Open report — full analysis, no account required.
Sign up to generate reports and read filings that aren't on the open list.
Get notified when MSFT files again. Create a free account and we'll email you the moment its next filing is analyzed.
Get filing alertsRed Flags Detected
- AI Infrastructure Investment At Scale Ahead of Revenue (worsened) — Microsoft is making massive, accelerated capital investments in AI datacenters and components before fully developed revenue streams, with $329.1B in not-yet-commenced leases and $743.8B in total contractual obligations.
- AI Demand and Capacity Misalignment Risk (new) — New risk factor warns that overestimating AI demand could lead to underutilized infrastructure and asset impairments, while underestimating could cause capacity shortfalls.
Microsoft FY26: Revenue +17.8% to $331.8B, net income +31.3% to $133.7B, but AI buildout risks mount
Filed July 29, 2026 · Period ending June 30, 2026 · Compared to 10-K Jul 30, 2025 · ~1 min read
Key Financials
SEC XBRL| Metric | PriorJun 30, 2025 | CurrentJun 30, 2026 | Δ |
|---|---|---|---|
| Revenue | $281.7B | $331.8B | ▲ +17.8% |
| Net income | $101.8B | $133.7B | ▲ +31.3% |
| Diluted EPS | $13.64 | $17.95 | ▲ +31.6% |
| Operating income | $128.5B | $155.2B | ▲ +20.8% |
| Cash & equivalents | $30.2B | $20.9B | ▼ -30.8% |
| Long-term debt (noncurrent) | $40.2B | $31.1B | ▼ -22.6% |
| Total assets | $619.0B | $758.4B | ▲ +22.5% |
As reported in XBRL by the filer · 10-K vs 10-K. Income figures cover the fiscal year; cash & assets are period-end balances. n/m = not meaningful (sign change; a % would mislead). about this table · verify on EDGAR →
Key Number Changes
Prior filing · verify on EDGAR →
As of June 30, 2025, we employed approximately 228,000 people on a full-time basis, 125,000 in the U.S. and 103,000 internationally. Of the total employees, 89,000 were in operations, including product support and consulting services, datacenter operations, and manufacturing and distribution; 80,000 were in product research and development; 44,000 were in sales and marketing; and 15,000 were in general and administration.
Current filing · verify on EDGAR →
As of June 30, 2026, we employed approximately 223,000 people on a full-time basis, 121,000 in the U.S. and 102,000 internationally. Of the total employees, 89,000 were in operations, including product support and consulting services, datacenter operations, and manufacturing and distribution; 77,000 were in product research and development; 43,000 were in sales and marketing; and 14,000 were in general and administration.
Prior filing · verify on EDGAR →
Revenue increased $36.6 billion or 15% with growth across each of our segments.
Current filing · verify on EDGAR →
Revenue increased $50.1 billion or 18% driven by growth in Microsoft Cloud.
Prior filing · verify on EDGAR →
Microsoft Cloud revenue increased 23% to $168.9 billion.
Current filing · verify on EDGAR →
Microsoft Cloud revenue increased 27% to $214.4 billion.
Prior filing · verify on EDGAR →
Azure and other cloud services revenue growth of 34%.
Current filing · verify on EDGAR →
Azure and other cloud services revenue increased 41%.
Prior filing · verify on EDGAR →
Operating income increased $19.1 billion or 17% with growth across each of our segments.
Current filing · verify on EDGAR →
Operating income increased $26.7 billion or 21% driven by growth in Productivity and Business Processes and Intelligent Cloud.
Prior filing · verify on EDGAR →
Net income | 101,832 | 88,136 | 16% | Diluted earnings per share | 13.64 | 11.80 | 16%
Current filing · verify on EDGAR →
Net income | 133,749 | 101,832 | 31% | Diluted earnings per share | 17.95 | 13.64 | 32%
Prior filing · verify on EDGAR →
Cash from operations increased $17.6 billion to $136.2 billion for fiscal year 2025
Current filing · verify on EDGAR →
Cash from operations increased $46.8 billion to $182.9 billion for fiscal year 2026
Prior filing · verify on EDGAR →
During fiscal years 2025 and 2024, we repurchased 31 million shares and 32 million shares of our common stock for $13.0 billion and $12.0 billion, respectively, through our share repurchase program.
Current filing · verify on EDGAR →
During fiscal years 2026 and 2025, we repurchased 36 million shares and 31 million shares of our common stock for $16.7 billion and $13.0 billion, respectively, through our share repurchase program.
Prior filing · verify on EDGAR →
During fiscal years 2025 and 2024, our Board of Directors declared dividends totaling $24.7 billion and $22.3 billion, respectively.
Current filing · verify on EDGAR →
During fiscal years 2026 and 2025, our Board of Directors declared dividends totaling $27.0 billion and $24.7 billion, respectively.
Prior filing · verify on EDGAR →
As of June 30, 2025, we had additional leases, primarily for datacenters, that had not yet commenced of $92.7 billion. These leases will commence between fiscal year 2026 and fiscal year 2031 with lease terms of 1 year to 20 years.
Current filing · verify on EDGAR →
As of June 30, 2026, we had additional leases, primarily for datacenters, that had not yet commenced of $329.1 billion, with some arrangements subject to certain contractual conditions being met. These leases will commence between fiscal year 2027 and fiscal year 2033 with lease terms of 1 year to 20 years.
Prior filing · verify on EDGAR →
Finance Leases | Property and equipment, at cost | $ 53,876 | $ 32,248 | Accumulated depreciation | (9,861) | (6,386) | Property and equipment, net | $ 44,015 | $ 25,862 | Other current liabilities | $ 3,172 | $ 2,349 | Other long-term liabilities | 43,000 | 24,796 | Total finance lease liabilities | $ 46,172 | $ 27,145
Current filing · verify on EDGAR →
Finance Leases | Property and equipment, at cost | $ 82,712 | $ 53,876 | Accumulated depreciation | (15,431) | (9,861) | Property and equipment, net | $ 67,281 | $ 44,015 | Other current liabilities | $ 4,290 | $ 3,172 | Other long-term liabilities | 62,304 | 43,000 | Total finance lease liabilities | $ 66,594 | $ 46,172
Prior filing · verify on EDGAR →
As of June 30, 2025, we accrued aggregate legal liabilities of $541 million. While we intend to defend these matters vigorously, adverse outcomes that we estimate could reach approximately $600 million in aggregate beyond recorded amounts are reasonably possible.
Current filing · verify on EDGAR →
As of June 30, 2026, we accrued aggregate legal liabilities of $553 million. While we intend to defend these matters vigorously, adverse outcomes that we estimate could reach approximately $400 million in aggregate beyond recorded amounts are reasonably possible.
Prior filing · verify on EDGAR →
As of June 30, 2025, $57.3 billion remained of this $60.0 billion share repurchase program.
Current filing · verify on EDGAR →
As of June 30, 2026, $40.6 billion remained of this $60.0 billion share repurchase program.
Prior filing · verify on EDGAR →
As of June 30, 2025, total unrecognized compensation costs related to stock awards were $21.6 billion. These costs are expected to be recognized over a weighted average period of three years. The weighted average grant-date fair value of stock awards granted was $413.90, $339.46, and $252.59 for fiscal years 2025, 2024, and 2023, respectively. The fair value of stock awards vested was $16.2 billion, $16.0 billion, and $11.9 billion, for fiscal years 2025, 2024, and 2023, respectively. As of June 30, 2025, an aggregate of 98 million shares were authorized for future grant under our stock plans.
Current filing · verify on EDGAR →
As of June 30, 2026, total unrecognized compensation costs related to stock awards were $24.8 billion. These costs are expected to be recognized over a weighted average period of three years. The weighted average grant-date fair value of stock awards granted was $471.00, $413.90, and $339.46 for fiscal years 2026, 2025, and 2024, respectively. The fair value of stock awards vested was $16.3 billion, $16.2 billion, and $16.0 billion, for fiscal years 2026, 2025, and 2024, respectively. As of June 30, 2026, an aggregate of 292 million shares were authorized for future grant under our stock plans.
Key Changes
-
high
Revenue grew 17.8% to $331.8B, driven by Azure (+41%) and Microsoft 365 Commercial. Net income rose 31.3% to $133.7B, boosted by in OpenAI gains.
-
high
Datacenter lease commitments not yet commenced surged, and total contractual obligations reached, reflecting massive AI infrastructure buildout.
-
high
New risk factors warn that AI demand misjudgment could cause asset impairments, and AI cost structure uncertainty may compress margins.
-
medium
OpenAI partnership extended; Microsoft recorded in related-party revenue and holds a as-converted equity interest.
-
medium
XBOX revenue fell and content/services declined, with impairment expenses disclosed in the segment.
Summary
Microsoft delivered strong fiscal 2026 results, with revenue up 17.8% to $331.8B and net income up 31.3% to $133.7B. Growth was led by Azure (+41%) and Microsoft 365 Commercial (+16%), while a $5.0B net gain from OpenAI investments boosted the bottom line.
However, the company is making unprecedented bets on AI infrastructure: not-yet-commenced datacenter leases jumped to $329.1B, and total contractual obligations reached $743.8B. These investments are being made ahead of fully developed revenue streams, and new risk factors explicitly warn that misjudging AI demand could lead to asset impairments, while uncertain AI cost structures could compress margins.
For retail investors, the key concern is execution risk. Microsoft is spending heavily on AI capacity with no guarantee that demand will match supply, and the company itself flags the possibility of underutilized infrastructure and margin pressure. The XBOX segment also showed weakness, with revenue down 7% and impairment expenses disclosed. On the positive side, the OpenAI partnership deepened, with $24.1B in related-party revenue and a 25% equity stake, but this also concentrates risk in a single partner. Watch next quarter for signs of AI capacity utilization and margin trends. If Azure growth remains strong and AI costs stabilize, the investment thesis holds; if demand softens or costs rise faster than revenue, the impairment and margin risks flagged in the filing could materialize.
Section-by-Section Diff
Business
Microsoft reorganized its business description, renamed Gaming to XBOX and Search to Search advertising, and updated executive and workforce disclosures.
Previous filing · verify on EDGAR →
focusing on secure, trusted, and innovative platforms and tools that meet evolving customer needs across cloud computing, productivity and collaboration, and personal computing.
Current filing · verify on EDGAR →
focusing on secure, trusted, and innovative platforms and applications that meet evolving customer needs across AI, cloud computing, productivity and collaboration, and personal computing.
Microsoft added AI as a distinct area of customer need and changed 'tools' to 'applications', reflecting the company's increased emphasis on AI across its portfolio.
Added in current filing · verify on EDGAR →
Tackling security from all angles with our integrated, end-to-end solutions spanning security, compliance, identity, and management, across all clouds and platforms.
Microsoft added security as a new top investment priority in its future opportunity section, signaling increased strategic focus on security.
Added in current filing · verify on EDGAR →
Helping customers drive frontier transformation by applying frontier AI capabilities, engineering expertise, and trusted platforms to reinvent how their organizations operate, improve decision-making, create new value, and deliver measurable business outcomes from AI.
Microsoft added a new investment priority focused on helping customers use frontier AI to transform their operations and achieve measurable outcomes.
Added in current filing · verify on EDGAR →
Providing a unified intelligence layer for enterprise AI to ground AI in a continuously evolving understanding of an organization’s data.
Microsoft added a new investment priority for a unified intelligence layer that grounds enterprise AI in organizational data.
Previous filing · verify on EDGAR →
As of June 30, 2025, we employed approximately 228,000 people on a full-time basis, 125,000 in the U.S. and 103,000 internationally. Of the total employees, 89,000 were in operations, including product support and consulting services, datacenter operations, and manufacturing and distribution; 80,000 were in product research and development; 44,000 were in sales and marketing; and 15,000 were in general and administration.
Current filing · verify on EDGAR →
As of June 30, 2026, we employed approximately 223,000 people on a full-time basis, 121,000 in the U.S. and 102,000 internationally. Of the total employees, 89,000 were in operations, including product support and consulting services, datacenter operations, and manufacturing and distribution; 77,000 were in product research and development; 43,000 were in sales and marketing; and 14,000 were in general and administration.
