Q3 2026 Microsoft Corp Earnings Call Transcript
Key Points
- Microsoft Corp (MSFT) reported a record third quarter with Microsoft Cloud revenue exceeding $54 billion, up 29% year over year.
- The AI business achieved an annual revenue run rate of over $37 billion, growing 123% year over year.
- Microsoft 365 Copilot saw significant growth with seat ads increasing 250% year over year, reaching over 20 million paid seats.
- Azure and other Cloud Services revenue grew 40% in constant currency, driven by strong customer demand across workloads and regions.
- LinkedIn revenue increased 12%, with growth across all lines of business, and Dynamics 365 revenue increased 22%.
- Operating expenses increased 9% due to continued investment in AI, including R&D compute capacity and talent.
- Gross margin percentage decreased year over year due to investments in AI infrastructure and growing AI product usage.
- Gaming revenue decreased 7%, with Xbox content and services revenue declining 5% in constant currency.
- Windows OEM revenue decreased 2%, impacted by inventory levels and a lower PC market due to rising memory costs.
- The company expects continued constraints in Azure capacity through 2026, despite increased capital expenditures.
Greetings, and welcome to the Microsoft fiscal year 2026 third quarter earnings conference call. (Operator Instructions) As a reminder, this conference is being recorded.
It is now my pleasure to introduce Jonathan Neilson, Vice President of Investor Relations. Please go ahead.
Good afternoon, and thank you for joining us today. On the call with me are Satya Nadella, Chairman and Chief Executive Officer; Amy Hood, Chief Financial Officer; Alice Jolla, Chief Accounting Officer; and Brian DeFoe, Deputy General Counsel and Corporate Secretary.
On the Microsoft Investor Relations website, you can find our earnings press release and financial summary slide deck, which is intended to supplement our prepared remarks during today's call and provide the reconciliation of differences between GAAP and non-GAAP financial measures. More detailed outlook slide will be available on the Microsoft Investor Relations website where we provide outlook commentary on today's call.
On
| Access to All Earning Calls and Stock Analysis | |
| 30-Year Financial on one screen | |
| All-in-one Stock Screener with unlimited filters | |
| Customizable Stock Dashboard | |
| Real Time Insider Trading Transactions | |
| 8,000+ Institutional investors’ 13F holdings | |
| Powerful Excel Add-in and Google sheets Add-on | |
| All data downloadable | |
| Quick customer support | |
| And much more... |
Trustpilot
We'd love to learn more about your experiences on GuruFocus.com and how we can improve!
Take Survey
