MICROSOFT CORP (MSFT) Earnings History

MICROSOFT CORP - Q2 FY2026 EarningsBeat

Filed at: Jan 28, 2026, 4:04 PM EST|Read from source

EXECUTIVE SUMMARY

Microsoft reported strong second-quarter results driven by robust performance in its Cloud segment, particularly Azure, and significant contributions from AI initiatives. The company exceeded expectations across key financial metrics, demonstrating continued revenue acceleration and operating leverage.

POSITIVE HIGHLIGHTS

  • •

    Microsoft Cloud revenue crossed $50 billion, increasing 26% year-over-year to $51.5 billion.

    positive
  • •

    Azure and other cloud services revenue increased 39% year-over-year.

    positive
  • •

    GAAP diluted EPS increased 60% year-over-year to $5.16.

    positive
  • •

    Commercial remaining performance obligation increased 110% to $625 billion.

    positive
  • •

    Microsoft returned $12.7 billion to shareholders in Q2 FY2026, an increase of 32% compared to Q2 FY2025.

    positive

CONCERNS & RISKS

  • •

    More Personal Computing segment revenue decreased 3% year-over-year.

    negative
  • •

    Xbox content and services revenue decreased 5% year-over-year.

    negative
  • •

    Windows OEM and Devices revenue increased only 1% year-over-year.

    attention

FINANCIAL METRICS

Revenue
Quarterly
$81.27B
+16.7%
Prior year: $69.63B
Net Income
Quarterly
$38.46B
+59.5%
Prior year: $24.11B
Annual (YTD)
$66.20B
N/A
Prior year: $48.77B
EPS (Diluted)
Quarterly
$5.16
+59.8%
Prior year: $3.23
Operating Income
Quarterly
$38.27B
+20.9%
Prior year: $31.65B
Annual (YTD)
$76.24B
N/A
Prior year: $62.20B
EPS (Basic)
Quarterly
$5.18
+60.0%
Prior year: $3.24

MARGIN ANALYSIS

Gross Margin
Current Quarter
68.0%
Prior Year
68.7%
YoY Change
-65 bps
Operating Margin
Current Quarter
47.1%
Prior Year
45.5%
YoY Change
+162 bps
Net Margin
Current Quarter
47.3%
Prior Year
34.6%
YoY Change
+1270 bps

Margin expansion indicates improving profitability and operational efficiency. Measured in basis points (bps): 100 bps = 1.0%.

REVENUE BY SEGMENT — Q2 FY2026 2026

VISUAL OVERVIEW

|
Productivity and Business Processes(4 segments)
0.0%
N/A
CC: +14.0%
Intelligent Cloud(1 segment)
0.0%
N/A
CC: +28.0%
More Personal Computing(2 segments)
0.0%
N/A
CC: -3.0%

DETAILED BREAKDOWN

|
SegmentCurrentPrior YrYoY% TotalCC
Productivity and Business Processes
N/A———+14.0%
Intelligent Cloud
N/A———+28.0%
More Personal Computing
N/A———-3.0%
Total Revenue$0.00M——100.0%—

Segment performance shows business unit health and growth drivers. Constant currency (CC) removes FX impact for like-for-like comparison.

SPECIAL ITEMS & ADJUSTMENTS

Q2 FY2026
Impact from investments in OpenAI (net gains)
Non-GAAP results exclude this impact.
+$7,583M
$1.02 per share
Q2 FY2025
Impact from investments in OpenAI (net losses)
Non-GAAP results exclude this impact.
$939M
$0.12 per share
Total Impact
+$6,644M$0.90 per share

Special items are non-recurring events that may distort period-over-period comparisons. Analysts typically adjust for these when calculating normalized earnings.

MANAGEMENT COMMENTARY

We are only at the beginning phases of AI diffusion and already Microsoft has built an AI business that is larger than some of our biggest franchises.

— MICROSOFT CORP, Q2 FY2026 2026 Earnings Call

We are pushing the frontier across our entire AI stack to drive new value for our customers and partners.

— MICROSOFT CORP, Q2 FY2026 2026 Earnings Call

Microsoft Cloud revenue crossed $50 billion this quarter, reflecting the strong demand for our portfolio of services.

— MICROSOFT CORP, Q2 FY2026 2026 Earnings Call

Commentary excerpts from earnings call transcripts provide management's perspective on performance, strategy, and outlook. Always review full transcripts for complete context.

OPERATIONAL METRICS

Azure and other cloud services revenue
N/A
+39.0% YoY
Commercial remaining performance obligation
625000.0M
+110.0% YoY
Dynamics 365 revenue
N/A
+19.0% YoY
LinkedIn revenue
N/A
+11.0% YoY
Microsoft 365 Commercial cloud revenue
N/A
+17.0% YoY
Microsoft 365 Consumer cloud revenue
N/A
+29.0% YoY
Microsoft Cloud revenue
51500.0M
+26.0% YoY
Search and news advertising excluding traffic acquisition costs
N/A
+10.0% YoY
Windows OEM and Devices revenue
N/A
+1.0% YoY
Xbox content and services revenue
N/A
-5.0% YoY

Operational metrics provide insight into business drivers and customer engagement beyond traditional financial measures.