How Does Microsoft Make Money? Revenue by Its New Segments

Most of the software people use at work is no longer bought once and kept for years. It is paid for each month, or by the hour, or it comes with a new laptop because the firm that made the laptop has already paid for it. That makes the tools easy to use and the money behind them hard to see.

The usual answers online can make it harder. Many charts of where a big tech firm earns its money were drawn from the way it used to report its results. When the firm changes how it groups its units, the old charts keep being shared, and they show a business that no longer reports itself that way.

The best fix is the firm's own filing. A listed company has to split its sales into segments, the units its bosses actually run. When it changes them, it usually redoes past years so the figures still line up. Read side by side, the segments, the product lines inside them and the last few years show what earns money, what keeps it and what is shrinking.

Microsoft is a good case to learn this on. It changed its segments in September 2026, and its first quarterly results in the new shape came out on October 28, 2026. On BloFin you can trade Microsoft stock (MSFT) through the MSFTUSDT Perpetual, a contract settled in USDT that you can buy, or sell short, with leverage. Microsoft's sales figures are among the biggest things that move it.

How does Microsoft make money?

Microsoft makes most of its money by renting out cloud computing and selling software plans that customers pay for over time. In fiscal 2026, the twelve months to June 30, 2026, its revenue was $331.8 billion. Two lines, Azure and Microsoft 365 cloud, brought in $202.2 billion of it, or 60.9% (source: Microsoft FY27 segment slides).

Fiscal 2027 began the same way, only more so. In its first quarter, July to September 2026, revenue was $92.3 billion, up 19% from a year earlier. The same two lines made $60.9 billion of it, or 66.0% (source: Microsoft FY27 Q1 press release).

The rest comes from a few other ways of charging. Microsoft's annual report says it earns money from cloud services and content, from software licenses, from online ads and from the devices it designs and sells (source: Microsoft 10-K for fiscal 2026). In plain terms, a firm pays for Office apps and Teams by the seat and pays for Azure servers by how much it uses them. It may also buy Windows Server licenses for its own machines. Advertisers pay for ads on Bing and LinkedIn, while makers of personal computers (PCs) and gamers pay for Windows, XBOX games and consoles.

Microsoft's fiscal year runs from July to June, so fiscal 2026 means July 2025 to June 2026. Microsoft restated that year's figures in September 2026 to fit its new segments. Alongside its October 28 results it filed the recast figures again, in a Securities and Exchange Commission (SEC) filing whose segment totals match the September ones (source: Microsoft Form 8-K, October 28, 2026). Its shares trade on Nasdaq under the ticker MSFT, and a crypto account can get exposure to them through the routes in the guide to Microsoft stock.

Microsoft's two segments: Agents and Infra, Devices and Consumer

Microsoft reports two segments: Agents and Infra, which holds the cloud, software licenses and support, and Devices and Consumer, home to Windows, XBOX and the ad business. Their first reported quarter was July to September 2026. Agents and Infra made $76.8 billion of sales and $40.6 billion of operating income, and Devices and Consumer $15.5 billion and $5.4 billion (source: Microsoft FY27 Q1 press release).

Microsoft announced the change in a filing on September 2, 2026, and posted slides to its investor site the same day (source: Microsoft Form 8-K, September 2, 2026). Restated for fiscal 2026, Agents and Infra had $268.1 billion of sales and $136.4 billion of operating income, while Devices and Consumer had $63.7 billion and $18.9 billion (source: Microsoft FY27 segment slides). Chief executive Satya Nadella wrote that the new setup mirrors how the business is run and where it is headed (source: Microsoft FY27 segment slides).

Operating income is the profit left from sales once the cost of the products and of running the business is paid, but before interest and tax. Divide that profit by sales and you get the operating margin. Put simply, in fiscal 2026 Agents and Infra kept about 51 cents of profit from each dollar it took in, and Devices and Consumer kept about 30 cents.

That gap makes the larger segment matter even more than its size suggests. Agents and Infra brought in 80.8% of Microsoft's sales in fiscal 2026 but 87.8% of its profit. In July to September 2026 those two shares rose to 83.2% and 88.3% (source: Microsoft FY27 segment slides) (source: Microsoft FY27 Q1 press release). When people call Microsoft a cloud company, those shares are the reason.