Microsoft's total workforce decreased by approximately 5,000 employees year-over-year, with reductions in U.S. and international headcount and across most functional areas.
Previous filing · verify on EDGAR →
We plan to continue to make significant investments in a broad range of product research and development activities, and as appropriate, we will coordinate our research and development across operating segments and leverage the results across the company.
Current filing · verify on EDGAR →
We plan to continue to make significant investments in a broad range of product research and development activities, including AI-based products and services. We will coordinate our research and development across operating segments and leverage the results across the company, as appropriate.
Microsoft added explicit mention of AI-based products and services to its R&D investment plans and restructured the sentence about coordination.
Show 22 minor / wording changes
Previous filing · verify on EDGAR →
Our products include operating systems, cross-device productivity and collaboration applications, server applications, business solution applications, desktop and server management tools, software development tools, and video games.
Current filing · verify on EDGAR →
Our products include operating systems, server applications, business solution applications, software development tools, desktop and server management tools, and video games.
Microsoft removed 'cross-device productivity and collaboration applications' from its product list, simplifying the description of its offerings.
Previous filing · verify on EDGAR →
Create more personal computing to enable users to interact with technology in more intuitive, engaging, and dynamic ways.
Current filing · verify on EDGAR →
Create more personal computing experiences that empower people to play, create, and interact with technology in more intuitive, engaging, and dynamic ways.
Microsoft expanded its third ambition to explicitly include playing and creating, broadening the scope of personal computing experiences.
Previous filing · verify on EDGAR →
Since announcing these goals, we have made meaningful progress while having seen major changes in both the technology sector and in our understanding of what it will take to meet our goals.
Current filing · verify on EDGAR →
Since announcing these goals, we have seen major changes in both the technology sector and in our understanding of what it will take to meet our goals.
Microsoft removed the phrase 'we have made meaningful progress' from its sustainability discussion, softening the claim of progress toward its 2030 goals.
Removed from previous filing · verify on EDGAR →
In August 2024, we announced changes to the composition of our segments. These changes align our segments with how we currently manage our business, most notably bringing the commercial components of Microsoft 365 together in the Productivity and Business Processes segment. Beginning in fiscal year 2025, the information that our chief operating decision maker is regularly provided and reviews for purposes of allocating resources and assessing performance reflects these segment changes.
Microsoft removed the disclosure about the August 2024 segment reorganization, which is now historical and no longer current news.
Previous filing · verify on EDGAR →
Nuance Healthcare cloud services
Current filing · verify on EDGAR →
Health and Life Sciences cloud services (formerly Nuance Healthcare cloud services)
Microsoft renamed Nuance Healthcare cloud services to Health and Life Sciences cloud services, reflecting a rebranding of the offering.
Previous filing · verify on EDGAR →
Customers can use Azure through our global network of datacenters for computing, networking, storage, mobile and web application services, AI, Internet of Things, cognitive services, and machine learning.
Current filing · verify on EDGAR →
Customers can use Azure through our global network of datacenters for computing, networking, storage, mobile and web application services, AI, and Internet of Things.
Microsoft removed 'cognitive services' and 'machine learning' from the list of Azure capabilities, likely reflecting a consolidation of AI-related services under the broader AI category.
Previous filing · verify on EDGAR →
GitHub and Nuance Healthcare include both cloud and on-premises offerings. GitHub provides a collaboration platform for developers to manage code and incorporate AI and agent-based tools across the software development lifecycle. Nuance Healthcare provides AI solutions to the healthcare industry.
Current filing · verify on EDGAR →
GitHub includes both cloud and on-premises offerings. GitHub provides a collaboration platform for developers to manage code and incorporate AI and agent-based tools across the software development lifecycle. Health and Life Sciences cloud services provides AI solutions to the healthcare industry.
Microsoft separated the descriptions of GitHub and the healthcare cloud services, reflecting the rebranding of Nuance Healthcare to Health and Life Sciences cloud services.
Previous filing · verify on EDGAR →
Enterprise and partner services, including Enterprise Support Services, Industry Solutions, Nuance professional services, Microsoft Partner Network, and Learning Experience, assist customers in developing, deploying, and managing Microsoft server solutions, Microsoft desktop solutions, and Nuance conversational AI and ambient intelligent solutions, along with providing training and certification to developers and IT professionals on various Microsoft products.
Current filing · verify on EDGAR →
Enterprise and partner services assist customers in developing, deploying, and managing Microsoft server solutions, Microsoft desktop solutions, and conversational AI and ambient intelligent solutions, along with providing training and certification to developers and IT professionals on various Microsoft products.
Microsoft simplified the description of enterprise and partner services, removing the specific list of service components and the Nuance branding.
Previous filing · verify on EDGAR →
Gaming, including Xbox hardware and Xbox content and services, comprising first- and third-party content (including games and in-game content), Xbox Game Pass and other subscriptions, Xbox Cloud Gaming, advertising, and other cloud services.
Current filing · verify on EDGAR →
XBOX (formerly Gaming), including XBOX hardware and XBOX content and services, comprising first- and third-party content (including games and in-game content), XBOX Game Pass and other subscriptions, XBOX Cloud Gaming, advertising, and other cloud services.
Microsoft renamed the Gaming segment to XBOX and changed the capitalization of Xbox to XBOX throughout the segment description.
Previous filing · verify on EDGAR →
Search and news advertising, comprising Bing and Copilot, Microsoft News, Microsoft Edge, and third-party affiliates.
Current filing · verify on EDGAR →
Search advertising (formerly Search and news advertising), comprising Bing, Copilot, Microsoft News, Microsoft Edge, and third-party affiliates.
Microsoft renamed the Search and news advertising segment to Search advertising and adjusted the description of Bing and Copilot.
Previous filing · verify on EDGAR →
Xbox and our cloud gaming services face competition from various online gaming ecosystems and game streaming services. We also compete with other providers of entertainment services such as video streaming platforms. Our gaming platform competes with other console platforms.
Current filing · verify on EDGAR →
XBOX and our cloud gaming services face competition from various online gaming ecosystems and game streaming services. Our gaming platform competes with other console platforms.
Microsoft removed the sentence about competing with video streaming platforms from the gaming competition description.
Previous filing · verify on EDGAR →
We have regional operations service centers in the Americas, Asia Pacific, Europe, and the Middle East that support our business operations, including customer contract and order processing, billing, credit and collections, customer lifecycle AI and cloud operations, and vendor management and logistics.
Current filing · verify on EDGAR →
We have a global operations service center covering the Americas, Asia Pacific, Europe, and the Middle East that supports our business operations, including customer contract and order processing, billing, credit and collections, customer lifecycle AI and cloud operations, and vendor management and logistics.
Microsoft changed the description from multiple regional operations service centers to a single global operations service center, indicating a consolidation of operations.
Previous filing · verify on EDGAR →
servers, including graphics processing units (“GPUs”) and other components.
Current filing · verify on EDGAR →
servers, including graphics processing units and other components.
Microsoft removed the abbreviation 'GPUs' from the description of server components, using only the full term 'graphics processing units'.
Previous filing · verify on EDGAR →
Extended or unforeseen disruptions at these suppliers could impact our ability to operate our datacenters and manufacture devices on time to meet consumer demand.
Current filing · verify on EDGAR →
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.
Microsoft broadened the supply chain risk language to include limited availability of components, not just disruptions at suppliers.
Previous filing · verify on EDGAR →
Our customers include individual consumers, small and medium organizations, large global enterprises, public-sector institutions, service providers, application developers, and OEMs. We market and distribute our products and services through the following channels: direct, distributors and resellers, and OEMs. Our sales organization performs a variety of functions, including working directly with commercial enterprises and public-sector organizations worldwide to identify and meet their technology and digital transformation requirements; supporting system integrators, independent software vendors, and other partners who engage directly with our customers to perform sales, consulting, and fulfillment functions for our products and services; and managing OEM relationships. Direct Many organizations that license our products and services transact directly with us through Enterprise Agreements and Enterprise Services contracts, with sales support from system integrators, independent software vendors, web agencies, and partners that advise organizations on licensing our products and services (“Enterprise Agreement Software Advisors” or “ESA”). Microsoft offers direct sales programs targeted to reach small, medium, and corporate customers, in addition to those offered through the reseller channel. A large network of partner advisors support many of these sales. We also sell commercial and consumer products and services directly to customers, such as cloud services, search, and gaming, through our digital marketplaces and online stores. Additionally, our Microsoft Experience Centers are designed to facilitate deeper engagement with our partners and customers across industries. Distributors and Resellers Organizations also license our products and services indirectly, primarily through licensing solution partners (“LSP”), distributors, value-added resellers (“VAR”), and retailers. Although each type of reselling partner may reach organizations of all sizes, LSPs are primarily engaged with large organizations, distributors resell primarily to VARs, and VARs typically reach small and medium organizations. ESAs are also typically authorized as LSPs and operate as resellers for our other volume licensing programs. Microsoft Cloud Solution Provider is our main partner program for reselling cloud services. We distribute our retail packaged products primarily through independent non-exclusive distributors, authorized replicators, resellers, and retail outlets. Individual consumers obtain these products primarily through retail outlets. We distribute our devices through third-party retailers. We have a network of field sales representatives and field support personnel that solicit orders from distributors and resellers and provide product training and sales support. Our Dynamics business solutions are also licensed to enterprises through a global network of channel partners providing vertical solutions and specialized services. ... OEMs We distribute our products and services through OEMs that pre-install our software on new devices and servers they sell. The largest component of the OEM business is the Windows operating system pre-installed on devices. OEMs also sell devices pre-installed with other Microsoft products and services, including applications such as Office and the capability to subscribe to Microsoft 365 Consumer. There are two broad categories of OEMs. The largest category of OEMs are direct OEMs as our relationship with them is managed through a direct agreement between Microsoft and the OEM. We have distribution agreements covering one or more of our products with virtually all the multinational OEMs, including Dell, Hewlett-Packard, Lenovo, and with many regional and local OEMs. The second broad category of OEMs are system builders consisting of lower-volume PC manufacturers, which source Microsoft software for pre-installation and local redistribution primarily through the Microsoft distributor channel rather than through a direct agreement or relationship with Microsoft.
Current filing · verify on EDGAR →
Distribution occurs through a combination of direct and indirect channels. Direct sales activities serve customers ranging from large multinational enterprises and public sector organizations to small and medium-sized businesses. Indirect sales activities serve customers through a broad network of partners that support the sale, deployment, and management of Microsoft products and services worldwide. The indirect channel extends the reach of commercial offerings and supports customers across industries, geographies, and organization sizes. Sales and distribution models continue to evolve to support cloud-based, subscription-based, and consumption-based offerings while maintaining multiple options through which customers may acquire and manage our products and services. OEMs license and preinstall certain Microsoft software on devices that are sold to end customers. In addition, certain products and services are available through online purchasing channels and digital marketplaces.
Microsoft significantly condensed its distribution, sales, and marketing section, removing detailed descriptions of direct sales, distributors and resellers, and OEM channels.
