Microsoft closed fiscal 2026 on June 30, posting $331.8 billion in full-year revenue and $90 billion in fourth-quarter revenue, above the $87.7 billion consensus. GAAP net income for the quarter reached $35.8 billion, up 31%.
Microsoft Cloud generated $59.3 billion in quarterly revenue, up 27%, while Azure and related services grew 43% and crossed $100 billion in annual revenue for the first time. Microsoft 365 Copilot also surpassed 30 million paid licenses, up from 20 million in April.
Azure growth ran ahead of the prior guide
Amy Hood had previously guided Azure growth to 39% to 40%, so the 43% print came in above that range. Microsoft expects Azure growth of about 45% in fiscal first quarter 2027 at constant currency.
The chief financial officer said demand continues to exceed available supply. The source also says the 43% Azure growth did not come from a large increase in new capacity, but from efficiency gains on the existing CPU and GPU fleet that were quickly monetized because of the shortage.
Usage-based billing is moving through the product stack
Satya Nadella now presents Microsoft’s license plus consumption model as its main lever for expanding the market. GitHub Copilot switched to usage-based billing during the quarter, and Amy Hood said higher-than-expected usage of GitHub Copilot was one of the drivers of Azure’s outperformance, without hurting enterprise seat growth.
Copilot Cowork is billed on a usage basis. Microsoft also announced usage-based pricing for Project Perception, its new agentic security system, and said Microsoft 365 E7 has been available since May 1 with a three-year Copilot purchase option in CSP.
What this means for Microsoft partners
Microsoft is asking partners to differentiate themselves on generative AI industrialization and production deployment work. The company has not publicly clarified the boundary between work it delivers directly and work left to its ecosystem, so the commercial split is still open.
For channel teams, that leaves less room to rely on seat-only economics when Microsoft is steering more of the stack toward consumption billing and direct delivery.
The consumer and device lines stayed softer
Microsoft said the average revenue per user will decline on new seats, especially frontline licenses and SME offers. More Personal Computing declined 5% at constant currency to $12.9 billion, and Windows OEM and devices revenue fell 7%.
Microsoft now expects that line to fall by about 20% in fiscal first quarter 2027.
Frontier Company is already in the field
Frontier Company is a $2.5 billion entity announced in early July. Microsoft says it already has 6,000 engineers and sector experts working with customers, and the company claims 330 projects carried out for 164 companies.
The disclosure matters because Microsoft is pushing partners toward the same generative AI industrialization and production deployment work. Microsoft has not publicly clarified what it keeps in-house and what it leaves to the ecosystem.