Slide 1: First Quarter Fiscal Year 2026 Results
EE Microsoft First Quarter Fiscal Year 2026 Results October 29, 2025 Satya Nadella Amy Hood Jonathan Neilson
Slide 2: Forward-looking statements
This presentation contains forward-looking statements, which are any predictions, projections, or other statements about future events. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could materially differ because of fa
Slide 3: Agenda
Agenda Financial Summary and Highlights Commercial Highlights Segment Overview and Highlights Appendix All growth comparisons in this presentation relate to the corresponding period of last fiscal year unless otherwise noted. Numbers may not foot due to rounding. HE Microsoft 3
Slide 4: Financial Summary
FY26 Q1 Financial Summary GAAP and CC results As Adjusted (non-GAAP) (¢ in billions, except per share amounts) FY26Q1_ Growth CC Growth* FY26Q1_Growth** CC Growth*** — Summary of Results Productivity and Business Processes $33.0 17% 14% $33.0 17% 14% + Revenue increased 18% (up 17% CC) with growth a
Slide 5: Financial Highlights
FY26 Q1 Financial Highlights Cash Returned to Shareholders + Returned $10.7 billion to shareholders with $6.8 billion in dividends and $4.0 billion in share repurchases Capital Expenditures + Capital expenditures including assets acquired under finance leases were $34.9 billion, up 74% to support cu
Slide 6: Commercial Highlights
FY26 Q1 Commercial Highlights Commercial Business + Commercial bookings increased 112% (up 111% CC) year-over-year driven by Azure commitments from Opendl. Results do not include any impact from the incremental Azure commitment with Opendl announced on October 28, 2025. + Commercial remaining perfor
Slide 7: Segment Overview: Productivity and Business Processes
FY26 Q1 Segment Overview: Productivity and Business Processes Results + Revenue grew 17% (up 14% CC) driven by Microsoft 365 Commercial cloud + Cost of revenue grew 8% + Gross margin dollars grew 19% (up 16% CC) and gross margin percentage increased driven by efficiency gains in Microsoft 365 Commer
Slide 8: Segment Highlights: Productivity and Business Processes
FY26 Q1 Segment Highlights: Productivity and Business Processes Microsoft 365 Commercial + Microsoft 365 Commercial cloud revenue grew 17% (up 15% CC) with growth in revenue per user driven by E5 and M365 Copilot, as well as some benefit from in-period revenue recognition. Microsoft 365 Commercial s
Slide 9: Segment Overview: Intelligent Cloud
FY26 Q1 Segment Overview: Intelligent Cloud Results + Revenue grew 28% (up 27% CC) driven by Azure * Cost of revenue grew 43% (up 42% CC) + Gross margin dollars grew 20% (up 19% CC) and gross margin percentage decreased driven by the impact of scaling our Al infrastructure, partially offset by effic
Slide 10: Segment Highlights: Intelligent Cloud
FY26 Q1 Segment Highlights: Intelligent Cloud Server Products and Cloud Services + Azure and other cloud services revenue grew 40% (up 39% CC) driven by strong demand for our portfolio of services with continued growth across all workloads + Server products revenue grew 1% (relatively unchanged CC)
Slide 11: Segment Overview: More Personal Computing
FY26 Q1 Segment Overview: More Personal Computing Results + Revenue grew 4% driven by Windows OEM and Search and news advertising, partially offset by declines in our hardware businesses + Cost of revenue declined 3% driven by lower hardware sales, partially offset by growth in Search and news adver
Slide 12: Segment Highlights: More Personal Computing
FY26 Q1 Segment Highlights: More Personal Computing Windows OEM and Devices + Windows OEM and Devices revenue grew 6% driven by Windows OEM growth of 18% with demand ahead of Windows 10 end of support and inventory levels that remained elevated, partially offset by a decline in Devices Gaming + Xbox
Slide 13: Appendix
Appendix
Slide 14: Reconciliation of GAAP and Non-GAAP Financial Measures
Our presentation of first-quarter performance includes non-GAAP financial measures. Reconciliation of ok . a The following slides provide reconciliations GAAP and Non-GAAP between the GAAP and non-GAAP . . financial measures presented: Financial Measures + Impact from investments in OpenAl * Constan
Slide 15: Impact from investments in OpenAI
Impact from investments in OpenAl Three Months Ended September 30, (6 in millions, except per share amounts) Other Income Effective Tax Net Diluted Earnings and Expense Rate Income per Share 2024 As Reported (GAAP) $(283) 19% $24,667 $3.30 Impact from investments in OpenAl $688 0 pts $523 $0.07 2024
Slide 16: Constant Currency Reconciliation
Constant Currency Reconciliation Three Months Ended September 30, ($ in millions, except per share amounts) Revenue Cost of Gross Operating Operating Net edie Revenue Margin Expenses Income Income pet Share 2024 As Reported (GAAP) $65,585 $20,099 $45,486 $14,934 $30,552 $24,667 $3.30 2024 As Adjuste
Slide 17: Constant Currency Reconciliation: Segment Revenue
Constant Currency Reconciliation Segment Revenue Three Months Ended September 30, (6 in millions) Productivity and Intelligent More Personal Business Processes Cloud Computing 2024 As Reported (GAAP) $28,317 $24,092 $13,176 2025 As Reported (GAAP) $33,020 $30,897 $13,756 Percentage Change Y/Y (GAAP)
Slide 18: Constant Currency Reconciliation: Segment Cost of Revenue and Gross Margin
Constant Currency Reconciliation Segment Cost of Revenue Three Months Ended September 30, 2025 Percentage Change Y/Y (GAAP) Constant Currency Impact Heer ee eunge aid Productivity and Business Processes 8% 0% 8% Intelligent Cloud 43% (1)% 42% More Personal Computing (3)% 0% (3)% Segment Gross Margin
Slide 19: Constant Currency Reconciliation: Segment Operating Expense and Income
Constant Currency Reconciliation Segment Operating Expense Three Months Ended September 30, 2025 Percentage Change Y/Y (GAAP) Constant Currency Impact Renae canes Productivity and Business Processes 6% (1% 5% Intelligent Cloud 4% 0% 4% More Personal Computing 4% (1)% 3% Segment Operating Income Thre
Slide 20: Constant Currency Reconciliation: Selected Product and Service Information
Constant Currency Reconciliation Selected Product and Service Information Three Months Ended September 30, 2025 Percentage Change Y/Y (GAAP) Constant Currency Impact Peicentaas pie Commercial bookings 112% (1% 111% Commercial remaining performance obligation 51% 0% 51% Microsoft Cloud revenue 26% (1
Slide 21: Cash Flow Reconciliation
Cash Flow Reconciliation Three Months Ended September 30, ($ in millions) 2025 2024 Haein Net Cash from Operations (GAAP) $45,057 $34,180 32% Additions to Property and Equipment $(19,394) $(14,923) 7 Free Cash Flow $25,663 $19,257 33% *Not meaningful Free cash flow is included as an additional clari
Slide 22: Microsoft
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