The first quarter also showed the two margins moving in opposite directions. Chief financial officer Amy Hood said the Agents and Infra margin slipped slightly to 53% as more of its sales came from Azure. The segment's operating income still grew 24%. The Devices and Consumer margin rose to 35% because amortization, the non-cash cost of spreading out the price Microsoft paid for Activision, was lower (source: Microsoft FY27 Q1 earnings call).

How the old three segments map to the new two

Until June 2026 Microsoft reported three segments: Intelligent Cloud, More Personal Computing, and Productivity and Business Processes. Many sales charts still use those names. The new setup regroups the same units, and eight new lines take the place of ten old ones (source: Microsoft FY27 segment slides). Other big tech firms report the same way: Amazon, for example, shows AWS as one of its business segments.

The totals match in both versions, $331.8 billion for fiscal 2026, so nothing was added or taken away, only moved (source: Microsoft FY27 segment slides). Under the old names, Productivity and Business Processes made $140.0 billion that year, Intelligent Cloud $137.8 billion and More Personal Computing $54.1 billion. Microsoft's October 28, 2026 release, its first for fiscal 2027, gave segment results only for Agents and Infra and Devices and Consumer (source: Microsoft FY27 Q1 press release).

Where LinkedIn and GitHub revenue went

LinkedIn no longer has a sales line of its own. Its hiring and sales tools moved into Industry solutions, and its ads and Premium plans moved into Search and advertising (source: Microsoft FY27 segment slides). Under the old setup LinkedIn made $19.8 billion in fiscal 2026, up 11%, the last year Microsoft reported it as one business (source: Microsoft 10-K for fiscal 2026).

The cloud lines changed too. GitHub's cloud services and Security Copilot moved out of Azure and into the business part of Microsoft 365 cloud, and Microsoft's health care cloud moved from Azure into Industry solutions. Azure now covers only cloud and AI services that customers pay for by use, plus virtual desktops. Its growth rate tracks how much computing they use (source: Microsoft FY27 segment slides).

That change rewrote the past a little. Restated, Azure grew 42% in the April to June 2026 quarter, against the 43% Microsoft reported in July for its older, wider Azure figure. Both numbers are right for their own definitions, and the narrower one is the base for newer figures (source: Microsoft FY27 segment slides). In July to September 2026 Azure made up 43.2% of Agents and Infra sales (source: Microsoft FY27 Q1 press release), which is why Azure's growth rate weighs so heavily on Microsoft stock. If you follow the stock, you can watch how its price reacts to each quarter's segment figures on the MSFTUSDT Perpetual page.

Microsoft revenue breakdown by product line

Inside its two segments, Microsoft reports its sales in eight product lines. In fiscal 2026 Azure was the largest at $101.9 billion, just ahead of Microsoft 365 cloud at $100.3 billion, after growth of 40.4% and 18.5%. In July to September 2026 Azure grew 48.2%, while Windows OEM and devices fell 22.0%, the steepest drop of any line (source: Microsoft FY27 segment slides) (source: Microsoft FY27 Q1 press release).

Azure is Microsoft's cloud, which firms use to run their own apps and AI models on Microsoft's servers, the same kind of service sold by Amazon's AWS and by Google Cloud. Microsoft 365 cloud holds the plans for Word, Excel, Outlook, Teams and Copilot, for firms and for homes. It also holds GitHub, the site where coders store and share their work, and Microsoft's security tools.

The next lines are older parts of the business. Productivity and server licensing is software a customer puts on its own computers, such as Windows Server, SQL Server and one-off copies of Office. It grew slowly in fiscal 2026 and shrank in July to September 2026. Hood tied the drop to fewer one-off purchases after strong product launches a year earlier (source: Microsoft FY27 Q1 earnings call). Industry solutions holds Dynamics 365, Microsoft's apps for sales, finance and customer service, along with parts of LinkedIn and a health care cloud. Frontier and support services is Microsoft's paid help and advice for large customers.

So the shape of the business is easy to state. About three dollars in five came from the two cloud lines in fiscal 2026, and closer to two in three in July to September 2026. Together those lines grew faster than the company as a whole. Windows, XBOX and ads brought in about one dollar in five in fiscal 2026 and about one in six in July to September 2026.