Previous filing · verify on EDGAR →
We offer options for organizations of varying sizes that want to purchase our cloud services and on-premises software. We license these organizations under volume licensing agreements to allow the customer to acquire multiple licenses of products and services instead of having to acquire separate licenses through retail channels. These volume licensing programs have varying programmatic requirements and benefits to best meet the needs of our customers. Software Assurance (“SA”) conveys rights to new software and upgrades for perpetual licenses released over the contract period. It also provides support, tools, training, and other licensing benefits to help customers deploy and use software efficiently. SA is required to be purchased with certain volume licensing agreements and is an optional purchase with others. Volume Licensing Programs Enterprise Agreement Enterprise Agreements offer large organizations a manageable volume licensing program that gives them the flexibility to buy cloud services and software licenses under one agreement. Enterprise Agreements are designed for medium or large organizations that want to license Microsoft products and services organization-wide over a three-year period. Organizations can elect to purchase perpetual licenses (covered with SA) and/or subscribe to cloud services. Microsoft Customer Agreement Microsoft Customer Agreements are simplified purchase agreements presented, accepted, and stored through a digital experience. Microsoft Customer Agreements are non-expiring agreements that are designed to support all customers over time, whether purchasing through a partner or directly from Microsoft. Microsoft Online Subscription Agreement Microsoft Online Subscription Agreements are designed for small and medium organizations that want to subscribe to, activate, provision, and maintain cloud services seamlessly and directly via the web. These agreements allow customers to acquire monthly or annual subscriptions for cloud-based services. Microsoft Products and Services Agreement Microsoft Products and Services Agreements are designed for medium and large organizations that want to license cloud services and on-premises software as needed, with no organization-wide commitment, under a single, non-expiring agreement. Organizations purchase perpetual licenses or subscribe to licenses. SA is optional for customers that purchase perpetual licenses. ... Open Value Open Value agreements are a simple, cost-effective way to acquire the latest Microsoft technology. These agreements are designed for small and medium organizations that want to license cloud services and on-premises software over a three-year period. Under Open Value agreements, organizations can elect to purchase perpetual licenses or subscribe to licenses and SA is included. Select Plus A Select Plus agreement is designed for government and academic organizations to acquire on-premises licenses at any affiliate or department level, while realizing advantages as one organization. Organizations purchase perpetual licenses and SA is optional. Partner Programs The Microsoft Cloud Solution Provider Program offers customers an easy way to license the cloud services they need in combination with the value-added services offered by their systems integrator, managed services provider, or cloud reseller partner. Partners in this program can easily package their own products and services to directly provision, manage, and support their customer subscriptions. The Microsoft Services Provider License Agreement allows hosting service providers and independent software vendors who want to license eligible Microsoft software products to provide hosted applications and software services to their end customers. Partners license software over a three-year period and are billed monthly based on units licensed. The Independent Software Vendor Royalty Program enables partners to integrate Microsoft products into other applications and then license the unified business solution to their end users.
Current filing · verify on EDGAR →
We offer a range of volume purchasing programs that enable organizations of varying sizes to acquire software, cloud services, and related support benefits through direct and partner-assisted purchasing arrangements. These programs provide customers with flexible purchasing, deployment, and management options and are tailored to large enterprises, mid-sized organizations, small businesses, educational institutions, and government entities.
Microsoft significantly condensed its licensing options section, removing detailed descriptions of volume licensing programs, Software Assurance, and partner programs.
Previous filing · verify on EDGAR →
including those that may apply to our products and online services offerings, and those that impose requirements related to user privacy, telecommunications, data storage and protection, advertising, and online content.
Current filing · verify on EDGAR →
including those that may apply to our products, services, and infrastructure, and those that impose requirements related to user privacy, telecommunications, data storage and protection, advertising, and online content.
Microsoft broadened the scope of government regulation to include infrastructure, not just products and online services offerings.
Previous filing · verify on EDGAR →
Judson B. Althoff 52 Executive Vice President and Chief Commercial Officer
Current filing · verify on EDGAR →
Judson B. Althoff 53 Chief Executive Officer, Microsoft Commercial Business
Judson Althoff's title changed from Executive Vice President and Chief Commercial Officer to Chief Executive Officer, Microsoft Commercial Business, and his age increased by one year.
Removed from previous filing · verify on EDGAR →
Kathleen T. Hogan 59 Executive Vice President, Office of Strategy and Transformation
Kathleen T. Hogan is no longer listed as an executive officer, indicating her departure from the company or a change in her role.
Previous filing · verify on EDGAR →
Mr. Althoff also serves on the Board of Directors of Ecolab Inc.
Current filing · verify on EDGAR →
Mr. Althoff also serves on the Board of Directors of Ecolab Inc. and General Electric Company, operating as GE Aerospace.
Judson Althoff added a board membership at General Electric Company, operating as GE Aerospace.
Previous filing · verify on EDGAR →
Press releases on quarterly earnings, product and service announcements, legal developments, and international news.
Current filing · verify on EDGAR →
Press releases on quarterly earnings, product and service announcements, and legal developments.
Microsoft removed 'international news' from the list of press release topics.
Previous filing · verify on EDGAR →
We publish a variety of reports and resources related to our Corporate Social Responsibility programs and progress on our Reports Hub website, www.microsoft.com/corporate-responsibility/reports-hub, including reports on responsible AI, sustainability, responsible sourcing, accessibility, digital trust, and public policy engagement.
Current filing · verify on EDGAR →
We publish a variety of reports and resources related to our Corporate Responsibility programs and progress on our Reports Hub website, www.microsoft.com/corporate-responsibility/reports-hub, including the Environmental Sustainability Report, Microsoft Digital Defense Report, and Microsoft Impact Summary.
Microsoft changed the name from Corporate Social Responsibility to Corporate Responsibility and updated the list of specific reports available.
MD&A
Microsoft's FY26 MD&A shows 18% revenue growth to $331.8B, driven by Azure and Microsoft 365, with OpenAI gains boosting net income.
Previous filing · verify on EDGAR →
Revenue increased $36.6 billion or 15% with growth across each of our segments.
Current filing · verify on EDGAR →
Revenue increased $50.1 billion or 18% driven by growth in Microsoft Cloud.
Microsoft's revenue growth accelerated from 15% in fiscal 2025 to 18% in fiscal 2026, with the dollar increase rising from $36.6 billion to $50.1 billion. The company attributes the acceleration to growth in Microsoft Cloud, particularly Azure.
Previous filing · verify on EDGAR →
Microsoft Cloud revenue increased 23% to $168.9 billion.
Current filing · verify on EDGAR →
Microsoft Cloud revenue increased 27% to $214.4 billion.
Microsoft Cloud revenue growth accelerated from 23% to 27%, with total revenue rising from $168.9 billion to $214.4 billion. This reflects strong demand for Azure and other cloud services.
Previous filing · verify on EDGAR →
Azure and other cloud services revenue growth of 34%.
Current filing · verify on EDGAR →
Azure and other cloud services revenue increased 41%.
Azure revenue growth accelerated from 34% to 41%, indicating stronger demand for Microsoft's cloud platform. This is a key driver of the company's overall revenue growth.
Previous filing · verify on EDGAR →
Operating income increased $19.1 billion or 17% with growth across each of our segments.
Current filing · verify on EDGAR →
Operating income increased $26.7 billion or 21% driven by growth in Productivity and Business Processes and Intelligent Cloud.
Operating income growth accelerated from 17% to 21%, with the dollar increase rising from $19.1 billion to $26.7 billion. The improvement was driven by strong performance in the Productivity and Business Processes and Intelligent Cloud segments.
Previous filing · verify on EDGAR →
Net income | 101,832 | 88,136 | 16% | Diluted earnings per share | 13.64 | 11.80 | 16%
Current filing · verify on EDGAR →
Net income | 133,749 | 101,832 | 31% | Diluted earnings per share | 17.95 | 13.64 | 32%
Net income growth accelerated from 16% to 31%, and diluted EPS growth accelerated from 16% to 32%. The increase was partly driven by net gains from investments in OpenAI, which added $5.0 billion to net income in fiscal 2026.
Previous filing · verify on EDGAR →
Microsoft and OpenAI maintain a long-term strategic partnership originally established in 2019.
Current filing · verify on EDGAR →
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 disclosed that it extended its partnership with OpenAI in October 2025 and April 2026, providing more specific details about the ongoing relationship. The company also noted it will continue to receive revenue-sharing payments.
Added in current filing · verify on EDGAR →
Commercial remaining performance obligation increased 84% to $678 billion.
Microsoft added a new highlight showing commercial remaining performance obligation increased 84% to $678 billion, indicating strong future revenue visibility. This metric was not highlighted in the prior year's MD&A.
Previous filing · verify on EDGAR →
Cash from operations increased $17.6 billion to $136.2 billion for fiscal year 2025
Current filing · verify on EDGAR →
Cash from operations increased $46.8 billion to $182.9 billion for fiscal year 2026
Cash from operations grew significantly, with the increase rising from $17.6 billion to $46.8 billion. The company attributed the improvement to higher cash received from customers and lower income tax payments.
Previous filing · verify on EDGAR →
During fiscal years 2025 and 2024, we repurchased 31 million shares and 32 million shares of our common stock for $13.0 billion and $12.0 billion, respectively, through our share repurchase program.
Current filing · verify on EDGAR →
During fiscal years 2026 and 2025, we repurchased 36 million shares and 31 million shares of our common stock for $16.7 billion and $13.0 billion, respectively, through our share repurchase program.
Microsoft increased its share repurchases from $13.0 billion in fiscal 2025 to $16.7 billion in fiscal 2026, reflecting continued commitment to returning capital to shareholders. The remaining authorization decreased from $57.3 billion to $40.6 billion.
Previous filing · verify on EDGAR →
During fiscal years 2025 and 2024, our Board of Directors declared dividends totaling $24.7 billion and $22.3 billion, respectively.
Current filing · verify on EDGAR →
During fiscal years 2026 and 2025, our Board of Directors declared dividends totaling $27.0 billion and $24.7 billion, respectively.
Dividend payments increased from $24.7 billion to $27.0 billion, consistent with Microsoft's policy of returning capital to shareholders.
Previous filing · verify on EDGAR →
Xbox content and services revenue increased 16% driven by the impact of the Activision Blizzard acquisition and Xbox Game Pass.
Current filing · verify on EDGAR →
XBOX content and services revenue decreased 5% on a prior year comparable that benefited from strong first-party content performance, offset in part by growth in XBOX Game Pass.
XBOX content and services revenue declined 5% in fiscal 2026 after growing 16% in fiscal 2025. The decline was attributed to a difficult comparison with the prior year, which benefited from strong first-party content performance.
Previous filing · verify on EDGAR →
Search and news advertising revenue excluding traffic acquisition costs increased 20%.
Current filing · verify on EDGAR →
Search advertising (formerly Search and news advertising) revenue excluding traffic acquisition costs increased 12%.
Microsoft renamed its search advertising metric from 'Search and news advertising' to 'Search advertising' and reported growth of 12%, down from 20% in the prior year. The slowdown reflects a more challenging comparison.
Previous filing · verify on EDGAR →
Operating expenses increased $3.8 billion or 6% driven by investments in cloud and AI engineering and Gaming, including the impact of the Activision Blizzard acquisition.
Current filing · verify on EDGAR →
Operating expenses increased $4.9 billion or 7% driven by continued investments in research and development compute capacity, AI talent, and data to support product development that benefits the entire portfolio, impairment and other related expenses in our XBOX business, investments in commercial sales, and higher Copilot advertising expenses.
Microsoft disclosed impairment and other related expenses in its XBOX business as a driver of higher operating expenses in fiscal 2026. This is a new disclosure that was not present in the prior year.
Added in current filing · verify on EDGAR →
Current year net income and diluted EPS were positively impacted by net gains from investments in OpenAI, which resulted in an increase in net income and diluted EPS of $5.0 billion and $0.67, respectively.
Microsoft disclosed that net gains from investments in OpenAI increased net income by $5.0 billion and diluted EPS by $0.67 in fiscal 2026. This is a significant new disclosure that highlights the impact of the OpenAI investment on financial results.
Added in current filing · verify on EDGAR →
Adjusted net income and adjusted diluted earnings per share (“EPS”) are non-GAAP financial measures. These non-GAAP financial measures exclude net gains and losses from investments in OpenAI.
Microsoft introduced adjusted net income and adjusted diluted EPS as non-GAAP measures that exclude net gains and losses from investments in OpenAI. This provides investors with a view of the company's performance excluding the impact of the OpenAI investment.
Previous filing · verify on EDGAR →
Total | $ 148,106 | $ 248,939 | $ 397,045
Current filing · verify on EDGAR →
Total | $ 241,922 | $ 501,899 | $ 743,821
Microsoft's total contractual obligations increased significantly from $397.0 billion to $743.8 billion, driven by higher purchase commitments and operating and finance leases. This reflects the company's continued investment in datacenters and cloud infrastructure.
