding the allocation of resources. We disclose metrics to enable investors to evaluate progress against our ambitions, provide transparency into performance trends, and reflect the continued evolution of our products and services. Our commercial and other business metrics are fundamentally connected based on how customers use our products and services. The metrics are disclosed in the MD&A or the Notes to Financial Statements (Part I, Item 1 of this Form 10-Q). Financial metrics are calculated based on financial results prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and growth comparisons relate to the corresponding period of last fiscal year.

In the first quarter of fiscal year 2026, we made updates to our metrics to align with how we manage and monitor certain businesses. As part of these updates, Microsoft 365 Consumer subscribers was removed as a metric.

Commercial

Our commercial business primarily consists of Server products and cloud services, Microsoft 365 Commercial products and cloud services, the commercial portion of LinkedIn, Dynamics products and cloud services, and Enterprise and partner services. Our commercial metrics allow management and investors to assess the overall health of our commercial business and include leading indicators of future performance.

[[GREPCENT_TABLE]]
[["Commercial remaining performance obligation","","Commercial portion of revenue allocated to remaining performance obligations, which includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods"],["Microsoft Cloud revenue and revenue growth","","Revenue from Microsoft 365 Commercial cloud, Azure and other cloud services, the commercial portion of LinkedIn, and Dynamics 365"],["Microsoft Cloud gross margin percentage","","Gross margin percentage for our Microsoft Cloud business"]]
[[/GREPCENT_TABLE]]

33

PART I

Item 2

Productivity and Business Processes and Intelligent Cloud

Metrics related to our Productivity and Business Processes and Intelligent Cloud segments assess the health of our core businesses within these segments. The metrics primarily reflect growth across our cloud services.

[Excerpt truncated for page length; source filing is linked above.]

## Latest 10-K MD&A (excerpt)

Latest 10-K Item 7 source: https://www.sec.gov/Archives/edgar/data/789019/000119312526323660/msft-20260630.htm
Complete FY 2026 MD&A: /company/MSFT/mda/fy2026/

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary.
Confidence: high
Filing date: 2026-07-29
Report date: 2026-06-30

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help the reader understand the results of operations and financial condition of Microsoft Corporation. MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying Notes to Financial Statements (Part II, Item 8 of this Form 10-K). This section generally discusses the results of our operations for the year ended June 30, 2026 compared to the year ended June 30, 2025. For a discussion of the year ended June 30, 2025 compared to the year ended June 30, 2024, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended June 30, 2025.

OVERVIEW

Microsoft is a technology company committed to making digital technology and artificial intelligence (“AI”) available broadly and doing so responsibly, with a mission to empower every person and every organization on the planet to achieve more. We create platforms and applications, powered by AI, that deliver innovative solutions that meet the evolving needs of our customers.

We generate revenue by offering a wide range of cloud-based solutions, content, and other services to people and businesses; licensing and supporting an array of software products; delivering relevant online advertising to a global audience; and designing and selling devices. Our most significant expenses are related to compensating employees; supporting and investing in our cloud-based services, including datacenter operations; designing, manufacturing, marketing, and selling our other products and services; and income taxes.

Highlights from fiscal year 2026 compared with fiscal year 2025 included:

•
Microsoft Cloud revenue increased 27% to $214.4 billion.

•
Commercial remaining performance obligation increased 84% to $678 billion.

•
Microsoft 365 Commercial cloud revenue increased 17%.

•
Microsoft 365 Consumer cloud revenue increased 28%.

•
LinkedIn revenue increased 11%.

•
Dynamics 365 revenue increased 18%.

•
Azure and other cloud services revenue increased 41%.

•
Windows OEM and Devices revenue decreased slightly.

•
XBOX content and services revenue decreased 5%.

•
Search advertising (formerly Search and news advertising) revenue excluding traffic acquisition costs increased 12%.

Industry Trends and Opportunities

Our industry is dynamic and highly competitive, with frequent changes in both technologies and business models. Each industry shift is an opportunity to conceive new products, new technologies, or new ideas that can further transform the industry and our business. At Microsoft, we push the boundaries of what is possible through a broad range of research and development activities that seek to identify and address the changing demands of customers and users, industry trends, and competitive forces.

