v3.26.1
SEGMENT INFORMATION AND GEOGRAPHIC DATA
 9 Months Ended
Mar. 31, 2026
Segment Reporting [Abstract]  
SEGMENT INFORMATION AND GEOGRAPHIC DATA

NOTE 16 — SEGMENT INFORMATION AND GEOGRAPHIC DATA

In its operation of the business, management, including our chief operating decision maker (“CODM”), who is also our Chief Executive Officer, reviews certain financial information, including segmented internal profit and loss statements. The primary profitability measure used by the CODM to review segment operating results is operating income. The CODM uses operating income to allocate resources during our annual planning process and throughout the year, as well as to assess the performance of our segments, primarily by monitoring actual results compared to prior periods and expected results. During the periods presented, we reported our financial performance based on the following segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing.

Our reportable segments are described below.

Productivity and Business Processes

Our Productivity and Business Processes segment consists of products and services in our portfolio of productivity, communication, and information services, spanning a variety of devices and platforms. This segment primarily comprises:

•
Microsoft 365 Commercial products and cloud services, including Microsoft 365 Commercial cloud, comprising Microsoft 365 Commercial, Enterprise Mobility + Security, the cloud portion of Windows Commercial, the per-user portion of Power BI, Exchange, SharePoint, Microsoft Teams, Microsoft 365 Security and Compliance, and Microsoft 365 Copilot; and Microsoft 365 Commercial products, comprising Windows Commercial on-premises and Office licensed on-premises.
•
Microsoft 365 Consumer products and cloud services, including Microsoft 365 Consumer subscriptions, Office licensed on-premises, and other consumer services.
•
LinkedIn, including Talent Solutions, Marketing Solutions, Premium Subscriptions, and Sales Solutions.
•
Dynamics products and cloud services, including Dynamics 365, comprising a set of intelligent, cloud-based applications across ERP, CRM, Power Apps, and Power Automate; and on-premises ERP and CRM applications.

Intelligent Cloud

Our Intelligent Cloud segment consists of our public, private, and hybrid server products and cloud services that power modern business and developers. This segment primarily comprises:

•
Server products and cloud services, including Azure and other cloud services, comprising cloud and AI consumption-based services, GitHub cloud services, Nuance Healthcare cloud services, virtual desktop offerings, and other cloud services; and Server products, comprising SQL Server, Windows Server, Visual Studio, System Center, related Client Access Licenses, and other on-premises offerings.
•
Enterprise and partner services, including Enterprise Support Services, Industry Solutions, Nuance professional services, Microsoft Partner Network, and Learning Experience.

More Personal Computing

Our More Personal Computing segment consists of products and services that put customers at the center of the experience with our technology. This segment primarily comprises:

•
Windows and Devices, including Windows OEM licensing (Windows Pro and non-Pro licenses sold through the OEM channel) and Devices, comprising Surface and PC accessories.
•
Gaming, including Xbox hardware and Xbox content and services, comprising first- and third-party content (including games and in-game content), Xbox Game Pass and other subscriptions, Xbox Cloud Gaming, advertising, and other cloud services.
•
Search advertising (formerly Search and news advertising), comprising Bing, Copilot, Microsoft News, Microsoft Edge, and third-party affiliates.

Revenue and costs are generally directly attributed to our segments. However, due to the integrated structure of our business, certain revenue recognized and costs incurred by one segment may benefit other segments. Revenue from certain contracts is allocated among the segments based on the relative value of the underlying products and services, which can include allocation based on actual prices charged, prices when sold separately, or estimated costs plus a profit margin. Cost of revenue is allocated in certain cases based on a relative revenue methodology. Operating expenses that are allocated primarily include those relating to our investments in AI infrastructure and training, as well as marketing of products and services, from which multiple segments benefit and are generally allocated based on relative gross margin.

In addition, certain costs are incurred at a corporate level and allocated to our segments. These allocated costs generally include legal, including settlements and fines, information technology, human resources, finance, excise taxes, field selling, shared facilities services, customer service and support, and severance incurred as part of a corporate program. Each allocation is measured differently based on the specific facts and circumstances of the costs being allocated and is generally based on relative gross margin or relative headcount.