Previous filing · verify on EDGAR →
Total | $ 67,265
Current filing · verify on EDGAR →
Total | $ 75,712
Unearned revenue increased from $67.3 billion to $75.7 billion, indicating growth in multi-year contracts and future revenue recognition.
Previous filing · verify on EDGAR →
Cash used in investing decreased $24.4 billion to $72.6 billion for fiscal year 2025
Current filing · verify on EDGAR →
Cash used in investing increased $66.9 billion to $139.5 billion for fiscal year 2026, primarily due to a $51.4 billion increase in additions to property and equipment and a $22.2 billion increase in cash used in other investing primarily to facilitate the purchase of components
Cash used in investing increased significantly from $72.6 billion to $139.5 billion, driven by higher capital expenditures on property and equipment and purchases of components. This reflects Microsoft's aggressive investment in AI infrastructure.
Previous filing · verify on EDGAR →
Cash used in financing increased $13.9 billion to $51.7 billion for fiscal year 2025, primarily due to a $9.5 billion increase in cash used for repayments of debt, net of proceeds.
Current filing · verify on EDGAR →
Cash used in financing increased $847 million to $52.5 billion for fiscal year 2026, primarily due to a $6.0 billion decrease in cash used for repayments of debt, offset in part by a $3.9 billion increase in common stock repurchases and a $2.4 billion increase in dividends paid.
Cash used in financing increased modestly, with lower debt repayments offset by higher share repurchases and dividends. The company continues to return significant capital to shareholders.
Previous filing · verify on EDGAR →
Our effective tax rate for both fiscal years 2025 and 2024 was 18%.
Current filing · verify on EDGAR →
Our effective tax rate for fiscal years 2026 and 2025 was 19% and 18%, respectively.
Microsoft's effective tax rate increased from 18% to 19%, primarily due to changes in the mix of earnings and tax expenses between the U.S. and foreign countries.
Previous filing · verify on EDGAR →
Fluctuations in the U.S. dollar relative to certain foreign currencies did not have a material impact on reported revenue and expenses from our international operations in fiscal year 2025.
Current filing · verify on EDGAR →
Revenue and operating income both included a favorable foreign currency impact of 2%.
Microsoft disclosed a favorable foreign currency impact of 2% on revenue and operating income in fiscal 2026, compared to no material impact in fiscal 2025. This reflects currency movements that benefited the company's results.
Previous filing · verify on EDGAR →
Research and development expenses increased $3.0 billion or 10% driven by investments in cloud and AI engineering and Gaming, including the impact of the Activision Blizzard acquisition.
Current filing · verify on EDGAR →
Research and development expenses increased $3.1 billion or 9% driven by continued investments in compute capacity, AI talent, and data to support product development that benefits the entire portfolio, as well as impairment and other related expenses in our XBOX business.
Research and development expenses increased at a slower rate in fiscal 2026, with the company attributing the increase to investments in AI and impairment expenses in the XBOX business. The prior year's increase was driven by the Activision Blizzard acquisition.
Previous filing · verify on EDGAR →
Sales and marketing expenses increased $1.2 billion or 5% driven by investments in commercial sales and Gaming, including the impact of the Activision Blizzard acquisition.
Current filing · verify on EDGAR →
Sales and marketing expenses increased $1.1 billion or 4% driven by investments in commercial sales and higher Copilot advertising expenses.
Sales and marketing expense growth slowed, with the company now attributing the increase to commercial sales and Copilot advertising rather than Gaming. This reflects a shift in spending priorities.
Previous filing · verify on EDGAR →
General and administrative expenses decreased $386 million or 5% driven by Gaming, including the impact of the Activision Blizzard acquisition.
Current filing · verify on EDGAR →
General and administrative expenses increased $733 million or 10% driven by higher legal expenses and gains on divestitures in the prior period.
General and administrative expenses increased in fiscal 2026 after decreasing in fiscal 2025, driven by higher legal expenses and the absence of prior-year gains on divestitures.
Previous filing · verify on EDGAR →
Other, net primarily reflects net recognized losses on equity method investments, including OpenAI.
Current filing · verify on EDGAR →
Other income (expense), net included $6.5 billion of net gains and $4.8 billion of net losses for fiscal years 2026 and 2025, respectively, from investments in OpenAI
Microsoft disclosed significant net gains from investments in OpenAI in fiscal 2026, compared to net losses in fiscal 2025. This swing had a material impact on other income and net income.
Previous filing · verify on EDGAR →
Microsoft 365 Commercial products and cloud services revenue increased $10.8 billion or 14%. Microsoft 365 Commercial cloud revenue grew 15% with Microsoft 365 Commercial seat growth of 6% driven by small and medium businesses and frontline worker offerings, as well as growth in revenue per user.
Current filing · verify on EDGAR →
Microsoft 365 Commercial products and cloud services revenue increased $14.2 billion or 16%. Microsoft 365 Commercial cloud revenue grew 17% with growth in revenue per user driven by Microsoft 365 Copilot and Microsoft 365 E5.
Microsoft 365 Commercial revenue growth accelerated, driven by strong performance in Microsoft 365 Copilot and E5. The company highlighted revenue per user growth as a key driver, reflecting the success of its AI-powered offerings.
Previous filing · verify on EDGAR →
Server products and cloud services revenue increased $18.6 billion or 23% driven by Azure and other cloud services. Azure and other cloud services revenue grew 34% driven by demand for our portfolio of services.
Current filing · verify on EDGAR →
Server products and cloud services revenue increased $31.0 billion or 31% driven by Azure and other cloud services. Azure and other cloud services revenue grew 41% driven by demand for services across the platform with continued growth across all workloads.
Intelligent Cloud revenue growth accelerated significantly, driven by strong Azure performance. The company noted continued growth across all workloads, indicating broad-based demand for its cloud services.
Previous filing · verify on EDGAR →
Gaming revenue increased $2.0 billion or 9% driven by growth in Xbox content and services, offset in part by a decline in Xbox hardware.
Current filing · verify on EDGAR →
XBOX revenue decreased $1.7 billion or 7% driven by declines in XBOX content and services and XBOX hardware.
More Personal Computing revenue declined, driven by weakness in the XBOX business. The company attributed the decline to a difficult comparison with the prior year, which benefited from strong first-party content performance.
Previous filing · verify on EDGAR →
Microsoft 365 Consumer products and cloud services revenue increased $756 million or 11%. Microsoft 365 Consumer cloud revenue grew 11% driven by Microsoft 365 Consumer subscriber growth of 8% to 89.0 million, as well as growth in revenue per user from the price increase announced in January 2025.
Current filing · verify on EDGAR →
Microsoft 365 Consumer products and cloud services revenue increased $1.8 billion or 24%. Microsoft 365 Consumer cloud revenue grew 28% driven by growth in revenue per user and Microsoft 365 Consumer subscriber growth of 7%.
Microsoft 365 Consumer revenue growth accelerated significantly, driven by strong growth in cloud revenue and subscriber growth. The company no longer discloses the total number of subscribers, as it removed that metric in fiscal 2026.
Previous filing · verify on EDGAR →
LinkedIn revenue increased $1.4 billion or 9% with growth across all lines of business.
Current filing · verify on EDGAR →
LinkedIn revenue increased $2.0 billion or 11% with growth across all lines of business.
LinkedIn revenue growth accelerated from 9% to 11%, with the company noting growth across all lines of business.
Previous filing · verify on EDGAR →
Dynamics products and cloud services revenue increased $996 million or 15% driven by growth in Dynamics 365, offset in part by a decline in Dynamics on-premises products. Dynamics 365 revenue grew 19% with growth across all workloads.
Current filing · verify on EDGAR →
Dynamics products and cloud services revenue increased $1.2 billion or 15% driven by growth in Dynamics 365. Dynamics 365 revenue grew 18% with growth across all workloads.
Dynamics 365 revenue growth remained strong at 18%, though slightly lower than the prior year's 19%. The company no longer mentions a decline in on-premises products, suggesting that business stabilized.
Previous filing · verify on EDGAR →
Windows and Devices revenue increased $288 million or 2%. Windows OEM and Devices revenue increased 3% driven by growth in Windows OEM, offset in part by a decline in Devices.
Current filing · verify on EDGAR →
Windows and Devices revenue decreased $230 million or 1%. Windows OEM and Devices revenue decreased slightly driven by a decline in Devices, offset in part by Windows OEM growth of 5% with inventory levels that remained elevated.
Windows and Devices revenue declined slightly in fiscal 2026, with Windows OEM growth of 5% offset by a decline in Devices. The company noted that inventory levels remained elevated.
Previous filing · verify on EDGAR →
Search and news advertising revenue increased $1.6 billion or 13%. Search and news advertising revenue excluding traffic acquisition costs increased 20% driven by higher search volume and higher revenue per search.
Current filing · verify on EDGAR →
Search advertising revenue increased $1.3 billion or 9%. Search advertising revenue excluding traffic acquisition costs increased 12% driven by higher search volume and revenue per search, as well as benefit from third-party partnerships.
Search advertising revenue growth slowed from 13% to 9%, with the company attributing the slowdown to a more challenging comparison. The company also noted a benefit from third-party partnerships.
Previous filing · verify on EDGAR →
Microsoft Cloud gross margin percentage decreased to 69% driven by the impact of scaling our AI infrastructure, offset in part by efficiency gains in Azure.
Current filing · verify on EDGAR →
Microsoft Cloud gross margin percentage decreased to 66% driven by continued investments in AI infrastructure and growing AI product usage, offset in part by efficiency gains in Azure and Microsoft 365 Commercial cloud.
Microsoft Cloud gross margin percentage declined from 69% to 66%, reflecting the impact of continued investments in AI infrastructure and growing AI product usage. The company noted efficiency gains in Azure and Microsoft 365 Commercial cloud as partial offsets.
Previous filing · verify on EDGAR →
Operating expenses increased $3.8 billion or 6% driven by investments in cloud and AI engineering and Gaming, including the impact of the Activision Blizzard acquisition.
Current filing · verify on EDGAR →
Operating expenses increased $4.9 billion or 7% driven by continued investments in research and development compute capacity, AI talent, and data to support product development that benefits the entire portfolio, impairment and other related expenses in our XBOX business, investments in commercial sales, and higher Copilot advertising expenses.
Microsoft disclosed impairment and other related expenses in its XBOX business as a driver of higher operating expenses in fiscal 2026. This is a new disclosure that was not present in the prior year.
Previous filing · verify on EDGAR →
Other, net primarily reflects net recognized losses on equity method investments, including OpenAI.
Current filing · verify on EDGAR →
Other income (expense), net included $6.5 billion of net gains and $4.8 billion of net losses for fiscal years 2026 and 2025, respectively, from investments in OpenAI, primarily net recognized gains (losses) on our equity method investment reflected in Other, net. The net gains recorded for fiscal year 2026 primarily relate to the dilution gain from the OpenAI Recapitalization.
Microsoft disclosed significant net gains from investments in OpenAI in fiscal 2026, primarily due to a dilution gain from the OpenAI Recapitalization. This is a material new disclosure that explains the swing in other income.
Previous filing · verify on EDGAR →
As of June 30, 2025, we believe our allowances for income tax contingencies are adequate. We disagree with the proposed adjustments and will vigorously contest the NOPAs through the IRS’s administrative appeals office and, if necessary, judicial proceedings. We do not expect a final resolution of these issues in the next 12 months. Based on the information currently available, we do not anticipate a significant increase or decrease to our income tax contingencies for these issues within the next 12 months.
Current filing · verify on EDGAR →
As of June 30, 2026, we believe our allowances for income tax contingencies are adequate. We disagree with the proposed adjustments and will vigorously contest the NOPAs through the IRS’s administrative appeals office and, if necessary, judicial proceedings.
Microsoft removed the statement that it does not expect a final resolution of the IRS audit issues in the next 12 months. This may indicate that the company anticipates a resolution sooner than previously expected, or that the timeline has become less certain.
