Microsoft Cloud and AI Strength Fuels Third Quarter Results
REDMOND, Wash. — April 29, 2026 — Microsoft Corp. today announced the following results for the quarter ended March 31, 2026, as compared to the corresponding period of last fiscal year:
- Revenue was $82.9 billion and increased 18% (up 15% in constant currency)
- Operating income was $38.4 billion and increased 20% (up 16% in constant currency)
- Net income was $31.8 billion and increased 23% on a GAAP basis, and increased 20% (up 18% in constant currency) on a non-GAAP basis
- Diluted earnings per share was $4.27 and increased 23% on a GAAP basis, and increased 21% (up 18% in constant currency) on a non-GAAP basis
- Non-GAAP results exclude the impact from investments in OpenAI, explained in the Non-GAAP Definition section below
“We are focused on delivering cloud and AI infrastructure and solutions that empower every business to eval-max their outcomes in the agentic computing era,” said Satya Nadella, chairman and chief executive officer of Microsoft. “Our AI business surpassed an annual revenue run rate of $37 billion, up 123% year-over-year.”
“We delivered results that exceeded expectations across revenue, operating income, and earnings per share, reflecting strong execution and growing demand for the Microsoft Cloud,” said Amy Hood, executive vice president and chief financial officer of Microsoft. The following table reconciles our financial results reported in accordance with generally accepted accounting principles (GAAP) to non-GAAP financial results. Additional information regarding our non-GAAP definition is provided below. All growth comparisons relate to the corresponding period in the last fiscal year.
| Three Months Ended March 31, | ||||||||||
| 2026 | 2025 | Percentage Change Y/Y | ||||||||
| ($ in millions, except per share amounts) | As Reported (GAAP) | Adjustment* | As Adjusted (non-GAAP) | As Reported (GAAP) | Adjustment* | As Adjusted (non-GAAP) | GAAP | Constant Currency | Non- GAAP | Non-GAAP Constant Currency |
| Net Income | $31,778 | $14 | $31,792 | $25,824 | $583 | $26,407 | 23% | 20% | 20% | 18% |
| Diluted Earnings per Share | $4.27 | $0.00 | $4.27 | $3.46 | $0.08 | $3.54 | 23% | 21% | 21% | 18% |
*Adjustment is the impact from investments in OpenAI
Business Highlights
Microsoft Cloud revenue was $54.5 billion and increased 29% (up 25% in constant currency), and commercial remaining performance obligation increased 99% to $627 billion.
Revenue in Productivity and Business Processes was $35.0 billion and increased 17% (up 13% in constant currency), with the following business highlights:
- Microsoft 365 Commercial cloud revenue increased 19% (up 15% in constant currency)
- Microsoft 365 Consumer cloud revenue increased 33% (up 29% in constant currency)
- LinkedIn revenue increased 12% (up 9% in constant currency)
- Dynamics 365 revenue increased 22% (up 17% in constant currency)
Revenue in Intelligent Cloud was $34.7 billion and increased 30% (up 28% in constant currency), with the following business highlights:
- Azure and other cloud services revenue increased 40% (up 39% in constant currency)
Revenue in More Personal Computing was $13.2 billion and decreased 1% (down 3% in constant currency), with the following business highlights:
- Windows OEM and Devices revenue decreased 2% (down 3% in constant currency)
- Xbox content and services revenue decreased 5% (down 7% in constant currency)
- Search advertising revenue excluding traffic acquisition costs increased 12% (up 9% in constant currency)
Microsoft returned $10.2 billion to shareholders in the form of dividends and share repurchases in the third quarter of fiscal year 2026.
Business Outlook
Microsoft will provide forward-looking guidance in connection with this quarterly earnings announcement on its earnings conference call and webcast.
Quarterly Highlights, Product Releases, and Customer Stories
Every quarter Microsoft delivers hundreds of products, services, and enhancements. These releases are driven by years of significant research and development investments, to empower customers with greater productivity, security, and differentiated value.
This momentum is reflected in stories that showcase how our technology is shaping industries and driving customer success. We share innovation updates on our product blogs across Azure, Microsoft 365, and more on our Official Microsoft blog.
Webcast Details
Satya Nadella, chairman and chief executive officer, Amy Hood, executive vice president and chief financial officer, Alice Jolla, chief accounting officer, Brian DeFoe, deputy general counsel and corporate secretary, and Jonathan Neilson, vice president of investor relations, will host a conference call and webcast at 2:30 p.m. Pacific time (5:30 p.m. Eastern time) today to discuss details of the company’s performance for the quarter and certain forward-looking information. The session may be accessed at http://www.microsoft.com/en-us/investor. Participants can also dial into the conference call at (877) 407-0666 or +1 (201) 689-8023 for international, no password required. The webcast will be available for replay through the close of business on April 29, 2027.
Non-GAAP Definition
Impact from investments in OpenAI. In the third quarter of fiscal year 2026, net losses from investments in OpenAI resulted in a decrease in net income of $14 million and had minimal impact on earnings per share. In the third quarter of fiscal year 2025, net income and diluted earnings per share were impacted by net losses from investments in OpenAI, which resulted in a decrease in net income and diluted earnings per share of $583 million and $0.08, respectively.
Microsoft has provided non-GAAP financial measures related to the impact from investments in OpenAI to aid investors in better understanding our performance. Microsoft believes these non-GAAP measures assist investors by providing additional insight into its operational performance and help clarify trends affecting its business. For comparability of reporting, management considers non-GAAP measures in conjunction with GAAP financial results in evaluating business performance. The non-GAAP financial measures presented in this release should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.
Constant Currency Microsoft presents constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars using the average exchange rates from the comparative period rather than the actual exchange rates in effect during the respective periods. All growth comparisons relate to the corresponding period in the last fiscal year. Microsoft has provided this non-GAAP financial information to aid investors in better understanding our performance. The non-GAAP financial measures presented in this release should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.