Microsoft $MSFT reported fourth-quarter revenue of $90 billion, up 18% from a year earlier, and said Azure cloud revenue surpassed $100 billion for the first time in fiscal year 2026. Microsoft stock rose 8% in after-hours trading on Wednesday.
The company posted GAAP net income of $35.8 billion, or $4.81 per share, a 31% increase from the same period last year. Adjusted earnings per share came in at $4.74, compared with analyst expectations of $4.24 per share, according to CNBC. Revenue of $90.01 billion topped the $87.62 billion consensus.
The quarter included a $3.2 billion gain from Microsoft's investment in AI lab Anthropic and lower-than-expected costs tied to its voluntary retirement program, partially offset by severance expenses and impairment charges in Xbox, the company said.
Azure and other cloud services revenue grew 43% in the quarter, accelerating from 40% growth in the prior quarter. The Intelligent Cloud segment, which houses Azure, posted revenue of $39.3 billion, up 32%. Microsoft 365 Copilot reached more than 30 million paid seats, up from 20 million as of April, the company said.
"This year, Azure revenue surpassed $100 billion for the first time, and Microsoft 365 Copilot reached over 30 million paid seats, reflecting the confidence customers are placing in us to power their AI transformation," Chief Executive Officer Satya Nadella said in a statement.
The Productivity and Business Processes segment — covering Office, LinkedIn, and Dynamics — generated $37.8 billion in revenue, up 14%. The More Personal Computing segment, which includes Windows, Xbox, Surface, and Bing, posted $12.9 billion, down 4%, with Xbox content and services revenue falling 10%.
Microsoft's commercial remaining performance obligations, a measure of contracted future revenue, rose 84% to $678 billion, the company said. Chief financial officer Amy Hood said sequential growth in that backlog came from companies outside of frontier AI labs.
Capital expenditures and finance leases for the quarter reached $41 billion, up 69%. Hood said Microsoft revised its calendar 2026 capex forecast down to approximately $175 billion from about $190 billion by lengthening the assumed useful life of its office and data center properties to 25 years from 15 years, according to The Wall Street Journal. Hood said Microsoft expects to remain free cash flow positive in fiscal year 2027.
Microsoft reported fiscal third-quarter revenue of $82.9 billion in April, when Azure growth came in at 40% and Copilot had reached 20 million paid seats. The company has been working to convert its large user base into paying AI customers while managing the allocation of computing capacity between Azure cloud clients and AI model training.
For the fiscal first quarter, Hood projected 45% Azure growth at constant currency and guided for revenue of $89.85 billion to $90.95 billion, the company said.