Previous filing · verify on EDGAR →
Cash, cash equivalents, and short-term investments totaled $94.6 billion and $75.5 billion as of June 30, 2025 and 2024, respectively. Equity and other investments were $15.4 billion and $14.6 billion as of June 30, 2025 and 2024, respectively.
Current filing · verify on EDGAR →
Cash, cash equivalents, and short-term investments totaled $76.8 billion and $94.6 billion as of June 30, 2026 and 2025, respectively. Equity and other investments were $36.3 billion and $15.4 billion as of June 30, 2026 and 2025, respectively.
Cash and short-term investments decreased from $94.6 billion to $76.8 billion, while equity and other investments increased from $15.4 billion to $36.3 billion. The increase in equity investments likely reflects the appreciation of the OpenAI investment.
Previous filing · verify on EDGAR →
September 30, 2025 | $ 25,191 | December 31, 2025 | 19,733 | March 31, 2026 | 13,742 | June 30, 2026 | 5,889 | Thereafter | 2,710 | Total | $ 67,265
Current filing · verify on EDGAR →
September 30, 2026 | $ 28,589 | December 31, 2026 | 22,556 | March 31, 2027 | 15,457 | June 30, 2027 | 6,363 | Thereafter | 2,747 | Total | $ 75,712
Unearned revenue increased from $67.3 billion to $75.7 billion, with higher amounts expected to be recognized in each future quarter. This reflects growth in multi-year contracts.
Previous filing · verify on EDGAR →
Purchase commitments (d) | 103,940 | 6,013 | 109,953
Current filing · verify on EDGAR →
Purchase commitments (d) | 169,008 | 25,052 | 194,060
Purchase commitments increased significantly from $109.9 billion to $194.1 billion, driven by higher commitments related to datacenters and AI infrastructure.
Previous filing · verify on EDGAR →
Operating and finance leases, including imputed interest (c) 12,798 | 165,903 | 178,701
Current filing · verify on EDGAR →
Operating and finance leases, including imputed interest (c) 32,411 | 411,095 | 443,506
Operating and finance lease obligations increased significantly from $178.7 billion to $443.5 billion, reflecting the company's expanded datacenter and infrastructure footprint.
Previous filing · verify on EDGAR →
Construction commitments (b) | 26,859 | 5,290 | 32,149
Current filing · verify on EDGAR →
Construction commitments (b) | 29,848 | 4,718 | 34,566
Construction commitments increased from $32.1 billion to $34.6 billion, reflecting continued investment in datacenter construction.
Previous filing · verify on EDGAR →
Long-term debt: (a) | Principal payments | $ 3,000 | $ 46,206 | $ 49,206 | Interest payments | 1,509 | 25,527 | 27,036
Current filing · verify on EDGAR →
Long-term debt: (a) | Principal payments | $ 9,250 | $ 36,886 | $ 46,136 | Interest payments | 1,405 | 24,148 | 25,553
Long-term debt principal payments decreased from $49.2 billion to $46.1 billion, while interest payments decreased from $0.0M to $0.0M. This reflects changes in the company's debt portfolio.
Previous filing · verify on EDGAR →
As of June 30, 2025, $57.3 billion remained of our $60 billion share repurchase program.
Current filing · verify on EDGAR →
As of June 30, 2026, $40.6 billion remained of our $60 billion share repurchase program.
The remaining share repurchase authorization decreased from $57.3 billion to $40.6 billion, reflecting the company's continued repurchases during fiscal 2026.
Show 13 minor / wording changes
Removed from previous filing · verify on EDGAR →
As of June 30, 2025, our eighth transition tax installment of $4.4 billion is short-term and payable in the first quarter of fiscal year 2026.
The disclosure about the eighth transition tax installment of $4.4 billion was removed from the current MD&A. This is likely because the installment was paid during fiscal 2026, and the obligation no longer exists.
Previous filing · verify on EDGAR →
In the first quarter of fiscal year 2025, we made updates to our metrics in connection with the segment changes described above.
Current filing · verify on EDGAR →
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.
Microsoft updated its metrics in fiscal 2026, removing Microsoft 365 Consumer subscribers as a metric. This change reflects how the company manages and monitors its consumer business.
Previous filing · verify on EDGAR →
We have critical accounting estimates in the areas of revenue recognition, impairment of investment securities, goodwill, research and development costs, legal and other contingencies, and income taxes.
Current filing · verify on EDGAR →
We have critical accounting estimates in the areas of revenue recognition, measurement and impairment of investment securities, goodwill, research and development costs, legal and other contingencies, and income taxes.
Microsoft added 'measurement' to the description of its critical accounting estimates for investment securities, reflecting the increased complexity of its investment portfolio, including the OpenAI investment.
Added in current filing · verify on EDGAR →
Remaining performance obligations represent the revenue we expect to recognize for our products and services for which control has not yet been transferred to customers.
Microsoft added a discussion of remaining performance obligations to its critical accounting estimates, providing more detail on how it estimates revenue to be recognized in future periods.
Added in current filing · verify on EDGAR →
Equity method investments may be recorded on a lag of up to three months when sufficient financial information is not available in a timely manner.
Microsoft added a disclosure about the lag in recording equity method investments, which is relevant to its investment in OpenAI. This provides transparency into the timing of recognizing gains and losses from such investments.
Previous filing · verify on EDGAR →
estimation of the long-term rate of growth for our business, estimation of the useful life over which cash flows will occur, and determination of our weighted average cost of capital.
Current filing · verify on EDGAR →
estimation of the long-term rate of growth for our business, the period over which cash flows are expected to be generated, and determination of our weighted average cost of capital.
Microsoft slightly revised the language describing the assumptions used in its goodwill impairment test, changing 'estimation of the useful life over which cash flows will occur' to 'the period over which cash flows are expected to be generated'.
Previous filing · verify on EDGAR →
We have operating and finance leases for datacenters, corporate offices, research and development facilities, Microsoft Experience Centers, and certain equipment.
Current filing · verify on EDGAR →
We have operating and finance leases for datacenters and related infrastructure, servers and network equipment, corporate offices, and research and development facilities.
Microsoft updated its description of operating and finance leases to include servers and network equipment, reflecting the company's increased investment in AI infrastructure.
Removed from previous filing · verify on EDGAR →
The Organisation for Economic Co-operation and Development (“OECD”) published its model rules “Tax Challenges Arising From the Digitalisation of the Economy - Global Anti-Base Erosion Model Rules (Pillar Two)” which established a global minimum corporate tax rate of 15% for certain multinational enterprises.
Microsoft removed the discussion of the OECD Pillar Two global minimum tax from its MD&A. This may indicate that the company has completed its assessment of the impact, or that the legislation is no longer considered material.
Previous filing · verify on EDGAR →
We expect existing cash, cash equivalents, short-term investments, cash flows from operations, and access to capital markets to continue to be sufficient to fund our operating activities and cash commitments for investing and financing activities, such as dividends, share repurchases, debt maturities, material capital expenditures, and the transition tax related to the Tax Cuts and Jobs Act (“TCJA”), for at least the next 12 months and thereafter for the foreseeable future.
Current filing · verify on EDGAR →
We expect existing cash, cash equivalents, short-term investments, cash flows from operations, and access to capital markets to continue to be sufficient to fund our operating activities and cash commitments for investing and financing activities, such as dividends, share repurchases, debt maturities, and material capital expenditures, for at least the next 12 months and thereafter for the foreseeable future.
Microsoft removed the reference to the transition tax related to the Tax Cuts and Jobs Act from its liquidity discussion, as the final installment was paid in fiscal 2026.
Previous filing · verify on EDGAR →
We will continue to invest in capital expenditures to support growth in our cloud offerings and our investments in AI infrastructure and training.
Current filing · verify on EDGAR →
We will continue to invest in capital expenditures to support growth in our cloud offerings and our investments in AI training and other infrastructure.
Microsoft slightly revised the language describing its capital expenditure plans, changing 'AI infrastructure and training' to 'AI training and other infrastructure'.
Added in current filing · verify on EDGAR →
Remaining performance obligations represent the revenue we expect to recognize for our products and services for which control has not yet been transferred to customers.
Microsoft added a discussion of remaining performance obligations to its critical accounting estimates, providing more detail on how it estimates revenue to be recognized in future periods.
Previous filing · verify on EDGAR →
We review debt investments quarterly for credit losses and impairment.
Current filing · verify on EDGAR →
Investments purchased by Microsoft are typically accounted for as available-for-sale debt securities, equity investments with readily determinable fair values, or equity investments without readily determinable fair values measured using either the equity method when required or at cost less impairments, if any, with adjustments for observable changes in price (referred to as the measurement alternative).
Microsoft expanded its discussion of investment securities accounting to include equity method investments and the measurement alternative, reflecting the increased complexity of its investment portfolio.
Previous filing · verify on EDGAR →
estimation of the long-term rate of growth for our business, estimation of the useful life over which cash flows will occur, and determination of our weighted average cost of capital.
Current filing · verify on EDGAR →
estimation of the long-term rate of growth for our business, the period over which cash flows are expected to be generated, and determination of our weighted average cost of capital.
Microsoft slightly revised the language describing the assumptions used in its goodwill impairment test, changing 'estimation of the useful life over which cash flows will occur' to 'the period over which cash flows are expected to be generated'.
Notes
Microsoft's FY26 notes show major AI-driven growth, a new OpenAI agreement, and a surge in datacenter lease commitments.
Added in current filing · verify on EDGAR →
We have a long-term strategic partnership with OpenAI. In October 2025, we signed a new definitive agreement with OpenAI that extends this partnership. We have an investment accounted for under the equity method that represents an approximate 25% interest on an as-converted basis. As an equity method investee, OpenAI is a related party as defined in Accounting Standards Codification Topic 850, Related Party Disclosures (“ASC 850”). In accordance with ASC 850, we are disclosing revenue and accounts receivable balances from transactions with OpenAI. For fiscal year 2026, we recorded revenue from commercial arrangements with OpenAI, inclusive of revenue-sharing payments, of $24.1 billion, and accounts receivable from OpenAI as of June 30, 2026 was $6.0 billion. We have made total funding commitments of $13.0 billion related to our investment, of which $11.9 billion has been funded as of June 30, 2026.
The current filing adds extensive new disclosure about the OpenAI relationship, including a new definitive agreement signed in October 2025, a 25% as-converted equity interest, related-party revenue of $24.1 billion, and $6.0 billion in receivables. The baseline only mentioned an investment in OpenAI Global, LLC with $13 billion in funding commitments. This is a material new disclosure reflecting the deepening commercial and financial ties.
Previous filing · verify on EDGAR →
As of June 30, 2025, we had additional leases, primarily for datacenters, that had not yet commenced of $92.7 billion. These leases will commence between fiscal year 2026 and fiscal year 2031 with lease terms of 1 year to 20 years.
Current filing · verify on EDGAR →
As of June 30, 2026, we had additional leases, primarily for datacenters, that had not yet commenced of $329.1 billion, with some arrangements subject to certain contractual conditions being met. These leases will commence between fiscal year 2027 and fiscal year 2033 with lease terms of 1 year to 20 years.
The not-yet-commenced datacenter lease commitments jumped from $92.7 billion to $329.1 billion, a 255% increase. This reflects a massive expansion of Microsoft's AI and cloud infrastructure buildout. The commencement window also extended from fiscal 2031 to fiscal 2033.
Previous filing · verify on EDGAR →
Finance Leases | Property and equipment, at cost | $ 53,876 | $ 32,248 | Accumulated depreciation | (9,861) | (6,386) | Property and equipment, net | $ 44,015 | $ 25,862 | Other current liabilities | $ 3,172 | $ 2,349 | Other long-term liabilities | 43,000 | 24,796 | Total finance lease liabilities | $ 46,172 | $ 27,145
Current filing · verify on EDGAR →
Finance Leases | Property and equipment, at cost | $ 82,712 | $ 53,876 | Accumulated depreciation | (15,431) | (9,861) | Property and equipment, net | $ 67,281 | $ 44,015 | Other current liabilities | $ 4,290 | $ 3,172 | Other long-term liabilities | 62,304 | 43,000 | Total finance lease liabilities | $ 66,594 | $ 46,172
Finance lease assets and liabilities grew substantially year-over-year, with property and equipment at cost rising from $53.9 billion to $82.7 billion and total finance lease liabilities from $46.2 billion to $66.6 billion. This aligns with the broader datacenter expansion.
