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MSFT · Q4 FY2026
Archived report (Q4 FY2026). Latest deep dive →
The quarter in brief
An exceptionally strong quarter with revenue up 18% to $90.0 billion and operating income up 18%, driven by Azure's 43% surge and Intelligent Cloud's 32% growth, while GAAP net income of $35.8 billion (+31%) was flattered by a $3.2 billion Anthropic investment gain embedded in other income, partially offset by softness in More Personal Computing (-4%).
Net Income
$35,766M
up 31% y/y
Total Revenue
$90,007M
up 18% y/y
Operating Income
$40,603M
up 18% y/y
Gross Margin
$60,482M
up 15% y/y
All figures in $M.
| Line item | Amount and change |
|---|---|
| Productivity & Business Processes | $37,847 · +14% |
| Intelligent Cloud | $39,306 · +32% |
| More Personal Computing | $12,854 · -4% |
| Total Revenue | $90,007 · +18% |
| Cost of Revenue | $29,525 · +23% |
| Gross Margin | $60,482 · +15% · 67.2% margin |
| R&D | $9,997 · +13% |
| Sales & Marketing | $7,595 · +4% |
| G&A | $2,287 · +15% |
| Operating Income | $40,603 · +18% · 45.1% margin |
| Other Income, net | $3,444 · vs $(1,707) · incl. ≈$3.2B Anthropic gain |
| Pretax Income | $44,047 · +35% |
| Income Tax | $8,281 · +54% |
| Net Income | $35,766 · +31% · $4.81 diluted EPS |
Verdict: an exceptionally strong quarter with revenue up 18% to $90.0 billion and operating income up 18%, driven by Azure's 43% surge and Intelligent Cloud's 32% growth, while GAAP net income of $35.8 billion (+31%) was flattered by a $3.2 billion Anthropic investment gain embedded in other income, partially offset by softness in More Personal Computing (-4%).
OCF $55.4B; returned $10.2B to shareholders via dividends ($6.8B) and buybacks ($4.6B); commercial RPO +84% to $678B; no forward guidance issued in release (given on earnings call).
Source and notation
* marks non-cash / ≈ estimated. Source: Microsoft press release / 10-Q (SEC EDGAR).
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<figure> <a href="https://whoreportstoday.com/t/msft/q4-fy2026"><img src="https://whoreportstoday.com/t/msft/q4-fy2026/sankey.png" alt="MSFT Q4 FY2026: where the revenue went" loading="lazy" style="max-width:100%;height:auto"></a> <figcaption>Source: <a href="https://whoreportstoday.com/t/msft/q4-fy2026">Who Reports Today</a>, licensed under <a href="https://creativecommons.org/licenses/by/4.0/">CC BY 4.0</a></figcaption> </figure>
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<a href="https://whoreportstoday.com/t/msft/q4-fy2026">MSFT Q4 FY2026 earnings chart (Who Reports Today)</a>
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- GAAP net income of $35.8B (+31%) significantly outpaces non-GAAP net income of $35.3B (+22%), a gap driven by a $480M net gain from OpenAI investment marks this quarter vs a $1,575M loss a year ago.
- Other income (expense), net swung to +$3,444M from -$1,707M y/y, largely reflecting a $3.2B gain on the Anthropic investment plus the OpenAI mark-to-market swing — a major one-off boosting pretax income.
- Azure and other cloud services revenue grew 43% y/y and Microsoft Cloud revenue hit $59.3B (+27%), the primary growth engine; Azure alone surpassed $100B for the full fiscal year.
- More Personal Computing revenue fell 4% y/y, dragged by Windows OEM/Devices (-7%) and Xbox content and services (-10%), partly due to severance and impairment charges in Xbox mentioned as a discrete item.
- Capex (additions to property and equipment) more than doubled y/y to $35.8B from $17.1B, reflecting continued heavy AI infrastructure investment that pressures free cash flow despite strong operating cash flow.
- Effective tax rate fell to ~18.8% from ~16.5% a year ago in dollar terms tax rose to $8,281M from $5,383M, partly reflecting higher pretax income.
What distorts the picture in this report and what to watch beyond the headlines.
MSFT — Microsoft is a technology company known for developing software, hardware, and cloud services.
Key products include Windows, Office, Azure, and Surface devices, headquartered in Redmond, Washington.
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