We have a long-term strategic partnership with OpenAI which was originally established in 2019. In October 2025 and April 2026, we extended this partnership and continue to build on our shared vision to advance artificial intelligence responsibly and make its benefits broadly accessible. Microsoft is a major investor in OpenAI and will continue to receive revenue-sharing payments. We hold rights to OpenAI’s intellectual property, including models and infrastructure, for integration into our products.

34

PART II

Item 7

Economic Conditions, Challenges, and Risks

The markets for software, devices, and cloud-based services are dynamic and highly competitive. Our competitors are developing new software and devices, while also deploying competing cloud-based services for consumers and businesses. The devices and form factors customers prefer evolve rapidly, influencing how users access services in the cloud and, in some cases, the user’s choice of which suite of cloud-based services to use. Aggregate demand for our software, services, and devices is also correlated to global macroeconomic and geopolitical factors, which remain dynamic. We must continue to evolve and adapt over an extended time in pace with this changing environment.

The investments we are making in cloud and AI infrastructure and devices will continue to increase our operating costs and may decrease our operating margins. We continue to identify and evaluate opportunities to expand our datacenter locations and increase our server capacity to meet the evolving needs of our customers, particularly given the growing demand for AI services. Our datacenters depend on the availability of permitted and buildable land, predictable energy, networking supplies, and servers, including graphics processing units and other components. Our devices are primarily manufactured by third-party contract manufacturers. For the majority of our products, we have the ability to use other manufacturers if a current vendor becomes unavailable or unable to meet our requirements. However, some of our products contain certain components for which there are very few qualified suppliers. Extended or unforeseen disruptions, or limited availability of components from these suppliers could impact our ability to operate our datacenters and manufacture devices on time to meet consumer demand.

Our success is highly dependent on our ability to attract and retain qualified employees. We hire a mix of university and industry talent worldwide. We compete for talented individuals globally by offering an exceptional working environment, broad customer reach, scale in resources, the ability to grow one’s career across many different products and businesses, and competitive compensation and benefits.

Our international operations provide a significant portion of our total revenue and expenses. Many of these revenue and expenses are denominated in currencies other than the U.S. dollar. As a result, changes in foreign exchange rates may significantly affect revenue and expenses. Fluctuations in the U.S. dollar relative to certain foreign currencies increased reported revenue and did not have a material impact on reported expenses from our international operations in fiscal year 2026.

Further, global, regional, and local economic developments and changes in global trade policies such as restrictions on international trade, including tariffs and other controls on imports or exports, could result in increased supply chain challenges, cost volatility, and consumer and economic uncertainty which may adversely affect our results of operations.

Refer to Risk Factors (Part I, Item 1A of this Form 10-K) for a discussion of these factors and other risks.

Seasonality

Our revenue fluctuates quarterly and is generally higher in the fourth quarter of our fiscal year. Fourth quarter revenue is driven by a higher volume of multi-year contracts executed during the period.

Reportable Segments

We report our financial performance based on the following three segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. The segment amounts included in MD&A are presented on a basis consistent with our internal management reporting.

Additional information on our reportable segments is contained in Note 18 – Segment Information and Geographic Data of the Notes to Financial Statements (Part II, Item 8 of this Form 10-K).

35

PART II

Item 7

Metrics

We use metrics in assessing the performance of our business and to make informed decisions regarding the allocation of resources. We disclose metrics to enable investors to evaluate progress against our ambitions, provide transparency into performance trends, and reflect the continued evolution of our products and services. Our commercial and other business metrics are fundamentally connected based on how customers use our products and services. The metrics are disclosed in the MD&A or the Notes to Financial Statements (Part II, Item 8 of this Form 10-K). Financial metrics are calculated based on financial results prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”), and growth comparisons relate to the corresponding period of last fiscal year.

In the first quarter of fiscal year 2026, we made updates to our metrics to align with how we manage and monitor certain businesses. As part of these updates, Microsoft 365 Consumer subscribers was removed as a metric.

Commercial

Our commercial business primarily consists of Server products and cloud services, Microsoft 365 Commercial products and cloud services, the commercial portion of LinkedIn, Dynamics products and cloud services, and Enterprise and partner services. Our commercial metrics allow management and investors to assess the overall health of our commercial business and include leading indicators of future performance.