Previous filing · verify on EDGAR →
As of June 30, 2025, we accrued aggregate legal liabilities of $541 million. While we intend to defend these matters vigorously, adverse outcomes that we estimate could reach approximately $600 million in aggregate beyond recorded amounts are reasonably possible.
Current filing · verify on EDGAR →
As of June 30, 2026, we accrued aggregate legal liabilities of $553 million. While we intend to defend these matters vigorously, adverse outcomes that we estimate could reach approximately $400 million in aggregate beyond recorded amounts are reasonably possible.
Accrued legal liabilities increased slightly from $541 million to $553 million, but the estimated reasonably possible adverse outcomes beyond recorded amounts decreased from $600 million to $400 million. This suggests a reduction in the upper bound of potential legal exposure.
Previous filing · verify on EDGAR →
As of June 30, 2025, $57.3 billion remained of this $60.0 billion share repurchase program.
Current filing · verify on EDGAR →
As of June 30, 2026, $40.6 billion remained of this $60.0 billion share repurchase program.
The remaining authorization under the September 2024 $60 billion buyback program fell from $57.3 billion to $40.6 billion, reflecting $16.7 billion of program repurchases during fiscal 2026. This is consistent with the cash flow statement showing $22.3 billion in common stock repurchased, which includes tax withholding.
Previous filing · verify on EDGAR →
As of June 30, 2025, total unrecognized compensation costs related to stock awards were $21.6 billion. These costs are expected to be recognized over a weighted average period of three years. The weighted average grant-date fair value of stock awards granted was $413.90, $339.46, and $252.59 for fiscal years 2025, 2024, and 2023, respectively. The fair value of stock awards vested was $16.2 billion, $16.0 billion, and $11.9 billion, for fiscal years 2025, 2024, and 2023, respectively. As of June 30, 2025, an aggregate of 98 million shares were authorized for future grant under our stock plans.
Current filing · verify on EDGAR →
As of June 30, 2026, total unrecognized compensation costs related to stock awards were $24.8 billion. These costs are expected to be recognized over a weighted average period of three years. The weighted average grant-date fair value of stock awards granted was $471.00, $413.90, and $339.46 for fiscal years 2026, 2025, and 2024, respectively. The fair value of stock awards vested was $16.3 billion, $16.2 billion, and $16.0 billion, for fiscal years 2026, 2025, and 2024, respectively. As of June 30, 2026, an aggregate of 292 million shares were authorized for future grant under our stock plans.
Unrecognized stock-based compensation costs rose from $21.6 billion to $24.8 billion, and the weighted average grant-date fair value increased from $413.90 to $471.00. The number of shares authorized for future grant jumped from 98 million to 292 million, indicating a significant expansion of the equity compensation pool.
Previous filing · verify on EDGAR →
Research and development expenses include payroll, employee benefits, stock-based compensation expense, and other headcount-related expenses associated with product development. Research and development expenses also include third-party development and programming costs and the depreciation and amortization of assets used to conduct research and development.
Current filing · verify on EDGAR →
Research and development expenses include payroll, stock-based compensation expense, employee benefits, and other headcount-related expenses associated with product development. Research and development expenses also include technology development costs, including AI training and other infrastructure costs, third-party development and programming costs, and the depreciation and amortization of assets used to conduct research and development.
The current filing adds 'technology development costs, including AI training and other infrastructure costs' to the description of R&D expenses. This reflects the growing importance of AI-related spending in Microsoft's cost structure.
Previous filing · verify on EDGAR →
As of June 30, 2025 and 2024, other receivables related to activities to facilitate the purchase of server components were $8.2 billion and $10.5 billion, respectively, and are included in other current assets in our consolidated balance sheets.
Current filing · verify on EDGAR →
As of June 30, 2026 and 2025, the current portion of other receivables related to activities to facilitate the purchase of server components was $27.8 billion and $8.2 billion, respectively, and are included in other current assets in our consolidated balance sheets. Additionally, as of June 30, 2026, restricted investments pursuant to a supplier agreement were $11.3 billion, with $3.8 billion included in short-term investments and $7.5 billion included in equity and other investments in our consolidated balance sheet.
The current filing discloses a significant increase in other receivables related to server component purchases, from $8.2 billion to $27.8 billion, and adds new disclosure about $11.3 billion in restricted investments pursuant to a supplier agreement. This reflects the scale of Microsoft's infrastructure investments.
Show 2 minor / wording changes
Previous filing · verify on EDGAR →
Gaming, including Xbox hardware and Xbox content and services, comprising first- and third-party content (including games and in-game content), Xbox Game Pass and other subscriptions, Xbox Cloud Gaming, advertising, and other cloud services. • Search and news advertising, comprising Bing and Copilot, Microsoft News, Microsoft Edge, and third-party affiliates.
Current filing · verify on EDGAR →
XBOX (formerly Gaming), including XBOX hardware and XBOX content and services, comprising first- and third-party content (including games and in-game content), XBOX Game Pass and other subscriptions, XBOX Cloud Gaming, advertising, and other cloud services. • Search advertising (formerly Search and news advertising), comprising Bing, Copilot, Microsoft News, Microsoft Edge, and third-party affiliates.
The segment descriptions were updated to rename 'Gaming' to 'XBOX' and 'Search and news advertising' to 'Search advertising'. These are presentational changes reflecting branding updates, not a change in segment composition.
Previous filing · verify on EDGAR →
Cloud services, which allow customers to use hosted software over the contract period without taking possession of the software, are provided on either a subscription or consumption basis.
Current filing · verify on EDGAR →
Cloud services, which include software-as-a-service, infrastructure-as-a-service, and platform-as-a-service, are provided on either a subscription or consumption basis.
The description of cloud services was updated to explicitly list the three service models (SaaS, IaaS, PaaS) instead of the previous functional description. This is a clarification of the accounting policy language.
Risk Factors
Microsoft materially expanded AI/cloud risk disclosures, added new AI misuse and capacity risks, and updated trade and cyber language.
Previous filing · verify on EDGAR →
Our focus on cloud-based and AI services presents execution and competitive risks. We are incurring significant costs to build and maintain infrastructure to support cloud-based and AI services, reducing operating margins.
Current filing · verify on EDGAR →
Our cloud and AI strategy requires substantial investments and depends on evolving customer demand, technological developments, competitive dynamics, and regulatory conditions, any of which could adversely affect our business, financial condition, and results of operations. We have made and are continuing to make significant capital and operational investments to develop, train, deploy, and support AI models and related cloud-based services, including building and expanding datacenters, acquiring necessary components, and securing energy resources. These investments are being made at significant scale and on an accelerated timeline, require substantial and increasing capital expenditures and continued access to capital, and are in advance of fully developed revenue streams.
The current filing replaces a brief execution-risk paragraph with a detailed, standalone risk factor describing large-scale, accelerated capital and operational investments in AI and cloud infrastructure, including datacenters, components, and energy. The new language emphasizes that these investments are made ahead of fully developed revenue streams and depend on continued access to capital. This is a material expansion of the disclosed risk profile.
Added in current filing · verify on EDGAR →
Demand for cloud-based and AI products and services is evolving and difficult to forecast. Overestimation of demand or misalignment of capacity investments may result in underutilization of infrastructure and may lead to impairment of assets on our balance sheet. Conversely, demand exceeding available capacity limits our ability to meet customer needs in a timely manner.
The current filing adds a new risk that misjudging AI and cloud demand could lead to asset impairments from underutilized infrastructure, or to capacity shortfalls that prevent timely customer service. This is a new, specific financial risk not present in the baseline.
Added in current filing · verify on EDGAR →
The cost structure for AI products and services is subject to significant uncertainty, including with respect to model training and inference costs, the availability and pricing of components, and energy costs. If these costs increase, remain elevated, or fail to decline, or if pricing for AI products and services declines as a result of competition, commoditization, or other market forces, our margins, financial condition, and results of operations could be adversely affected.
The current filing adds a new risk factor focused on uncertain AI cost structure, including model training and inference costs, component pricing, and energy costs, and the potential for margin compression from competition or commoditization. This is a new, specific financial risk not present in the baseline.
Added in current filing · verify on EDGAR →
Our AI strategy also depends in part on strategic relationships with third parties that provide technologies, models, products, and services that enhance our offerings. These relationships may change over time, and many of these partners compete with us with respect to certain products and services. Changes in strategic priorities, contractual arrangements, our access to third-party technologies, or key commercial relationships could adversely affect the competitiveness of our AI products and services.
The current filing adds a new risk factor describing dependence on third-party strategic relationships for AI technologies and models, noting that many partners also compete with Microsoft. This is a new, specific risk not present in the baseline.
Previous filing · verify on EDGAR →
Our AI systems offer users powerful tools and capabilities. However, there may be instances where these systems are used in ways that are unintended or inappropriate. In addition, some users may also engage in fraudulent or abusive activities through our cloud-based and AI services, such as unauthorized account access, payment fraud, or terms of service violations including cryptocurrency mining or launching cyberattacks.
Current filing · verify on EDGAR →
Our cloud-based and AI products and services may be misused by customers, users, or malicious actors for unintended, fraudulent, abusive, or unlawful purposes. Our efforts to detect, prevent, and mitigate such misuse may not be successful, which could result in reputational harm, regulatory scrutiny, service disruptions, or adverse impacts on our business, financial condition, and results of operations.
The current filing replaces the baseline's specific examples of AI and cloud misuse with a broader, more general statement covering unintended, fraudulent, abusive, or unlawful purposes by customers, users, or malicious actors. The new language is less specific but broadens the scope of potential misuse and adds regulatory scrutiny and service disruptions as potential consequences.
Previous filing · verify on EDGAR →
AI: Legislative and regulatory action is emerging in AI, which could increase costs or restrict opportunity. For example, the EU’s AI Act may increase costs or impact the provision or operation of our AI models and services in the European market. AI regulatory areas include model and system development and deployment, frontier model safety, transparency, and content provenance.
Current filing · verify on EDGAR →
AI: Legislative and regulatory action is evolving with respect to AI, which could increase costs or restrict opportunity. For example, the EU’s AI Act may increase costs or impact the provision or operation of our AI models and services in the European market. In addition, governments may impose restrictions on the development, deployment, availability, or cross-border access to advanced AI models based on safety, cybersecurity, or national security or may apply laws to AI models in ways we cannot anticipate. AI regulatory areas include model and system development and deployment, frontier model safety, transparency, content provenance, digital replicas, and AI companions.
The current filing expands the AI regulatory risk factor by adding potential government restrictions on development, deployment, availability, or cross-border access to advanced AI models based on safety, cybersecurity, or national security, and adds digital replicas and AI companions to the list of regulatory areas. This reflects a broader and more specific regulatory risk landscape.
Previous filing · verify on EDGAR →
U.S. tariff and shifting AI export controls policies, like the AI Diffusion Rule, could increase operational costs, create uncertainty in the continuity of our products, and accelerate sovereignty initiatives among international partners and customers. The volatility of U.S. tariffs has triggered economic uncertainty and could impact cloud and devices supply chain cost competitiveness. The potential replacement of the recently rescinded AI Diffusion Rule and other potential AI-related rulemakings could adversely affect Microsoft’s business, strategy, and operations.
Current filing · verify on EDGAR →
U.S. tariffs, shifting AI export controls policies, and disagreements among governments on sanctions policies toward third countries, has and may continue to increase operational costs, create uncertainty in the continuity of our products, and accelerate sovereignty initiatives among international partners and customers. The volatility of U.S. tariffs has triggered economic uncertainty and could impact cloud and devices supply chain cost competitiveness. The potential replacement of the rescinded AI Diffusion Rule, expanded export license conditions, and other potential AI-related rulemakings could adversely affect Microsoft’s business, strategy, and operations.