Segment revenue, cost of revenue, operating expenses, and operating income were as follows during the periods presented:

 

(In millions)

Three Months Ended

March 31,

 

 

 

Nine Months Ended

March 31,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2026

 

 

 

2025

 

 

 

2026

 

 

 

2025

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Productivity and Business Processes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

35,013

$

29,944

 

 

$

102,149

 

 

$

87,698

 

Cost of revenue

 

 

6,197

 

 

 

5,517

 

 

 

18,028

 

 

 

16,380

 

Operating expenses

 

 

7,843

 

 

 

7,048

 

 

 

22,142

 

 

 

20,538

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

20,973

 

 

$

17,379

 

 

$

61,979

 

 

$

50,780

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intelligent Cloud

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

34,681

 

 

$

26,751

 

 

$

98,485

 

 

$

76,387

 

Cost of revenue

 

 

15,120

 

 

 

10,307

 

 

 

41,000

 

 

 

28,326

 

Operating expenses

 

 

5,808

 

 

 

5,349

 

 

 

16,468

 

 

 

15,612

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

13,753

 

 

$

11,095

 

 

$

41,017

 

 

$

32,449

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

More Personal Computing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

13,192

 

 

$

13,371

 

 

$

41,198

 

 

$

41,198

 

Cost of revenue

 

 

5,511

 

 

 

6,095

 

 

 

17,821

 

 

 

19,111

 

Operating expenses

 

 

4,009

 

 

 

3,750

 

 

 

11,739

 

 

 

11,111

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

3,672

 

 

$

3,526

 

 

$

11,638

 

 

$

10,976

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

82,886

 

 

$

70,066

 

 

$

241,832

 

 

$

205,283

 

Cost of revenue

 

 

26,828

 

 

 

21,919

 

 

 

76,849

 

 

 

63,817

 

Operating expenses

 

 

17,660

 

 

 

16,147

 

 

 

50,349

 

 

 

47,261

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

38,398

 

 

$

32,000

 

 

$

114,634

 

 

$

94,205

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

No sales to an individual customer or country other than the United States accounted for more than 10% of revenue for the three or nine months ended March 31, 2026 or 2025. Revenue, classified by the major geographic areas in which our customers were located, was as follows:

 

(In millions)

Three Months Ended

March 31,

 

 

 

Nine Months Ended

March 31,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2026

2025

 

 

 

2026

 

 

 

2025

 

 

 

 

 

 

 

 

 

 

 

 

United States (a)

$

42,336

$

36,084

 

 

$

123,823

 

 

$

105,534

 

Other countries

40,550

33,982

 

 

 

118,009

 

 

 

99,749

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

$

82,886

$

70,066

 

 

$

241,832

 

 

$

205,283

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(a)
Includes billings to OEMs and certain multinational organizations because of the nature of these businesses and the impracticability of determining the geographic source of the revenue.

Revenue, classified by significant product and service offerings, was as follows:

 

(In millions)

 

Three Months Ended

March 31,

 

 

Nine Months Ended

March 31,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2026

 

 

 

2025

 

 

2026

2025

 

 

Server products and cloud services

$

32,592

 

 

$

24,761

 

 

$

92,329

$

70,557

Microsoft 365 Commercial products and cloud services

 

25,593

 

 

 

21,883

 

 

74,083

 

63,449

 

Gaming

 

5,341

 

 

 

5,721

 

 

16,807

17,923

LinkedIn

 

4,832

 

 

 

4,311

 

 

14,628

 

13,190

 

Windows and Devices

 

4,041

 

 

 

4,144

 

 

13,071

 

12,985

 

Search advertising

 

 

3,808

 

 

 

3,504

 

 

 

11,317

 

 

 

10,287

 

Microsoft 365 Consumer products and cloud services

 

 

2,297

 

 

 

1,821

 

 

 

6,806

 

 

 

5,369

 

Dynamics products and cloud services

 

 

2,292

 

 

 

1,929

 

 

 

6,632

 

 

 

5,691

 

Enterprise and partner services

 

2,087

 

 

 

1,946

 

 

6,147

 

5,766

 

Other

 

3

 

 

 

46

 

 

12

 

66

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

$

82,886

 

 

$

70,066

 

 

$

241,832

 

$

205,283

 

 

 

 

 

 

 

 

 

 

 

 

Our Microsoft Cloud revenue, which includes Microsoft 365 Commercial cloud, Azure and other cloud services, the commercial portion of LinkedIn, and Dynamics 365, was $54.5 billion and $155.1 billion for the three and nine months ended March 31, 2026, respectively, and $42.4 billion and $122.2 billion for the three and nine months ended March 31, 2025, respectively. These amounts are included in Server products and cloud services, Microsoft 365 Commercial products and cloud services, LinkedIn, and Dynamics products and cloud services in the table above.

Assets are not allocated to segments for internal reporting presentations. A portion of amortization and depreciation is included with various other costs in an overhead allocation to each segment. It is impracticable for us to separately identify the amount of amortization and depreciation by segment that is included in the measure of segment profit or loss.