Microsoft Corporation Q3 FY2026 Earnings Call

· Earnings call transcript and AI-powered summary

Quarter Overview

  • Microsoft delivered record Q3 results driven by cloud and AI strength.
  • Total revenue reached $82.9B, up 18% year-over-year (15% constant currency).
  • Microsoft Cloud revenue was $54.5B, up 29% year-over-year (25% constant currency).
  • AI annualized revenue run rate surpassed $37B, growing 123% year-over-year.
  • Operating income increased 20% year-over-year; EPS was $4.27, up 21% year-over-year.

Key Segment Performance

Productivity & Business Processes
  • Revenue: $35B, up 17% year-over-year (13% constant currency).
  • Microsoft 365 Commercial Cloud revenue: up 19% year-over-year (15% constant currency).
  • Microsoft 365 Copilot exceeded 20 million paid seats (up 250% year-over-year).
  • LinkedIn revenue: up 12% year-over-year (9% constant currency).
  • Dynamics 365 revenue: up 22% year-over-year (17% constant currency), though bookings impacted by customers shifting to consumption models.
Intelligent Cloud
  • Revenue: $34.7B, up 30% year-over-year (28% constant currency).
  • Azure and Other Cloud Services: up 40% year-over-year (39% constant currency), ahead of expectations.
  • Demand continues to exceed supply despite accelerated data center builds.

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Operator: Greetings, and welcome to the Microsoft Fiscal Year 2026 Third 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. Jonathan Neilson: 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. On this call, we will discuss certain non-GAAP items. The non-GAAP financial measures provided should not be considered as a substitute for or superior to the measures of financial performance prepared in accordance with GAAP. They are included as additional clarifying items to aid investors in further understanding the company's third quarter performance in addition to the impact these items and events have on the financial results. All growth comparisons we make on the call today relate to

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