The current filing updates the trade risk factor to reflect that the AI Diffusion Rule has been rescinded, adds expanded export license conditions as a potential adverse factor, and notes disagreements among governments on sanctions policies toward third countries. This is an update to reflect evolving trade policy.
Previous filing · verify on EDGAR →
Cyberthreats are constantly evolving and becoming increasingly sophisticated and complex, increasing the difficulty of detecting and successfully defending against them. Threat actors may also utilize emerging technologies, such as AI and machine learning.
Current filing · verify on EDGAR →
Cyberthreats are constantly evolving and becoming increasingly sophisticated and complex, increasing the difficulty of preventing, detecting and successfully defending against them. Threat actors also utilize emerging technologies such as AI and machine learning to, among other things, increase the speed and scale of attacks by generating and refining malicious content and code, automate reconnaissance and targeting, accelerate their ability to detect or exploit vulnerabilities, and rapidly iterate on attack techniques, which can broaden the scope, intensity, and sophistication of campaigns and reduce the time we have to identify and mitigate emerging threats.
The current filing significantly expands the description of how threat actors use AI and machine learning, detailing specific capabilities such as generating malicious content, automating reconnaissance, and accelerating vulnerability exploitation. This reflects a more detailed and heightened cybersecurity threat assessment.
Previous filing · verify on EDGAR →
Weaknesses in our development processes can result in vulnerabilities in our products. Open source software can also contain vulnerabilities that may make our products susceptible to cyberattacks as we increasingly incorporate open source software into our products. Additionally, features that rely on generative AI can be susceptible to security threats.
Current filing · verify on EDGAR →
Our products are highly complex and weaknesses may exist in our development processes. For example, code generated by AI could include errors, deficiencies, or vulnerabilities that increase our exposure to cyberattacks. Additionally, open-source software can also contain vulnerabilities that may make our products susceptible to cyberattacks as we increasingly incorporate open-source software into our products.
The current filing replaces the baseline's reference to generative AI features being susceptible to security threats with a more specific statement that AI-generated code could include errors, deficiencies, or vulnerabilities. This is a refinement of the AI-related cybersecurity risk.
Previous filing · verify on EDGAR →
Environmental, Social, and Governance: Laws, regulations, and policies relating to environmental, social, and governance matters are being developed and formalized in Europe, the U.S., and elsewhere, which may include greenhouse gas emissions and energy usage caps, as well as specific, target-driven environmental, social, and governance frameworks and disclosure requirements. In addition, in 2020 we announced goals to become carbon negative, water positive, and zero waste by 2030.
Current filing · verify on EDGAR →
Environmental, Social, and Governance: Laws, regulations, and policies relating to environmental, social, and governance matters are being developed and formalized in Europe, the U.S., and elsewhere, which may include greenhouse gas emissions and energy usage caps, permitting, reporting, procurement, operational, and infrastructure-siting requirements as well as specific, target-driven environmental, social, and governance frameworks and disclosure requirements. These laws, regulations, and policies may require significant investments or operational changes and may result in new or unexpected costs. In addition, in 2020 we announced goals to become carbon negative, water positive, and zero waste by 2030. AI development and deployment has and will likely continue to raise energy use and emissions, making it harder to meet these goals.
The current filing expands the ESG risk factor by adding permitting, reporting, procurement, operational, and infrastructure-siting requirements, and notes that AI development and deployment will likely raise energy use and emissions, making it harder to meet sustainability goals. This is a material expansion of the ESG risk disclosure.
Previous filing · verify on EDGAR →
Abrupt political change, terrorist activity, and armed conflict, such as the ongoing conflict in Ukraine, pose economic and other risks, which may negatively impact our ability to sell to and collect from customers, increase our operating costs, or otherwise disrupt our operations in markets both directly and indirectly impacted by such events.
Current filing · verify on EDGAR →
Abrupt political change, terrorist activity, and armed conflict, such as the conflicts in Ukraine and the Middle East, pose economic and other risks, which may negatively impact our ability to sell to and collect from customers, increase our operating costs, or otherwise disrupt our operations in markets both directly and indirectly impacted by such events.
The current filing updates the geopolitical conflict risk factor to reference conflicts in Ukraine and the Middle East, reflecting the expanded scope of armed conflicts since the baseline filing.
Previous filing · verify on EDGAR →
Our hardware products such as Xbox consoles, Surface devices, and other devices we design and market are highly complex. Failure to prevent, detect, or address defects in design, manufacture, or associated software could result in recalls, safety alerts, or product liability claims, which could adversely affect our business and results of operations.
Current filing · verify on EDGAR →
Our datacenters and our hardware products such as XBOX consoles, Surface devices, and other devices we design and market are highly complex. Failure to prevent, detect, or address defects in design, manufacture, or associated software could adversely affect our business and results of operations.
The current filing adds datacenters to the list of complex hardware products and removes the specific examples of recalls, safety alerts, or product liability claims, generalizing the potential consequences. This reflects the growing importance of datacenter infrastructure.
Previous filing · verify on EDGAR →
Shifting a portion of our business to a vertically-integrated model may increase our cost of revenue and reduce our operating margins.
Current filing · verify on EDGAR →
Expansion of our vertically-integrated capabilities, including developing proprietary hardware, infrastructure, and artificial intelligence (“AI”) models, could increase our cost structure, reduce margins, and expose us to operational risks.
The current filing expands the vertically-integrated model risk to specifically include developing proprietary hardware, infrastructure, and AI models, and adds operational risks as a potential consequence. This reflects the company's increased investment in vertical integration.
Previous filing · verify on EDGAR →
We are investing in artificial intelligence (“AI”) across the entire company and infusing generative AI capabilities into our consumer and commercial offerings. AI technology and services are a highly competitive and rapidly evolving market, and new competitors continue to enter the market. We will bear significant development and operational costs to build and support the AI models, services, platforms, and infrastructure necessary to meet the needs of our customers.
Current filing · verify on EDGAR →
We are investing in AI across the entire company and infusing AI capabilities into our offerings. AI technology and services are a highly competitive and rapidly evolving market, and new competitors continue to enter the market. Our AI offerings compete with AI products from hyperscalers, open-source offerings, and frontier model providers, some of which are also current or potential partners.
The current filing updates the AI competition risk factor by removing the specific reference to generative AI capabilities in consumer and commercial offerings, and replacing the statement about bearing significant development costs with a description of competitors including hyperscalers, open-source offerings, and frontier model providers. This reflects the evolving competitive landscape.
Previous filing · verify on EDGAR →
These actors use a wide variety of methods, which include developing and deploying malicious software; exploiting known and potential vulnerabilities or intentionally designed processes in our or third-party hardware, software, or other infrastructure to attack our products and services or gain access to our networks and datacenters; using social engineering techniques to induce our employees, users, partners, or customers to disclose sensitive information, such as passwords, or take other actions to gain access to our data or our users’ or customers’ data; or acting in a coordinated manner or conducting coordinated attacks.
Current filing · verify on EDGAR →
These actors use a wide variety of methods, which include developing and deploying malicious software; exploiting known, latent, or potential vulnerabilities or intentionally designed processes in our or third-party hardware, software, or other infrastructure to attack our products and services or gain access to our networks and datacenters; using social engineering and AI-assisted techniques to induce our employees, users, partners, suppliers, or customers to disclose sensitive information, such as passwords, or take other actions to gain access to our data or our users’ or customers’ data; or acting in a coordinated manner or conducting coordinated attacks.
The current filing updates the cybersecurity incident description by adding latent vulnerabilities to the list of exploited vulnerabilities, adding suppliers to the list of targets for social engineering, and noting that social engineering techniques are AI-assisted. This reflects the evolving threat landscape.
Previous filing · verify on EDGAR →
Increasing use of generative AI models in our internal systems may create new attack surfaces or methods for adversaries.
Current filing · verify on EDGAR →
Increasing use of AI, including models, algorithms, copilots, and autonomous or semi-autonomous agents, in our internal or third-party systems may create new attack surfaces or methods for adversaries.
The current filing expands the AI internal environment risk by adding algorithms, copilots, and autonomous or semi-autonomous agents to the list of AI technologies, and extends the risk to third-party systems. This reflects the broader adoption of AI technologies.
Previous filing · verify on EDGAR →
Malicious actors may employ the supply chain to introduce malware through software updates or compromised supplier accounts or hardware.
Current filing · verify on EDGAR →
Malicious actors have and may continue to exploit the supply chain to compromise our systems by, for example, injecting malware, including through software updates or compromised supplier or open-source software code, accounts, or hardware.
The current filing expands the supply chain cybersecurity risk by noting that malicious actors have and may continue to exploit the supply chain, and adds open-source software code as a potential vector. This reflects the evolving threat landscape.
Previous filing · verify on EDGAR →
The reliability of our cloud-based services and the protection of customer data depend on the security of our infrastructure, which includes hardware and other elements provided by third parties.
Current filing · verify on EDGAR →
The reliability of our cloud-based services and the protection of customer data depend on the security of our infrastructure and the security of third-party infrastructure upon which we rely, which includes hardware, software, and other elements provided by third parties.
The current filing expands the third-party infrastructure security risk by explicitly referencing the security of third-party infrastructure and adding software to the list of elements provided by third parties. This reflects the growing reliance on third-party infrastructure.
Previous filing · verify on EDGAR →
Product vulnerabilities can persist even after we have issued security patches if customers have not installed the most recent updates, or if the attackers exploited the vulnerabilities before patching to install additional malware to further compromise customers’ systems.
Current filing · verify on EDGAR →
Product vulnerabilities can persist even after we have issued security patches if customers have not installed the most recent updates, or if attackers, potentially with the assistance of artificial intelligence, reconstruct and exploit the vulnerabilities before patching.
The current filing updates the zero-day vulnerability risk by noting that attackers may use artificial intelligence to reconstruct and exploit vulnerabilities before patching, and removes the specific reference to installing additional malware. This reflects the evolving threat landscape.
Previous filing · verify on EDGAR →
Further, customers of widely varied sizes and technical sophistication use our technology, and consequently may still have limited capabilities and resources to help them adopt and implement state-of-the-art cybersecurity practices and technologies. In addition, we must account for this wide variation of technical sophistication when defining default settings for our products and services, including security default settings, as these settings may limit or otherwise impact other aspects of operations and some customers may have limited capability to review and reset these defaults.
Current filing · verify on EDGAR →
Further, the rapid evolution of AI technologies and use cases may outpace the development, deployment, and effectiveness of security products, controls, and industry standards, particularly in complex customer environments, increasing the risk that security measures will be insufficient to address newly emerging threats.
The current filing replaces the baseline's discussion of customer technical sophistication with a new risk about the rapid evolution of AI technologies outpacing security products, controls, and industry standards. This is a material shift in the risk focus.
Previous filing · verify on EDGAR →
Worsening economic conditions, including inflation, recession, pandemic, or other changes in economic conditions, may cause lower IT spending and adversely affect our results of operations.
Current filing · verify on EDGAR →
Worsening economic conditions, including inflation, recession, pandemic, or other changes in economic conditions, periods of economic uncertainty, evolution of customer demand, technology investment cycles, interest rates, foreign exchange rates, or the timing and mix of customer spending, may cause lower or delayed IT spending and adversely affect our results of operations.
The current filing expands the economic conditions risk factor by adding periods of economic uncertainty, evolution of customer demand, technology investment cycles, interest rates, foreign exchange rates, and the timing and mix of customer spending as factors that may cause lower or delayed IT spending. This is a material expansion of the risk disclosure.
Previous filing · verify on EDGAR →
Changes to trade policy or agreements as a result of populism, protectionism, or economic nationalism may result in higher tariffs, local sourcing initiatives, and non-local sourcing restrictions, export controls, investment restrictions, or other developments that make it more difficult to operate and sell our products in foreign countries.
Current filing · verify on EDGAR →
Changes to trade policy or agreements as a result of populism, protectionism, or economic nationalism may result in higher tariffs, local sourcing initiatives, and non-local sourcing restrictions, disagreements among governments on export controls and sanctions toward third countries, investment restrictions, or other developments that make it more difficult to operate and sell our products in foreign countries.
