MSFT · Q4 2026 Earnings

Bullish

Microsoft

Reported July 29, 2026

30-second summary

30-second take. Microsoft closed FY26 with Q4 revenue of $90.0B (+18% YoY) and non-GAAP EPS of $4.74 (+23% YoY). Azure and other cloud services grew +43%, commercial RPO ballooned to $678B (+84% YoY), and Microsoft crossed the milestone of $100B+ Azure annual revenue with 30M+ paid M365 Copilot seats. FY26 operating margin landed at 46.8% (vs FY25's 45.6%), with FY FCF supported by $182.9B operating cash flow against $115.9B in CapEx. The one thing missing: no numerical forward guidance in the press release — everything was deferred to the earnings call.

Headline numbers

EPS

Q4 FY2026

$4.74

+11.8% vs est.

Revenue

Q4 FY2026

$90.01B

+18.0% YoY

+2.7% vs est.

Gross margin

Q4 FY2026

67.2%

Free cash flow

Q4 FY2026

$19.60B

Operating margin

Q4 FY2026

45.1%

Key financials

Q4 FY2026

Metric	Q4 FY2026	Q4 FY2025	YoY	Q3 FY2026	QoQ
Revenue	$90.01B	$76.40B	+17.8%	$82.89B	+8.6%
EPS	$4.74	$3.65	+29.9%	$4.27	+11.0%
Gross margin	67.2%	68.5%	-130bps	67.6%	-40bps
Operating margin	45.1%	44.9%	+20bps	46.3%	-120bps
Free cash flow	$19.60B	$25.60B	-23.4%	$15.80B	+24.0%

Guidance

No numerical guidance provided for Q1 FY2027 or full-year FY2027; Microsoft deferred forward guidance to earnings call.

Segment performance

Q4 FY2026

Segment	Q4 FY2026	Q4 FY2025	YoY
Productivity and Business Processes	$37.847B	$33.1B	+14.3%
Intelligent Cloud	$39.306B	$29.9B	+31.5%
More Personal Computing	$12.854B	$13.5B	-4.8%

Platform metrics

Q4 FY2026

Segment	Q4 FY2026	Q4 FY2025	YoY
Microsoft Cloud revenue	$59.3 billion	—	—
Microsoft Cloud revenue growth	27%	—	—
Azure and other cloud services revenue growth	43%	—	—
Commercial remaining performance obligation	$678 billion	—	—
Commercial remaining performance obligation growth	84%	—	—
Microsoft 365 Copilot paid seats	30 million+	—	—
Azure annual revenue	$100 billion+	—	—

Profitability

Q4 FY2026

Segment	Q4 FY2026	Q4 FY2025	YoY
Operating margin	45.1%	—	—

Management tone

Transcript-level tone data was not available for this press-release-only brief; the observations below are anchored in disclosure-framework changes visible in the release itself and interpreted against prior quarters.

The Azure disclosure framework has migrated from a growth-rate KPI to an annual revenue milestone. The Q4 release discloses Azure at $100B+ annual revenue alongside +43% growth — Nadella's prepared quote leads with the dollar figure ("this year, Azure revenue surpassed $100 billion for the first time") rather than the growth rate. The shift signals management is preparing investors for a world in which absolute scale becomes the anchor metric rather than the growth rate that has been the sole quarterly headline for a decade.

The AI monetization metric has been repositioned to a paid seat count. Nadella's quote pairs the Azure $100B milestone with "Microsoft 365 Copilot reached over 30 million paid seats" — a per-user metric that is harder to manipulate than a blended ARR figure. Its emergence as the lead AI KPI suggests management has settled on paid seats as the durable investor anchor for the Copilot franchise.

The RPO trajectory is the standout balance-sheet signal. Commercial RPO at $678B (+84% YoY) combined with the +43% Azure print underwrites the CapEx ramp visible in the cash flow statement — $115.9B of FY26 additions to property and equipment, up from $64.6B in FY25.

Guidance deferral to the call is not new but is worth flagging. The qualitative statement "will provide forward-looking guidance in connection with the earnings conference call" is the entire forward disclosure in this release; investors reading the print in isolation have no way to test whether FY27 operating margin, Azure Q1 guide, or CY26 CapEx cadence have shifted.

Answers to last quarter's watch list

Azure Q4 print — Azure and other cloud services printed +43% (reported).

Resolved positively

CapEx execution — FY26 additions to property and equipment totaled $115.9B (vs $64.6B in FY25); Q4 alone was $35.8B. Forward CapEx commentary was deferred to the earnings call.

Continue monitoring

AI monetization framing — Microsoft disclosed "30 million+ paid M365 Copilot seats" and "Azure annual revenue $100 billion+" as the new headline AI/cloud KPIs. Status: Resolved with new framing

Bookings / RPO — Commercial RPO grew +84% YoY to $678B. Whether this reflects the per-user-plus-consumption transition or base effects is unresolvable without call commentary.

Continue monitoring

More Personal Computing stabilization — MPC came in at $12.85B (-4%), with Windows OEM and Devices -7% and XBOX content and services -10%.

Resolved negatively

Operating margin trajectory — FY26 operating margin came in at 46.8% vs FY25's 45.6% — up ~120bps YoY. Q4 operating margin was 45.1%, with a $3.2B gain from the Anthropic investment and lower-than-expected Voluntary Retirement Program expenses providing a $0.27 EPS benefit vs the company's own April 29 guidance frame, partially offset by severance and XBOX impairment charges.

Resolved positively

What to watch into next quarter

Azure growth rate at the $100B+ scale: with Azure now disclosed at $100B+ annual revenue, +43% growth on this base implies incremental dollar adds that make continued +40%+ printing progressively harder. Watch whether Q1 FY27 Azure guide holds above +40% CC or whether management pivots the headline to absolute revenue additions.

M365 Copilot seat count trajectory: 30M+ paid seats is the new AI headline. Watch whether Microsoft continues to disclose this quarterly and whether growth is measured in seat adds or revenue per seat as the per-user-plus-consumption model matures.

CapEx cadence: FY26 CapEx of $115.9B nearly doubled FY25's $64.6B. Watch the Q1 FY27 press-release CapEx line and any updated CY26 commitment on the call.

Commercial RPO sequential build: $678B at +84% YoY sets a very high bar. Watch whether Q1 sustains sequential growth — the durability signal for the CapEx ramp.

FY27 operating margin framing: FY26 landed at 46.8%. Watch whether Hood commits to flat, up, or down for FY27; a "down slightly" frame would signal the CapEx depreciation catch-up has arrived.

XBOX and MPC trajectory: XBOX content and services -10% and an impairment charge in the quarter suggest continued pressure. Watch whether Q1 shows stabilization or deeper decline.

Sources

Microsoft Q4 FY2026 press release (SEC filing): https://www.sec.gov/Archives/edgar/data/789019/000119312526323632/msft-ex99_1.htm

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