More detailed Outlook slides will be available on the Microsoft Investor Relations website when we provide Outlook commentary on today's call. All growth comparisons we make on the call today relate to the corresponding period of last year, unless otherwise noted. We will also provide growth rates in constant currency, when available, as a framework for assessing how our underlying business has performed, excluding the effect of foreign currency rate fluctuations. Where growth rates are the same in constant currency, we will refer to the growth rate only.
It was a very strong close to what was a record fiscal year for us. All up, Microsoft Cloud surpassed $168 billion in annual revenue, up 23%. Azure surpassed $75 billion in annual revenue, up 34%, driven by growth across all workloads. Through software optimizations alone, we are delivering 90% more tokens for the same GPU compared to a year ago.
It continues to gain momentum with revenue up 55% year-over-year and over 25,000 customers. We saw the largest quarter of seat adds since launch, with a record number of customers returning to buy more seats. More broadly, GitHub usage and repos are seeing explosive growth because of AI. Our Copilot consumer app also continues to see strong growth in engagement and successful sessions.
| Metric | Period | Current guidance |
|---|---|---|
| Full-year revenue and operating income growth | FY2026 | Another year of double-digit revenue and operating income growth expected |
| Operating margins | FY2026 | Expected to be relatively unchanged year-over-year |
| Capital expenditure growth | FY2026 | Growth to moderate versus FY2025 with a greater mix of short-lived assets; H1 growth rates higher than H2 |
| Effective tax rate | FY2026 | Expected between 19% and 20% |
| FX impact on revenue and COGS growth | FY2026 | +approximately 2 points to full-year revenue and COGS growth; +1 point to operating expense growth |
| FX impact on total revenue growth | Q1 FY2026 | +2 points to total revenue growth |
| FX impact by segment | Q1 FY2026 | +~3 points in Productivity and Business Processes, +~1 point in Intelligent Cloud and More Personal Computing |
| Commercial bookings | Q1 FY2026 | Healthy growth expected on a growing expiry base, driven by core annuity sales motions |
| Metric | YoY | Note |
|---|---|---|
| Total revenue | +18% (+17% cc) to $76.4B | Broad strength across products and services with strong sales and partner execution in the largest quarter of the year. |
| Microsoft Cloud revenue | +27% (+25% cc) to $46.7B | Strength across the commercial cloud, ahead of expectations. |
| Productivity and Business Processes revenue | +16% (+14% cc) to $33.1B | Driven by M365 commercial products and cloud services and M365 consumer products and cloud services. |
| Intelligent Cloud revenue | +26% (+25% cc) to $29.9B | Driven by Azure and the on-premises server business. |
| Azure and other cloud services | +39% | Accelerated growth in core infrastructure, primarily from the largest customers; Azure AI revenue in line with expectations as demand exceeded supply. |
| More Personal Computing revenue | +9% to $13.5B | Primarily Windows OEM and Xbox content and services; gaming up 10%. |
| On-premises server business | -2% (-3% cc) | Ahead of expectations on transactional purchasing with higher end-period revenue recognition. |
| M365 commercial cloud | +18% (+16% cc) | Two points of benefit from end-period revenue recognition plus ARPU growth from E5 and M365 Copilot; seats up 6%. |
| M365 consumer cloud | +20% | ARPU growth following the January price increase and subscriber growth of 8%. |
| LinkedIn revenue | +9% (+8% cc) | Growth across all businesses, though talent solutions weighed by the hiring market. |
| Dynamics 365 revenue | +23% (+21% cc) | Strong execution in core annuity sales motions and growth across all workloads. |
| Search and news advertising ex-TAC | +21% (+20% cc) | Volume and revenue-per-search growth plus roughly 8 points of favorable third-party partnership impact against a low prior-year comparable. |
| Xbox content and services | +13% (+12% cc) | Better-than-expected first-party content and Xbox Game Pass. |
| Earnings per share | +24% (+22% cc) to $3.65 | Revenue outperformance and operating margin expansion to 45%. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Azure annual scale | Below $75B in the prior fiscal year | Surpassed $75 billion in annual revenue, up 34%, taking share every quarter of the year | — |
| Data center capacity | Fewer regions and no liquid cooling across all regions previously | Over 400 data centers across 70 regions; more than 2 GW of new capacity stood up in 12 months; every Azure region now AI-first with liquid-cooling support | — |
| Foundry token volume | Roughly one-seventh of current volume a year ago | Over 500 trillion tokens processed this year, up over 7x | — |
| Copilot app engagement | Prior-year AI-feature engagement lower | Over 100 million monthly active Copilot users and over 800 million monthly active users of AI features across products | — |
| GitHub Copilot enterprise | Lower base in the prior quarter | Enterprise customers up 75% quarter-over-quarter; 20 million total users; 90% of the Fortune 100 use GitHub Copilot | — |
| Dragon Copilot (healthcare) | Roughly one-seventh of current volume a year ago | Over 13 million physician-patient encounters documented this quarter, up nearly 7x year-over-year | — |
| CapEx supply-demand balance | In January expected better balance by June | Now hopes to be in better supply-demand shape by December as demand keeps improving | — |
| Microsoft Fabric | Prior-year revenue and customer base lower | Revenue up 55% year-over-year with over 25,000 customers, the fastest-growing database product in company history | — |