Q1 2026 Microsoft Corp Earnings Call Transcript
Key Points
- Microsoft Cloud revenue surpassed $49 billion, marking a 26% year-over-year increase.
- Commercial bookings increased by 112%, driven by Azure commitments and large contracts.
- Microsoft 365 Copilot adoption is accelerating, with over 90% of the Fortune 500 using it.
- GitHub Copilot has over 26 million users, contributing to record usage and growth.
- Strong financial performance with revenue of $77.7 billion, up 18%, and earnings per share of $4.13, up 23%.
- Investments in AI have led to a slight decrease in gross margin percentage due to increased costs.
- Azure is experiencing capacity constraints, impacting potential revenue growth.
- The Talent Solutions business within LinkedIn is affected by continued weakness in the hiring market.
- Operating expenses increased by 5%, driven by investments in cloud and AI engineering.
- Gaming revenue decreased by 2%, reflecting challenges in maintaining growth in this segment.
Greetings, and welcome to the Microsoft fiscal year 2026 first-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 Keith Dolliver, Corporate Secretary and Deputy General Counsel.
On the Microsoft Investor Relations website, we will provide our earnings press release and financial summary slide deck, which is intended to supplement our prepared remarks 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.
On this call, we will discuss certain non-GAAP items. The non-GAAP
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