[[GREPCENT_TABLE]]
[["Commercial remaining performance obligation","","Commercial portion of revenue allocated to remaining performance obligations, which includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods"],["Microsoft Cloud revenue and revenue growth","","Revenue from Microsoft 365 Commercial cloud, Azure and other cloud services, the commercial portion of LinkedIn, and Dynamics 365"],["Microsoft Cloud gross margin percentage","","Gross margin percentage for our Microsoft Cloud business"]]
[[/GREPCENT_TABLE]]

Productivity and Business Processes and Intelligent Cloud

Metrics related to our Productivity and Business Processes and Intelligent Cloud segments assess the health of our core businesses within these segments. The metrics primarily reflect growth across our cloud services.

[[GREPCENT_TABLE]]
[["Microsoft 365 Commercial cloud revenue growth","","Revenue from Microsoft 365 Commercial subscriptions, comprising Microsoft 365 Commercial, Enterprise Mobility + Security, the cloud portion of Windows Commercial, the per-user portion of Power BI, Exchange, SharePoint, Microsoft Teams, Microsoft 365 Security and Compliance, and Microsoft 365 Copilot"],["Microsoft 365 Commercial seat growth","","The number of Microsoft 365 Commercial seats at end of period where seats are paid users covered by a Microsoft 365 Commercial subscription"],["Microsoft 365 Consumer cloud revenue growth","","Revenue from Microsoft 365 Consumer subscriptions and other consumer services"],["LinkedIn revenue growth","","Revenue from LinkedIn, including Talent Solutions, Marketing Solutions, Premium Subscriptions, and Sales Solutions"],["Dynamics 365 revenue growth","","Revenue from Dynamics 365, including a set of intelligent, cloud-based applications across ERP, CRM, Power Apps, and Power Automate"],["Azure and other cloud services revenue growth","","Revenue from Azure and other cloud services, including cloud and AI consumption-based services, GitHub cloud services, Health and Life Sciences cloud services (formerly Nuance Healthcare cloud services), virtual desktop offerings, and other cloud services"]]
[[/GREPCENT_TABLE]]

36

PART II

Item 7

More Personal Computing

Metrics related to our More Personal Computing segment assess the performance of our key consumer businesses.

[Excerpt truncated for page length; the complete text is on the linked full-MD&A page.]

Read the full FY 2026 MD&A: /company/MSFT/mda/fy2026/
All MD&A years: /company/MSFT/mda/


## MD&A history

Prior-year 10-K MD&A spans are extracted from SEC filings with the same bounded parser used for the latest filing. Each year's full verbatim text is on its own sub-page.

- [FY 2025 MD&A](/company/MSFT/mda/fy2025/): filed 2025-07-30; accession 0000950170-25-100235 (https://www.sec.gov/Archives/edgar/data/789019/000095017025100235/msft-20250630.htm)
- [FY 2024 MD&A](/company/MSFT/mda/fy2024/): filed 2024-07-30; accession 0000950170-24-087843 (https://www.sec.gov/Archives/edgar/data/789019/000095017024087843/msft-20240630.htm)
- [FY 2023 MD&A](/company/MSFT/mda/fy2023/): filed 2023-07-27; accession 0000950170-23-035122 (https://www.sec.gov/Archives/edgar/data/789019/000095017023035122/msft-20230630.htm)
- [FY 2022 MD&A](/company/MSFT/mda/fy2022/): filed 2022-07-28; accession 0001564590-22-026876 (https://www.sec.gov/Archives/edgar/data/789019/000156459022026876/msft-10k_20220630.htm)




## Macro cross-references

Indicators mapped to this company's SIC classification (industry 7372 Services-Prepackaged Software) by grepcent's deterministic macro-sector crosswalk. A navigational mapping, not a statistical or causal claim.

- [PAYEMS](/indicator/PAYEMS/): All Employees, Total Nonfarm
- [CES0500000003](/indicator/CES0500000003/): Average Hourly Earnings of All Employees, Total Private
- [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity

Macro-to-micro threads including this sector: [US labor market](/thread/us-labor-market/), [Growth & output](/thread/growth-output/), [Government finances](/thread/government-finances/), [Sector employment](/thread/sector-employment/).

All macro indicators: /indicators/


## For LLMs & downloads

Markdown twin: /company/MSFT.md · JSON record: /company/MSFT.json · verified financials: /company/MSFT/financials.json / /company/MSFT/financials.csv · machine TOC for the whole site: /llms.txt