Microsoft reported $331.8 billion in revenue for FY2026, up 18% year over year, and said demand for Azure and its first-party AI applications and services helped drive that growth. Azure and other cloud services revenue grew 41% for the year, while Microsoft 365 Copilot passed 30 million paid seats. Those figures describe different things: revenue, a broad cloud-services growth measure and product adoption—not a standalone Copilot revenue total.
How much revenue did Microsoft report?
For the fiscal year ended June 30, 2026, Microsoft reported revenue of $331.8 billion, up 18% from FY2025. In the fourth quarter, which ended June 30, revenue was $90.0 billion, up 18% year over year. These are reported company figures; Microsoft’s explanation of what drove growth is management’s characterization.
Microsoft Cloud generated $214.4 billion in FY2026 revenue, up 27%. In Q4, Microsoft Cloud revenue was $59.3 billion, up 27%. The cloud business is a major part of Microsoft’s scale, but its growth rate should not be confused with the growth rate of the company as a whole.
What drove Microsoft’s revenue growth?
Azure and other cloud services
Microsoft reported that revenue from Azure and other cloud services grew 41% for FY2026 and 43% in Q4, each compared with the corresponding prior-year period. The measure is broader than Azure infrastructure alone: Microsoft’s investor metrics also include cloud and AI consumption-based services, GitHub cloud services, Nuance Healthcare cloud services, virtual desktop offerings and other cloud services. Microsoft said customer demand exceeded available capacity in its FY2026 Q4 remarks.
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On the earnings call, CEO Satya Nadella said Azure annual revenue surpassed $100 billion for the first time in FY2026. That is a management-stated Azure milestone; it is not the same measure as the 41% annual growth figure for Azure and other cloud services.
Microsoft 365 and Copilot adoption
Microsoft said Microsoft 365 Copilot had more than 30 million paid seats at FY2026 year-end. That is an adoption count, not a reported Copilot revenue figure. Separately, Microsoft 365 Commercial cloud revenue grew 17% for FY2026. The commercial cloud measure covers multiple subscriptions and services—including Microsoft 365, Enterprise Mobility + Security, parts of Windows Commercial, Power BI, Exchange, SharePoint, Teams, Security and Compliance, and Copilot—so the growth rate cannot be attributed to Copilot alone.
Management’s explanation
Nadella described the company’s full-year performance as driven by “strong demand across both the Azure platform and our first-party AI applications and services.” This is Microsoft management’s explanation of the results, rather than an independently measured breakdown of how much revenue each driver contributed.
Growth came with investment and margin pressure
Microsoft Cloud’s gross margin percentage was 66% for FY2026 and 65% in Q4. Management linked year-over-year pressure to Azure mix, AI infrastructure investment and increased product usage, while also citing efficiency gains. Revenue growth therefore does not, by itself, show that cloud profit or margins grew at the same rate.
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Microsoft also reported commercial remaining performance obligation (RPO) of $678 billion, up 84%, at FY2026 year-end. RPO represents contracted future revenue obligations, not revenue already earned. Management said roughly 30% was expected to be recognized as revenue over the next 12 months. The headline includes OpenAI commitments; excluding OpenAI, RPO grew 25%, according to management.
Not every Microsoft business grew
The company-wide 18% increase masks different results across businesses in Q4 FY2026:
| Measure | Q4 FY2026 result | What it indicates |
|---|---|---|
| Azure and other cloud services revenue | Up 43% | A broad cloud-services measure, not Azure infrastructure alone. |
| Microsoft 365 Commercial cloud revenue | Up 14% reported | A portfolio measure that includes multiple commercial subscriptions and services. |
| Windows OEM and Devices revenue | Down 7% | A decline within the broader company growth result. |
| Xbox content and services revenue | Down 10% | Another business area that contracted during the quarter. |
| Search advertising revenue, excluding traffic acquisition costs | Up 10% | Growth in a separate advertising measure. |
Microsoft’s reported non-GAAP earnings exclude the impact from investments in OpenAI, and the company disclosed discrete items affecting quarterly results. GAAP and non-GAAP earnings comparisons are distinct; neither should be mixed with the revenue figures above. Revenue growth rates in this article are year-over-year comparisons.
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The figures are from Microsoft’s FY2026 Q4 earnings release dated July 29, 2026, and its FY2026 investor metrics. Statements about Azure’s annual revenue milestone, Copilot paid seats, capacity and RPO expectations are management remarks from the earnings call. Results may be superseded by a later quarter.
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