Windows, XBOX and search inside Devices and Consumer

Devices and Consumer is the smaller, slower half of Microsoft. It made $63.7 billion in fiscal 2026, up 1.2%, from Windows licenses sold to PC makers together with Surface devices, XBOX games and consoles, and Bing and LinkedIn ads. In July to September 2026 its sales fell 3.2% to $15.5 billion, as Windows shrank and ads grew (source: Microsoft FY27 segment slides) (source: Microsoft FY27 Q1 press release).

Windows earns most of its money from PC makers, known as original equipment manufacturers (OEMs), which buy Windows licenses from Microsoft and put them on the computers they sell. That ties the line closely to how many PCs are shipped, and to the mix of devices people buy (source: Microsoft 10-K for fiscal 2026). In fiscal 2026 Windows OEM sales grew 5% while PC makers' stock of unsold machines stayed high, and sales of Microsoft's own devices fell.

Microsoft had warned of a steep fall for July to September, and it came. On July 29, 2026, Hood said Windows OEM and devices sales should fall in the low twenties, in percentage terms, in July to September. She pointed to component prices and stock levels in the PC market (source: Microsoft FY26 Q4 earnings call). The line fell 22%, and within it Windows OEM fell 27%, which Hood called below expectations (source: Microsoft FY27 Q1 earnings call). She tied that to extra demand a year earlier when Windows 10 support ended, to PC makers and stores running down their stock, and to weaker PC demand. For October to December 2026, she guided a fall in the mid-thirties (source: Microsoft FY27 Q1 earnings call).

The wider PC market points the same way. Research firm International Data Corporation (IDC) said on October 8, 2026 that PC shipments around the world fell 20.1% in the third quarter of 2026 to 62.7 million. It tied part of the drop to PC makers and sellers stocking up earlier in the year, ahead of price rises driven by memory chips (source: IDC).

XBOX shrank in fiscal 2026 as fewer consoles were sold, with console sales down 29%. Sales of XBOX content and services, its games and Game Pass plans, fell 5% against a year of strong sales of Microsoft's own games, even though Game Pass grew (source: Microsoft 10-K for fiscal 2026). XBOX sales were down only 2% in July to September 2026. Growth in Microsoft's own games made up for part of a drop in other publishers' games and in Game Pass (source: Microsoft FY27 Q1 earnings call).

Search and advertising grew 12.0% to $24.8 billion in fiscal 2026, a far smaller share of sales than at an ad-funded firm such as Meta, whose revenue comes mostly from ads. Under the old definition, Bing's search sales after its payments to partners rose 12% that year, on more searches and more money per search (source: Microsoft 10-K for fiscal 2026). The line now also carries LinkedIn's ads and Premium plans. In July to September 2026 its sales after partner payments grew 12%, which Hood credited to LinkedIn, Edge and Bing (source: Microsoft FY27 Q1 earnings call).

How Microsoft charges: Subscriptions, usage, licenses and ads

Microsoft charges in five ways: plans paid over a contract, cloud use billed by the amount used, licenses paid up front, ads paid when shown or clicked, and devices sold outright. Its annual report sets a rule for when each kind counts as revenue, which is why some lines are steady and others jump (source: Microsoft 10-K for fiscal 2026).

Each way of charging reaches Microsoft's sales at its own pace. Say your firm signs up 10 staff for a Microsoft 365 plan, runs its online shop on Azure servers and places an ad on Bing. Under the 10-K's rules, Microsoft spreads the Microsoft 365 plan evenly over the contract and counts the Azure bill as the servers are used. It books the ad when it shows in search results or when someone clicks it (source: Microsoft 10-K for fiscal 2026). If you also buy a Windows Server license for an office computer, Microsoft counts that sale in full on the day the software is made available.

Those rules explain why Microsoft's sales are so steady from one quarter to the next. Three lines bill mostly as a plan or by use: Azure, Microsoft 365 cloud and Industry solutions, which also holds some one-off licenses. Together they brought in $222.6 billion in fiscal 2026, or 67.1% of the total, and $66.3 billion in July to September 2026, or 71.8% (source: Microsoft FY27 segment slides) (source: Microsoft FY27 Q1 press release). Much of the rest is tied to long contracts too. On deals that run for several years, Microsoft usually bills once a year, at the start of each contract year (source: Microsoft 10-K for fiscal 2026).

