Microsoft(US:MSFT)2026-01-28 21:07Revenue Growth - Microsoft Cloud revenue increased 26% to $51.5 billion[141] - Microsoft 365 Commercial cloud revenue increased 17%[141] - Azure and other cloud services revenue increased 39%[141] - LinkedIn revenue increased 11%[141] - Productivity and Business Processes revenue increased by $4.7 billion or 16%, with Microsoft 365 Commercial products and cloud services revenue growing by $3.4 billion or 16%[178] - Intelligent Cloud revenue increased by $7.4 billion or 29%, with operating income rising by $3.0 billion or 28%[182][183] - Revenue for the three months ended December 31, 2025, was $81,273 million, an increase of 17% compared to $69,632 million for the same period in 2024[161] - Total revenue for the six months ended December 31, 2025, increased by $23.7 billion or 18% compared to the prior year[177] Net Income and Earnings - Net income for the three months ended December 31, 2025, was $38.5 billion, a 60% increase compared to the prior year[161] - Current year net income increased by $4.5 billion or $0.60 in diluted EPS, positively impacted by net gains from investments in OpenAI[175] - Adjusted net income (non-GAAP) for the three months ended December 31, 2025, was $30.875 billion, reflecting a 23% increase from $25.047 billion in 2024[224] - Adjusted net income for the six months ended December 31, 2025, was $61.7 billion, a 23% increase from $50.2 billion in 2024[224] Operating Income and Expenses - Operating income for the three months ended December 31, 2025, increased 21% to $38.3 billion[161] - Operating expenses increased by $1.6 billion or 5% driven by R&D investments in AI talent[171] - Operating expenses increased by $809 million or 6%, reflecting higher research and development investments and advertising expenses[202] - General and administrative expenses increased by $109 million or 6% for the three months ended December 31, 2025, driven by higher legal expenses[208] - For the six months ended December 31, 2025, general and administrative expenses rose by $242 million or 7%, also due to higher legal expenses[209] Cash Flow and Investments - Cash from operations increased by $24.3 billion to $80.8 billion for the six months ended December 31, 2025, primarily due to increased cash received from customers[230] - Cash used in investing activities rose by $28.0 billion to $57.3 billion for the six months ended December 31, 2025, driven by significant increases in property and equipment additions[230] - Cash used in financing increased by $1.6 billion to $29.4 billion for the six months ended December 31, 2025, primarily due to a $4.0 billion increase in common stock repurchases[230] Tax and Other Income - The effective tax rate increased to 20% for both the three and six months ended December 31, 2025, compared to 18% in the same periods of 2024, primarily due to deferred tax expenses[218] - Other income (expense), net totaled $9.971 billion for the three months ended December 31, 2025, compared to a loss of $2.288 billion in the same period of 2024, marking a 536% increase[224] - Interest and dividends income increased to $840 million for the three months ended December 31, 2025, up from $600 million in 2024, primarily due to higher portfolio balances and yields[215] Cloud and AI Investments - Microsoft Cloud gross margin percentage decreased to 67% due to investments in AI infrastructure[172] - Investments in cloud offerings and AI infrastructure will continue to increase operating costs[146] - A long-term strategic partnership with OpenAI was extended to advance artificial intelligence[144] Future Projections - Total unearned revenue expected to be recognized by December 31, 2026, is $54.044 billion[234] - The expected future recognition of unearned revenue totals $54.0 billion as of December 31, 2025, with $26.3 billion expected in the three months ending March 31, 2026[234] - The company expects existing cash and cash flows to be sufficient to fund operating activities and cash commitments for at least the next 12 months[226]