Redmond software giant closes fiscal 2026 with $90 billion quarter, driven by cloud demand and 30 million Copilot seats
Microsoft Corp. reported fourth-quarter revenue of $90.0 billion on Wednesday, an 18 percent increase over the same quarter a year ago, and disclosed that Azure revenue surpassed $100 billion for the first time in a single fiscal year — a threshold no Microsoft product line outside Windows and Office has reached in the company’s history.
Net income for the quarter came in at $35.8 billion, up 31 percent on a GAAP basis, with diluted earnings per share of $4.81, a 32 percent increase. Operating income reached $40.6 billion, also up 18 percent. On an adjusted basis that strips out the effect of the company’s OpenAI holdings, earnings were $4.74 per share, up 23 percent.
Wall Street had been looking for $4.24 per share on $87.62 billion in revenue, according to LSEG consensus, meaning Microsoft cleared both marks comfortably. Shares rose roughly 3 percent in extended trading.
The cloud number that mattered
Azure and other cloud services revenue grew 43 percent in the quarter — the fastest quarterly pace since early 2022, ahead of the roughly 40 percent growth analysts had modeled. The broader Intelligent Cloud segment, which houses Azure alongside server products and enterprise services, brought in $39.3 billion, a 32 percent gain.
Microsoft Cloud revenue overall — the combined commercial cloud figure the company uses to measure its subscription base — totaled $59.3 billion, up 27 percent. Commercial remaining performance obligation, essentially contracted business not yet recognized as revenue, climbed 84 percent to $678 billion. That backlog figure is the clearest signal in the release that enterprise customers are committing to multi-year AI infrastructure spending rather than experimenting quarter to quarter.
At its current size, Azure remains behind Amazon Web Services and ahead of Alphabet’s Google Cloud.
Copilot passes 30 million paid seats
Chief Executive Satya Nadella tied the quarter to adoption of the company’s AI assistant products, noting that Microsoft 365 Copilot has reached more than 30 million paid seats. That is up from the roughly 20 million the company cited three months earlier — a pace of paid seat growth that turns Copilot from an add-on line item into a business with real scale inside the Productivity and Business Processes segment.
That segment posted $37.8 billion in revenue, up 14 percent, with Microsoft 365 commercial cloud revenue up 14 percent on a reported basis, LinkedIn up 12 percent and Dynamics 365 up 13 percent.
Where the business softened
Not every line moved higher. More Personal Computing revenue fell 4 percent to $12.9 billion, with Windows OEM and Devices down 7 percent and Xbox content and services revenue down 10 percent. The consumer hardware and gaming side of the house continues to shrink as a share of the company while cloud absorbs the capital.
The quarter also carried several one-time items. Microsoft flagged a $3.2 billion gain on its investment in the AI firm Anthropic, along with lower-than-anticipated costs from its voluntary retirement program, offset partly by severance and impairment charges in Xbox — a net benefit of 27 cents per share against the guidance the company issued in April.
The capital bill keeps rising
The scale of the buildout behind these numbers shows up in the cash flow statement. Microsoft spent $35.8 billion on property and equipment in the quarter alone, more than double the $17.1 billion in the year-ago period, and $115.9 billion across the full fiscal year against $64.6 billion the prior year. Property and equipment on the balance sheet, net of depreciation, rose to $313.1 billion from $205.0 billion.
For the full fiscal year, revenue reached $331.8 billion, up 18 percent, with operating income of $155.2 billion and net income of $133.7 billion. The company returned $10.2 billion to shareholders through dividends and buybacks in the quarter.
Why it matters for business owners
For small and mid-sized firms across the tri-state area, the Copilot seat count is the number worth watching. Thirty million paid seats means AI assistance is no longer a pilot program at large enterprises — it is priced, licensed and deployed at scale, which sets the competitive baseline for everyone downstream. Firms weighing whether to move workloads to the cloud are now negotiating against a vendor whose backlog runs to $678 billion and whose capacity is being expanded at a rate of over $100 billion a year.
The corresponding risk is concentration. When a single provider carries this much of the market’s compute, pricing power moves in one direction, and outages or capacity constraints become a supply chain issue rather than an IT issue.
Nadella, Chief Financial Officer Amy Hood and other executives were scheduled to discuss the results with investors and analysts on a call Wednesday afternoon.
JBizNews Desk | Wall Street
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