Q4 2026 Microsoft Corp Earnings Call Transcript
Key Points
- Microsoft Corp (MSFT) reported a record fiscal year with annual revenue surpassing $331 billion, up 18%, and Microsoft Cloud revenue exceeding $214 billion, up 27%.
- Azure revenue grew 43% in Q4, driven by strong demand and efficiency gains, with expectations for continued acceleration in H1 FY27.
- Microsoft 365 Copilot paid seats surpassed 30 million, with net seat adds more than doubling quarter over quarter, and user satisfaction scores doubling over the last three quarters.
- The company is expanding its total addressable market by introducing usage-based billing models for Copilot, Cowork, and GitHub Copilot, alongside per-seat licensing.
- Capital expenditures are expected to grow in FY27, reflecting strong demand signals, with a focus on efficiency gains and monetization of new capacity.
- Customer demand for Azure continues to exceed available capacity, leading to supply constraints that could limit near-term growth.
- Xbox content and services revenue decreased 10% year over year, impacted by a strong prior-year comparable and impairment charges.
- Windows OEM and Devices revenue is expected to decline in the high-teens for FY27 due to lower PC market demand and higher component costs.
- Operating margins are expected to decline slightly in FY27 due to continued investments in AI infrastructure and R&D.
- Foreign exchange is expected to decrease total revenue growth by less than 1 point in Q1 FY27, adding headwinds to financial performance.
Greetings, and welcome to the Microsoft fiscal year 2026 fourth-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 provides 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.
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