Q2 2026 Microsoft Corp Earnings Call Transcript
Key Points
- Microsoft Cloud surpassed $50 billion in revenue for the first time, marking a 26% year-over-year increase.
- The company reported a 24% increase in earnings per share, showcasing strong financial performance.
- Microsoft 365 Copilot saw record growth with seat ads up over 160% year over year, reaching 15 million paid seats.
- GitHub Copilot subscribers increased by 75% year over year, indicating strong adoption in the developer community.
- Microsoft's AI infrastructure investments are yielding significant efficiency gains, particularly in Azure and M365 Commercial Cloud.
- Capital expenditures are growing faster than expected, raising concerns about the return on investment.
- Azure's growth is perceived as slower than anticipated, which may impact investor sentiment.
- Operating margins in the Intelligent Cloud segment decreased year over year due to continued investments in AI.
- Gaming revenue decreased by 9%, with Xbox content and services revenue also declining.
- Concerns were raised about the durability of the backlog, with 45% related to OpenAI, which could pose a risk if the partnership dynamics change.
Greetings, and welcome to the Microsoft fiscal year 2026 second-quarter earnings conference call. (Operator Instructions) As a reminder, this conference is being recorded.
It is now my pleasure to introduce Jonathan Nielsen, 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 Keith Dolliver, Corporate Secretary and Deputy General Counsel.
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 provides the reconciliation of differences between GAAP and non-GAAP financial measures. More detailed outlook slides will be available on the Microsoft Investor Relations website when we provide outlook commentary on today's call.
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