Microsoft Shares Rise Over 4% as Q4 Azure Revenue Beats and Commercial RPO Surges 84%

Tradingkey - Microsoft ( MSFT) released its fourth-quarter fiscal 2026 financial results after the U.S. market close on July 29, Eastern Time. Overall, this is a financial report where revenue, profit, and Azure growth beat expectations across the board. Following the release, Microsoft's after-hours share price once rose over 4% and remained up 2.47% at $400.2 as of press time.

During the period, Microsoft's revenue increased by 18% year-over-year (up 17% in constant currency) to $90 billion, higher than the market expectation of $87.62 billion; operating profit increased by 18% year-over-year to $40.6 billion. Among them, the cloud business delivered stellar revenue growth.

[Microsoft Stock Price Chart, Source: TradingView]

Revenue from the Intelligent Cloud segment increased by 32% year-over-year to $39.306 billion, with Azure and other cloud services revenue growing by 43% year-over-year, exceeding the market expectation of 40%.

CEO Satya Nadella stated that Azure's annual revenue surpassed $100 billion for the first time, and Microsoft 365 Copilot paid seats have exceeded 30 million. Total Microsoft Cloud revenue increased by 27% year-over-year to $59.3 billion; commercial remaining performance obligations (RPO) surged by 84% year-over-year to $678 billion, though the company disclosed that excluding OpenAI's commitment, RPO growth was 25%.

Regarding other segments, revenue from the Productivity and Business Processes segment increased by 14% year-over-year to $37.847 billion, with Microsoft 365 Commercial Cloud growing by 14% and Microsoft 365 Consumer Cloud growing by 24%.

However, the More Personal Computing segment decreased by 4% year-over-year to $12.854 billion, with Windows OEM and devices revenue down 7% and Xbox content and services revenue down 10%.

On the profit front, under GAAP, Microsoft's fourth fiscal quarter net income was $35.766 billion, up 31% year-over-year; diluted earnings per share was $4.81, up 32% year-over-year. Under non-GAAP (excluding the impact of the OpenAI investment), net income was $35.286 billion, up 22% year-over-year; adjusted EPS was $4.74, up 23% year-over-year, well above the market expectation of $4.24.

It is worth noting that the results for this quarter include several one-time items: a $3.2 billion gain from the Anthropic investment (boosting EPS by approximately $0.33), net gain from the OpenAI investment boosting EPS by approximately $0.07, and Xbox severance and impairment charges partially offset by lower-than-expected voluntary retirement program expenses; the aforementioned discrete items collectively boosted EPS by approximately $0.27 compared to the guidance provided on April 29. The company emphasized that after excluding these items, revenue, operating profit, and EPS still exceeded expectations across the board.

CEO Nadella stated, "We are pushing the frontier on the cost-outcome curve, ensuring that every customer can translate tokens into business outcomes."