Microsoft reports $100 billion in Azure revenue and 30 million Copilot seats
Microsoft put hard numbers on AI demand and spend. In its FY2026 Q4 release, Azure cleared $100 billion in annual revenue for the first time, Microsoft 365 Copilot passed 30 million paid seats, and the company is spending like the constraint is still capacity — not demand.
The AI numbers Microsoft wanted you to see
For the quarter ended June 30, 2026, Microsoft reported $90.0 billion in revenue, up 18% year over year. Operating income was $40.6 billion, up 18%. GAAP net income was $35.8 billion, up 31%; non-GAAP net income, stripping the OpenAI investment impact, was $35.3 billion, up 22%. Full-year revenue hit $331.8 billion, also up 18%.
Microsoft Cloud revenue was $59.3 billion in the quarter, up 27%. Commercial remaining performance obligation jumped 84% to $678 billion. Intelligent Cloud revenue was $39.3 billion, up 32%, with Azure and other cloud services up 43%. CEO Satya Nadella said Azure passed $100 billion for the year and Copilot passed 30 million paid seats.
On the earnings call transcript, Nadella sharpened the annual stack: Microsoft Cloud surpassed $214 billion for the year, up 27%, and Azure itself was up 41% on the year as it crossed the $100 billion mark. Customer demand, CFO Amy Hood said, still exceeds available capacity.
Copilot seats vs GitHub Copilot users
Do not mix the two Copilots. Microsoft 365 Copilot is the knowledge-work seat count: more than 30 million paid seats, with net seat adds more than doubling quarter over quarter on the call. Nadella said conversations per user nearly doubled year over year, weekly engagement is on par with Outlook and Teams, and time from deployment to “high usage” (monthly active usage above 80% of a customer’s user base) has fallen from months to days.
GitHub Copilot is the developer line: 50 million users, against 225 million GitHub users overall. After a June move to usage-based billing, Copilot revenue accelerated over 60% quarter over quarter.
What $41B quarterly capex buys
Hood put capital expenditures at $41 billion for the quarter, including higher component pricing already flagged in guidance. Roughly two-thirds of that capex went to short-lived assets — primarily CPUs and GPUs. Finance leases were $5.6 billion, mostly large datacenter sites. Cash paid for property and equipment was $35.8 billion. Free cash flow was still positive at $19.6 billion even after that spend; cash from operations was $55.4 billion.
Nadella’s ops color: 31 new datacenters across five continents in the quarter (88 for the year), another gigawatt of capacity added, dock-to-live times for new GPUs in the largest regions cut nearly 50% over the fiscal year, and a plan to roughly double overall capacity in two years. Maia 200, Cobalt VMs, and next-gen AMD Helios and NVIDIA Vera Rubin rack-scale gear all showed up in the prepared remarks.
Open questions for FY2027 guidance
For FY27, Microsoft still expects double-digit revenue and operating income growth, free cash flow positive, and capital expenditures that grow year over year. Q1 FY27 CapEx is guided over $50 billion, including a lease reclassification hit from extending datacenter and office useful lives from 15 to 25 years. That accounting shift moves more future datacenter leases from finance leases (inside CapEx) to operating leases (outside CapEx), and resets calendar-year 2026 CapEx expectations to about $175 billion without, Hood said, changing underlying investment plans.
Azure Q1 growth is guided around 45% in constant currency. Intelligent Cloud Q1 revenue is guided to $40.95–$41.25 billion.
Watch three things: whether capacity catches demand or the “demand exceeds supply” line becomes a permanent excuse; whether Copilot seat growth keeps converting into consumption revenue as Cowork and Autopilots ship; and whether $41 billion quarters of short-lived silicon still produce durable returns when component prices move and lease accounting reshuffles the CapEx line.
