v3.26.3
SEGMENT INFORMATION AND GEOGRAPHIC DATA
 12 Months Ended
Jun. 30, 2026
Segment Reporting [Abstract]  
SEGMENT INFORMATION AND GEOGRAPHIC DATA

NOTE 18 — SEGMENT INFORMATION AND GEOGRAPHIC DATA

In September 2026, we announced changes in our segment reporting structure. We have recast certain previously reported amounts to conform to the way we internally manage and monitor our business. Refer to Note 1 – Accounting Policies for further information.

In its operation of the business, management, including our 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 two segments: Agents and Infra, and Devices and Consumer.

Our reportable segments are described below.

Agents and Infra

Our Agents and Infra segment brings together our applications and agents, our multi-model system, and Azure infrastructure. This segment primarily comprises:

•
Azure, comprising consumption-based services across non-GPU workloads, including compute, data and analytics, storage, networking, and security; and GPU workloads, including GPU infrastructure-as-a-service and Foundry.
•
Microsoft 365 cloud, including Microsoft 365 commercial cloud, comprising Microsoft 365 commercial subscriptions and services, GitHub cloud and other cloud-based developer services, Microsoft 365 Copilot, GitHub Copilot, and security offerings including Agent 365 and Security Copilot; and Microsoft 365 consumer cloud.
•
Productivity and server licensing, including Server products, comprising SQL Server, Windows Server, Visual Studio, System Center, related Client Access Licenses, and other on-premises offerings; Microsoft 365 commercial products, comprising Windows commercial on-premises and Office licensed on-premises; and Microsoft 365 consumer products, comprising Office licensed on-premises.
•
Industry solutions, including Industry solutions cloud, comprising LinkedIn Talent Solutions and Sales Solutions, Dynamics 365 (including a set of intelligent, cloud-based applications across ERP, CRM, Service, Power Apps, and Power Automate), and Healthcare and Life Sciences cloud; and Industry solutions products, comprising the on-premises portion of these businesses.
•
Frontier and support services, including Customer Success Support (formerly Enterprise Support Services), Frontier Company, Microsoft Partner Network, and Learning Experience.

Devices and Consumer

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

•
Search and advertising, including Bing, Microsoft Edge, LinkedIn Marketing Solutions and Premium Subscriptions, third-party affiliates, and MSN.
•
XBOX, including 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; and XBOX hardware.
•
Windows OEM and devices, comprising Windows Pro and non-Pro licenses sold through the OEM channel, first-party devices (including Surface and PC accessories), and related Windows offerings beyond OEM licensing.

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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year Ended June 30,

 

 

2026

 

 

 

2025

 

 

 

2024

 

 

 

 

 

 

 

 

 

 

 

 

 

Agents and Infra

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

268,127

 

 

$

218,783

 

 

$

186,910

 

Cost of revenue

 

 

81,417

 

 

 

61,292

 

 

 

48,104

 

Operating expenses

 

 

50,345

 

 

 

46,677

 

 

 

44,344

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

136,365

 

 

$

110,814

 

 

$

94,462

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Devices and Consumer

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

63,712

 

$

62,941

 

$

58,212

 

Cost of revenue

 

24,957

26,539

 

26,010

Operating expenses

 

19,883

 

 

18,688

 

 

17,231

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

$

18,872

 

$

17,714

 

$

14,971

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

331,839

 

 

$

281,724

 

 

$

245,122

 

Cost of revenue

 

 

106,374

 

 

 

87,831

 

 

 

74,114

 

Operating expenses

 

 

70,228

 

 

 

65,365

 

 

 

61,575

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

155,237

 

 

$

128,528

 

 

$

109,433

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

No sales to an individual customer or country other than the United States accounted for more than 10% of revenue for fiscal years 2026, 2025, or 2024. Revenue, classified by the major geographic areas in which our customers were located, was as follows:

 

(In millions)

 

 

 

 

 

Year Ended June 30,

2026

2025

2024

 

 

 

United States (a)

$

170,794

$

144,546

$

124,704

Other countries

161,045

137,178

120,418

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

$

331,839

$

281,724

$

245,122

 

 

 

 

(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)

 

 

 

 

 

Year Ended June 30,

2026

2025

2024

 

 

 

Azure

 

$

101,938

$

72,610

$

54,070

Microsoft 365 cloud

100,299

 

84,605

73,457

Productivity and server licensing

37,285

 

35,391

 

34,976

Search and advertising

 

 

24,835

 

 

 

22,171

 

 

 

19,679

 

XBOX

 

21,790

 

 

23,455

 

21,503

Industry solutions

20,345

 

18,417

 

16,813

Windows OEM and devices

 

 

17,087

 

 

 

17,315

 

 

 

17,030

 

Frontier and support services

 

 

8,260

 

 

 

7,760

 

 

 

7,594

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

$

331,839

$

281,724

$

245,122

 

 

 

 

 

 

 

 

 

 

 

 

Our Microsoft Cloud revenue, which includes Azure, Microsoft 365 commercial cloud, and Industry solutions cloud, was $214.4 billion, $168.9 billion, and $137.7 billion in fiscal years 2026, 2025, and 2024, respectively.

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.

Long-lived assets, excluding financial instruments and tax assets, classified by the location of the controlling statutory company and with countries over 10% of the total shown separately, were as follows:

 

(In millions)

 

 

 

 

 

June 30,

2026

2025

2024

 

 

 

United States

$

300,354

$

230,069

$

186,106

Other countries

175,159

141,833

115,263

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

$

475,513

$

371,902

$

301,369