Microsoft also reports how much it has already signed but not yet earned. At September 30, 2026, that figure, called commercial remaining performance obligation, stood at $677 billion, up 73% from a year earlier. Microsoft expected to turn about 30% of it into sales within 12 months (source: Microsoft 10-Q for Q1 FY2027). Copilot, Microsoft's AI helper, is counted inside Microsoft 365 cloud for business customers (source: Microsoft FY27 segment slides). On the October 28 call, Hood said premium seat plans such as Microsoft 365 Copilot, E5 and E7 led the rise in revenue per user (source: Microsoft FY27 Q1 earnings call).

Microsoft revenue by year

Microsoft's revenue grew from $198.3 billion in fiscal 2022 to $331.8 billion in fiscal 2026, about 1.67 times as much in four years. Growth slowed to 6.9% in fiscal 2023, then picked up to 15.7%, 14.9% and 17.8% as demand for cloud and AI grew (source: Microsoft 10-K for fiscal 2026) (source: Microsoft 10-K for fiscal 2024).

In fiscal 2026 sales rose $50.1 billion, led by growth in the Microsoft Cloud (source: Microsoft 10-K for fiscal 2026).

Profit grew faster than sales. Operating income rose 20.8% in fiscal 2026 and net income rose 31.3%. Part of the gap comes from gains on Microsoft's stake in OpenAI, which are counted after operating income (source: Microsoft 10-K for fiscal 2026). Microsoft's recast segment tables, filed on October 28, 2026, go back to fiscal 2024. That year Agents and Infra made $186.9 billion and Devices and Consumer $58.2 billion (source: Microsoft Form 8-K, October 28, 2026).

Fiscal 2027 started at the same pace. In July to September 2026, sales were 19% higher than a year earlier, at $92.3 billion, and operating income was up 21% at $45.9 billion (source: Microsoft FY27 Q1 press release).

Microsoft revenue by region

Microsoft earns a little over half its revenue in the US. In fiscal 2026, customers in the US brought in $170.8 billion, or 51.5%, and customers in all other countries $161.0 billion, or 48.5%. Microsoft says no single country outside the US made up more than 10% of its sales (source: Microsoft 10-K for fiscal 2026).

The US figure is a little wider than sales to US customers alone. Microsoft counts its billings to PC makers and to some global firms in the US line. It cannot tell where in the world that money really comes from (source: Microsoft 10-K for fiscal 2026). Both halves grew at almost the same pace in fiscal 2026, 18.2% in the US and 17.4% elsewhere. In July to September 2026 the US pulled ahead, with sales up 23.4% to $49.5 billion, or 53.6% of the total, against 13.9% growth elsewhere (source: Microsoft 10-Q for Q1 FY2027).

Because almost half of sales are earned in other currencies, the dollar's value changes Microsoft's reported growth. That is why Microsoft gives many growth rates twice, once as reported and once in constant currency, which strips out the effect of exchange rates. In July to September 2026, for example, Microsoft Cloud revenue grew 30% as reported and 31% in constant currency (source: Microsoft FY27 Q1 press release).

Microsoft's first report under the new segments

Microsoft's first report under the new segments covered July to September 2026 and came out on October 28, 2026. Both segments beat the top of Microsoft's September ranges. Agents and Infra made $76.8 billion against a range of $75.15 billion to $75.75 billion, while Devices and Consumer made $15.5 billion against $14.7 billion to $15.2 billion (source: Microsoft FY27 segment slides) (source: Microsoft FY27 Q1 press release).

Because those ranges were Microsoft's own, the gaps are a fair first test of the new structure. Agents and Infra came in $1.0 billion, or 1.4%, above the top of its range, and Devices and Consumer $284 million, or 1.9%, above. Hood said the results beat expectations on revenue, operating income and earnings per share (source: Microsoft FY27 Q1 earnings call). The Microsoft Q1 fiscal 2027 earnings preview set out the rest of the guidance going in. The report landed in a busy week of big company earnings.

For October to December 2026, Hood guided Agents and Infra sales of $80.1 billion to $80.7 billion, growth of 24% to 25%. She put Devices and Consumer at $15.9 billion to $16.4 billion (source: Microsoft FY27 Q1 earnings call). Those are Microsoft's own ranges, and the report for the quarter ending December 31, 2026 will show where each segment lands against them. Knowing how to read Microsoft's earnings report helps you find figures like these quickly in the release, the slides and the call.