The current filing replaces the reference to export controls with a more specific reference to disagreements among governments on export controls and sanctions toward third countries. This reflects the evolving trade policy landscape.
Show 12 minor / wording changes
Previous filing · verify on EDGAR →
The occurrence of regional epidemics or a global pandemic, such as COVID-19, could adversely affect our business, operations, financial condition, and results of operations. The extent to which global pandemics impact our business going forward will depend on factors such as the duration and scope of the pandemic; governmental, business, and individuals' actions in response to the pandemic; and the impact on economic activity, including the possibility of recession or financial market instability.
Current filing · verify on EDGAR →
The occurrence of regional epidemics or a global pandemic could adversely affect our business, operations, financial condition, and results of operations. The extent to which global pandemics impact our business going forward will depend on factors such as the duration and scope of the pandemic; governmental, business, and individuals' actions in response to the pandemic; and the impact on economic activity, including the possibility of recession or financial market instability.
The current filing removes the specific reference to COVID-19 from the pandemic risk factor, generalizing the language to cover any regional epidemic or global pandemic. This is a minor update reflecting the passage of time since the COVID-19 pandemic.
Previous filing · verify on EDGAR →
Global, regional, and local economic developments, monetary policy, geopolitical tension, particularly between the U.S. and Europe, restrictions on international trade, such as tariffs and other controls on imports or exports, inflation, and recession, as well as political and military disputes, could adversely affect our results of operations.
Current filing · verify on EDGAR →
Global, regional, and local economic developments, monetary policy, geopolitical tension, restrictions on international trade, such as tariffs and other controls on imports or exports, inflation, and recession, as well as political and military disputes, could adversely affect our results of operations.
The current filing removes the specific reference to geopolitical tension between the U.S. and Europe, generalizing the language to cover geopolitical tension broadly. This is a minor update reflecting the evolving geopolitical landscape.
Previous filing · verify on EDGAR →
Protecting our intellectual property rights and combating unlicensed copying and use of our software, source code, and other intellectual property on a global basis is difficult. Similarly, the absence of harmonized patent laws makes it more difficult to ensure consistent respect for patent rights.
Current filing · verify on EDGAR →
Protecting our intellectual property rights and combating unlicensed copying and use of our software, source code, trade secrets, and other intellectual property on a global basis is difficult. Similarly, the absence of harmonized patent laws makes it more difficult to ensure consistent respect for patent rights.
The current filing adds trade secrets to the list of intellectual property types that are difficult to protect, reflecting a broader scope of intellectual property protection concerns.
Previous filing · verify on EDGAR →
Changes in the law may continue to weaken our ability to prevent the use of patented technology. Our increasing engagement with open source software will also cause us to license our intellectual property rights broadly in certain situations. If we are unable to protect our intellectual property, our results of operations could be adversely affected.
Current filing · verify on EDGAR →
significant amounts to settle claims related to the use of technology and intellectual property rights and to procure intellectual property rights as part of our strategy to manage this risk, and may continue to do so, which could adversely affect our results of operations.
The Patent law changes risk risk factor language was retained and updated (reorganized/edited, not rescinded).
Previous filing · verify on EDGAR →
Source code, the detailed program commands for our operating systems and other software programs, is critical to our business. If our source code leaks, we might lose future trade secret protection for that code. It may then become easier for third parties to compete with our products by copying functionality, which could adversely affect our results of operations.
Current filing · verify on EDGAR →
Source code, the detailed program commands for our software programs, is critical to our business. Unauthorized access to or disclosure of source code or other intellectual property may negatively impact future trade secret protection for that intellectual property. It may then become easier for third parties to compete with our products by copying functionality, which could adversely affect our results of operations.
The current filing updates the source code protection risk factor by removing the specific reference to operating systems and broadening the language to cover all software programs. The language about unauthorized access or disclosure is also slightly refined.
Previous filing · verify on EDGAR →
From time to time, others claim we infringe their intellectual property rights, including current copyright infringement and other claims arising from AI training and output.
Current filing · verify on EDGAR →
From time to time, others claim we infringe their intellectual property rights, including current copyright infringement and other claims arising from AI training, inference, and output.
The current filing adds inference to the list of AI-related activities that may give rise to intellectual property infringement claims, reflecting the broader scope of AI technology use.
Previous filing · verify on EDGAR →
A material part of our business involves cloud-based services available across the spectrum of computing devices. We and our competitors continue to devote significant resources to developing and deploying cloud-based strategies and services for consumers and business customers, and pricing and delivery models are evolving.
Current filing · verify on EDGAR →
A material part of our business involves cloud-based services available across the spectrum of computing devices. We and our competitors continue to devote significant resources to developing and deploying cloud-based strategies and services for consumers and business customers.
The current filing removes the reference to evolving pricing and delivery models from the cloud business model competition risk factor. This is a minor wording change.
Previous filing · verify on EDGAR →
For example, in October 2023 we completed our acquisition of Activision Blizzard, Inc. (“Activision Blizzard”). In January 2023 we announced the third phase of our OpenAI strategic partnership.
Current filing · verify on EDGAR →
For example, in October 2023 we completed our acquisition of Activision Blizzard, Inc. Additionally, we have a long-term strategic partnership with OpenAI.
The current filing updates the acquisition risk factor by removing the parenthetical definition of Activision Blizzard and replacing the specific reference to the third phase of the OpenAI partnership with a more general statement about a long-term strategic partnership. This reflects the passage of time and the evolving nature of the partnership.
Previous filing · verify on EDGAR →
In addition, an acquisition may be subject to challenge even after it has been completed.
Current filing · verify on EDGAR →
In addition, these transactions and arrangements have been and may be subject to legal and regulatory challenge.
The current filing broadens the acquisition legal challenge risk to cover all transactions and arrangements, not just acquisitions, and notes that they have been and may be subject to legal and regulatory challenge. This is a minor expansion of the risk language.
Previous filing · verify on EDGAR →
Nation-state attacks against us, our customers, or our partners have and may continue to intensify due to our transparency to our customers, other stakeholders, and the public about cyberattacks, and during elections or periods of intense diplomatic or armed conflict.
Current filing · verify on EDGAR →
Nation-state attacks against us, our customers, suppliers, or partners have and may continue to intensify due to our transparency to our customers, other stakeholders, and the public about cyberattacks, and during elections or periods of intense diplomatic or armed conflict.
The current filing adds suppliers to the list of entities that may be targeted by nation-state attacks. This is a minor expansion of the risk language.
Previous filing · verify on EDGAR →
Challenges or failures in applying security patches to all hardware and devices connected to our systems, including end-of-life and end-of-support equipment, have and may continue to result in unauthorized access to our systems and data in the future.
Current filing · verify on EDGAR →
Challenges or failures to update or apply security patches to all hardware and devices connected to our systems, including end-of-life and end-of-support equipment, have and may continue to result in unauthorized access to our systems and data in the future.
The current filing updates the security patch risk factor by changing 'in applying' to 'to update or apply', which is a minor wording change.
Previous filing · verify on EDGAR →
These conditions also may add uncertainty to the timing and budget for technology investment decisions by our customers and may cause supply chain disruptions for hardware manufacturers.
Current filing · verify on EDGAR →
These conditions also may add uncertainty to the timing and budget for technology investment decisions by our customers and may cause supply chain disruptions.
The current filing removes the specific reference to hardware manufacturers from the supply chain disruption risk factor, generalizing the language to cover all supply chain disruptions. This is a minor wording change.
Financial Statements
Primary statements as printed on the EDGAR filing (iXBRL face). Companyfacts is used only when a statement is not on the HTML face. Not generated by the model.
Income Statement
(In millions, except per share amounts)
| Description | Year ended June 30, 2026 | Year ended June 30, 2025 | Year ended June 30, 2024 |
|---|---|---|---|
| Revenue: | |||
| Product | 64,696 | 63,946 | 64,773 |
| Service and other | 267,143 | 217,778 | 180,349 |
| Total revenue | 331,839 | 281,724 | 245,122 |
| Cost of revenue: | |||
| Product | 12,098 | 13,501 | 15,272 |
| Service and other | 94,276 | 74,330 | 58,842 |
| Total cost of revenue | 106,374 | 87,831 | 74,114 |
| Gross margin | 225,465 | 193,893 | 171,008 |
| Research and development | 35,562 | 32,488 | 29,510 |
| Sales and marketing | 26,710 | 25,654 | 24,456 |
| General and administrative | 7,956 | 7,223 | 7,609 |
| Operating income | 155,237 | 128,528 | 109,433 |
| Other income (expense), net | 10,697 | (4,901) | (1,646) |
| Income before income taxes | 165,934 | 123,627 | 107,787 |
| Provision for income taxes | 32,185 | 21,795 | 19,651 |
| Net income | 133,749 | 101,832 | 88,136 |
| Earnings per share: | |||
| Basic | 18.00 | 13.70 | 11.86 |
| Diluted | 17.95 | 13.64 | 11.80 |
| Weighted average shares outstanding: | |||
| Basic | 7,429 | 7,433 | 7,431 |
| Diluted | 7,453 | 7,465 | 7,469 |
Consolidated Balance Sheets
| Description | Jun 30, 2026 | Jun 30, 2025 |
|---|---|---|
| Current assets: | ||
| Cash and equivalents | 20,935 | 30,242 |
| Short-term investments | 55,908 | 64,323 |
| Accounts receivable, net | 80,876 | 69,905 |
| Inventories | 1,397 | 938.0 |
| Other current assets | 48,594 | 25,723 |
| Total current assets | 207,710 | 191,131 |
| Investments | 12,000 | 6,000 |
| Property, plant and equipment, net | 313,076 | 204,966 |
| Operating lease right-of-use assets, net | 24,177 | 24,823 |
| Finite-lived intangible assets, net | 18,609 | 22,604 |
| Goodwill | 119,651 | 119,509 |
| Other assets | 38,805 | 40,565 |
| Other long-term assets | 24,348 | |
| TOTAL ASSETS | 758,376 | 619,003 |
| Current liabilities: | ||
| Current portion of long-term debt | 9,227 | 2,999 |
| Commercial paper | — | |
| Accounts payable | 42,416 | 27,724 |
| Income taxes payable | 2,534 | 7,211 |
| Deferred revenue, current | 72,965 | 64,555 |
| Other current liabilities | 41,683 | 38,729 |
| Total current liabilities | 168,825 | 141,218 |
| Long-term debt | 31,067 | 40,152 |
| Operating lease liabilities | 16,532 | 17,437 |
| Deferred revenue, noncurrent | 2,747 | 2,710 |
| Deferred income taxes and other liabilities | 3,054 | 2,835 |
| Other long-term liabilities | 93,764 | 71,172 |
| Total liabilities | 315,989 | 275,524 |
| Shareholders' equity: | ||
| Common stock | 117,406 | 109,095 |
| Accumulated other comprehensive income (loss) | (3,284) | (3,347) |
| Retained earnings (deficit) | 328,265 | 237,731 |
| Total shareholders' equity | 442,387 | 343,479 |
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 758,376 | 619,003 |
Consolidated Statements of Cash Flows
| Description | Year ended Jun 30, 2026 | Year ended Jun 30, 2025 |
|---|---|---|
| Operating Activities: | ||
| Net cash from operating activities | 182,935 | 136,162 |
| Investing Activities: | ||
| Net cash from investing activities | (139,500) | (72,599) |
| Financing Activities: | ||
| Net cash from financing activities | (52,546) | (51,699) |
| Effect of exchange rate changes | (196.0) | 63.0 |
| Net increase/(decrease) in cash | (9,307) | 11,927 |
Face scale: (In millions, except per share amounts). Amounts in millions USD; EPS as reported. Statements found on the EDGAR/iXBRL face print as filed; the rest are presentation-friendly mappings of filer XBRL tags. Use EDGAR for interactive notes and detail. Interactive statements & notes on EDGAR ↗
Thanks — your feedback helps us improve report quality.
Figures/quotes linked to EDGAR · Narrative written by AI · Sep 12, 2026 · How we verify