Revenue Growth Drivers
Microsoft's revenue increased by 16.7% year-over-year, driven by strong demand in cloud services and software products.
Source: 10-Q Income Statement
Computed from published fixed rules, not a model's judgement — though one input, the count of high-severity risks, comes from the AI analysis below.
Not investment advice and not a price target: it scores the quarter's fundamentals, not the stock. Full methodology →
AI Takeaway
In Q2 FY2026, Microsoft reported strong financial performance with a 16.7% increase in revenue and a 59.5% rise in net income, driven by robust operating income growth and effective cost management.
Revenue
$81.27B
+16.72% YoY
EPS (Diluted)
$5.16
+59.75% YoY
Gross Margin
68.0%
-0.7 pts YoY
Operating Income
$38.27B
+20.92% YoY
Source: SEC XBRL
Microsoft (MSFT) reported Q2 FY2026 revenue of $81.27B, up 16.7% year over year. Operating margin was 47.1%, up 1.6 points from 45.5% a year earlier. Operating cash flow was $35.76B, up 60.4% year over year. MSFT's fiscal Q2 FY2026 corresponds to calendar Q4 2025.
Last 4 quarters: 4 beats
| Quarter | Actual EPS (USD) | Consensus (USD) | Result |
|---|---|---|---|
| Jun 2026 | 4.74 | 4.33 | Beat +9.5% |
| Mar 2026 | 4.27 | 4.14 | Beat +3.1% |
| Dec 2025This filing | 4.14 | 4.03 | Beat +2.6% |
| Sep 2025 | 4.13 | 3.74 | Beat +10.5% |
Adjusted (non-GAAP) EPS of $4.14 versus the $4.03 analyst consensus — a +2.6% beat for Dec 2025. Analyst consensus is quoted on the adjusted (non-GAAP) basis the street uses. GAAP diluted EPS for this quarter was $5.16.
Compiled by AI from this SEC filing
Microsoft's revenue increased by 16.7% year-over-year, driven by strong demand in cloud services and software products.
Source: 10-Q Income Statement
Operating income rose by 20.9% due to increased efficiency and cost management, despite a 19.2% rise in cost of revenue.
Source: 10-Q Income Statement
Operating cash flow increased by 60.4%, reflecting improved cash generation from core operations.
Source: 10-Q Cash Flow
Compiled by AI from this SEC filing · 1 high, 2 medium, 0 low
Intense competition in cloud services could impact Microsoft's market share and pricing power.
Source: Industry Analysis
Potential regulatory changes in technology and data privacy could affect Microsoft's operations and compliance costs.
Source: Industry Analysis
Fluctuations in foreign currency exchange rates could impact Microsoft's international revenue and profitability.
Source: Industry Analysis
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue $B | 81.27 $B | 69.63 $B | +16.72% |
Cost of Revenue $B | 25.98 $B | 21.80 $B | +19.17% |
Gross Profit $B | 55.30 $B | 47.83 $B | +15.60% |
Operating Income $B | 38.28 $B | 31.65 $B | +20.92% |
Net Income $B | 38.46 $B | 24.11 $B | +59.52% |
EPS (Basic) $ | 5.18 $ | 3.24 $ | +59.88% |
EPS (Diluted) $ | 5.16 $ | 3.23 $ | +59.75% |
R&D Expense $B | 8.50 $B | 7.92 $B | +7.41% |
Answers draw on this SEC filing and the data on this page
In Q3 FY2026, Microsoft delivered strong 18% revenue growth to $82.9 billion and 23% net income growth to $31.8 billion, propelled by 40% Azure growth and a 99% surge in Commercial Remaining Performance Obligation to $627 billion, even as gross margin declined 1.1 percentage points due to continued AI infrastructure investment.
Microsoft's FY2026 results showcased robust cloud and AI-driven revenue growth, but rising infrastructure costs and one-time investment gains underscored a year of both expansion and transition.
Microsoft delivered strong Q1 FY2026 results with revenue rising 18% to $77.7B and operating income up 24% to $38.0B, driven by 40% growth in Azure and a 51% surge in commercial remaining performance obligation to $392B, though net income growth was tempered to 12% by $3.1B in net losses from its OpenAI investment.
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