Microsoft held its call on the results at 5.30PM ET, 9.30PM UTC, on October 28, after regular US trading hours had ended (source: Microsoft FY27 Q1 press release). The MSFTUSDT Perpetual is a perpetual futures contract with no expiry date. It is settled in USDT, offers leverage of up to 20x and has a smallest order of 0.01 MSFT (source: BloFin MSFT-USDT contract page).

Leverage magnifies a sales surprise in both directions, gains and losses alike, and a big move can trigger liquidation of a leveraged position. BloFin lists Microsoft among its stock perpetuals, next to the other TradFi markets listed on BloFin.

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Frequently asked questions

Who is Microsoft's biggest customer?

Microsoft's annual report names no customer that made up more than 10% of revenue in fiscal 2024, 2025 or 2026. Its sales are spread across firms, governments, PC makers and homes (source: Microsoft 10-K for fiscal 2026). The one customer whose revenue it does report is OpenAI, a company it holds a large stake in. In its 10-Q, the filing that covers the three months to September 30, 2026, Microsoft shows $10.0 billion of sales from commercial arrangements with OpenAI, a figure that also counts revenue-sharing payments. That came to about 10.8% of the quarter's sales (source: Microsoft 10-Q for Q1 FY2027).

Why is Microsoft's revenue highest in the April to June quarter?

April to June is the fourth quarter of Microsoft's fiscal year. The annual report says revenue is usually highest then, because more contracts that run for several years are signed in that quarter (source: Microsoft 10-K for fiscal 2026). In fiscal 2026 that quarter brought in $90.0 billion, or 27.1% of the year's sales (source: Microsoft FY27 segment slides). That is why each quarter is best set against the same quarter of the year before.

What are traffic acquisition costs?

Traffic acquisition costs, or TAC, are the payments Microsoft makes to the sites in the Bing Ads network and to its content partners for showing Bing ads. Microsoft reports a growth rate for its search and ad sales with TAC taken out, which shows how the money it keeps is growing (source: Microsoft FY27 segment slides). Restated, that measure grew 14% in fiscal 2026 (source: Microsoft FY27 segment slides) and 12% in July to September 2026 (source: Microsoft FY27 Q1 press release).

How much revenue does Microsoft make per employee?

About $1.49 million a year, based on $331.8 billion of fiscal 2026 sales and about 223,000 full-time staff at June 30, 2026 (source: Microsoft 10-K for fiscal 2026). Of those staff, about 121,000 were based in the US and the other 102,000 abroad. Microsoft's report for July to September 2026 says its total headcount fell 2% from a year earlier, while its sales kept growing (source: Microsoft 10-Q for Q1 FY2027).

How much money does Microsoft make a day?

Microsoft took in about $909 million of sales a day in fiscal 2026, which is $331.8 billion spread over 365 days. Its operating income came to about $425 million a day on the same basis, and its net income to about $366 million (source: Microsoft 10-K for fiscal 2026). In July to September 2026 the daily rate passed $1 billion, with $92.3 billion of sales over the quarter's 92 days (source: Microsoft FY27 Q1 press release).

Researched and written by the BloFin Academy editorial team with AI-assisted drafting. All facts independently verified. Primary sources include Microsoft's first quarter fiscal 2027 press release, earnings call and Form 10-Q, its Form 8-K of October 28, 2026 with recast segment figures, its FY27 segment slides filed with the SEC on September 2, 2026, its annual reports on Form 10-K for fiscal 2026 and fiscal 2024, its fourth quarter fiscal 2026 earnings call, IDC's October 8, 2026 PC shipments release and BloFin's MSFT-USDT contract page, current as of October 29, 2026.

Nothing in this article constitutes financial advice, and nothing in it is a recommendation to buy, sell or hold Microsoft in any form. Microsoft's share price can drop sharply after results when cloud growth or a segment's margin falls short of what the market expected, and the figures on this page will be replaced by new ones each quarter. A leveraged MSFTUSDT Perpetual position magnifies those moves and can be liquidated before your whole margin is gone. Past performance does not indicate future results. Do your own research and consider your risk tolerance before you trade on BloFin.