Microsoft 365 CommercialWide moat

Microsoft (MSFT) — moat facet

Seats grow 6% a year and revenue 16%: the Office rent has become a pricing business, and Copilot is what the price is now paying for.

Microsoft 365 Commercial is the rent the world's offices pay for Word, Excel, Outlook, Teams and the business version of Windows. At $102.0 billion in fiscal 2026 it is the second-largest line and 31% of the company1, up 16%2. It added $14.2 billion in the year3, nearly as much as the whole of Search advertising.

Microsoft 365 Commercial revenue by quarter ($B)20.4Q1'2521.1Q221.9Q324.3Q424.0Q1'2624.5Q225.6Q327.9Q4Microsoft 10-Qs; Q4 = fiscal year (10-K) less nine months
Growth held at about 17% for three quarters and slowed to 15% in June on a prior-year comparison.

The 10-K's list of what is inside is long. The cloud half, Microsoft 365 Commercial cloud, comprises Microsoft 365 Commercial, Enterprise Mobility + Security, the cloud portion of Windows Commercial, the per-user portion of Power BI, Exchange, SharePoint, Microsoft Teams, Microsoft 365 Security and Compliance, and Microsoft 365 Copilot; the products half comprises Windows Commercial on-premises and Office licensed on-premises4. Almost all of it is priced per person. Microsoft says the revenue depends on "installed base growth and average revenue per user expansion", and on the shift from licences to subscriptions5.

The line's ancestor is the Office business. Office products and cloud services was $25.6 billion in fiscal 2017 and $31.8 billion in fiscal 20196, $44.9 billion in fiscal 20227 and $54.9 billion in fiscal 2024 on the definition used then8. The fiscal 2025 recast built today's line by bringing the commercial components of Microsoft 365 together9, which is why fiscal 2024 reads $77.0 billion on the current basis10. The new line also takes in Windows sold to companies and Enterprise Mobility + Security11.

Growth comes from two dials, and they have gone in opposite directions. Seats grew 11% in fiscal 202312, 7% in fiscal 202413, 6% in fiscal 202514 and 6% in fiscal 202615. Cloud revenue, called Office 365 Commercial until fiscal 2025, grew 13% in fiscal 202316, 16% in fiscal 202417, 15% in fiscal 202518 and 17% in fiscal 202619. Seat growth has roughly halved while revenue growth has risen, so nearly all of the growth now comes from what each seat pays. In fiscal 2026 the filing credits Microsoft 365 Copilot and Microsoft 365 E5 for the rise in revenue per user20, and Copilot passed 30 million paid seats in the June quarter21.

On the current basis the line grew 15.0%, 14.0% and 16.2% in fiscal 2024, 2025 and 2026, about 15.1% a year compounded22. The weak spot has been the licensed software. Office Commercial products revenue declined 21% in fiscal 202323 and 16% in fiscal 202424 as customers moved to the cloud, then grew 7% in fiscal 2025 on Office 202425 and 13% in fiscal 202626. The June 2026 quarter was the slowest of the year at 14.8%, against 17.0% in March27; Microsoft said the cloud part would have grown 16% but for a prior-year quarter that benefited from 2 points of in-period revenue recognition28.

Microsoft reports no margin for the line, but its home segment is the most profitable in the company. Productivity and Business Processes earned 59.9% of revenue in fiscal 202629, and its gross margin rose, driven by efficiency gains in Microsoft 365 Commercial cloud30. The new cost is visible in the same paragraph: cost of revenue rose 12% "driven by investments in AI infrastructure to support Microsoft 365 Copilot seat and usage growth"31. Unlike Azure, this line has so far absorbed its AI costs without losing margin.

Over eight quarters the line's revenue climbed from $20.4 billion to $27.9 billion32. The licensed half is the volatile part: Microsoft 365 Commercial products revenue grew 17% in September on Office 2024 purchasing33 and only 1% in March34, while the cloud half grew between 17% and 19% in each of the first three quarters353637. The cloud half also counts toward Microsoft Cloud, the $214.4 billion total that gathers the cloud parts of four lines38.

Several pages already argue the moat around this line: Office and Productivity Grip on why companies stay, Copilot and the Agent Push on the paid assistant, and The Price-Hike Ceiling on how far the rent can rise. What the line's own numbers add is that it has become a pricing business. Everything above seat growth is Microsoft charging each seat more.

The measure of whether that can continue is the gap between cloud revenue growth and seat growth, eleven points in fiscal 2026. If Copilot is worth paying for, the gap holds or widens. If it narrows toward zero, the line goes back to being a very good seat business growing at the speed of employment.

Moat trajectory: Widening

Revenue growth rose to 16.2% while seat growth held at 6%, so each seat is paying more, and the segment's gross margin rose despite the cost of Copilot. The June quarter slowed to 14.8% on a prior-year comparison.

The number that tests this moat
Moat Explorer calc
Microsoft 365 Commercial revenue, June 2026 quarter
$27,914M, +14.8% year on year

The line grew 17% in each of the three earlier quarters; the June quarter was held back by a prior-year comparison that benefited from in-period revenue recognition. Growth back at 16-17% would confirm Copilot is lifting revenue per seat; another quarter near 14% would not.

How it's calculated: Fourth-quarter revenue = FY2026 revenue in the Form 10-K less the nine-month figure in the Q3 FY2026 Form 10-Q; the year-earlier quarter is computed the same way from the FY2025 figures.
Source: Microsoft Form 10-K FY2026 and Form 10-Q Q3 FY2026 ↗
References
  1. ReportedAt $102.0 billion in fiscal 2026 it is the second-largest line and 31% of the company, up 16%.
    Microsoft Form 10-K, FY2026 — Note: revenue by significant product and service offering, FY2024-FY2026 (Server products and cloud services $129,425M / $98,435M / $79,828M; Microsoft 365 Commercial $101,997M / $87,767M / $76,969M; XBOX $21,790M / $23,455M / $21,503M; LinkedIn $19,817M / $17,812M / $16,372M; Windows and Devices $17,084M / $17,314M / $17,026M; Search advertising $15,176M / $13,878M / $12,306M; Microsoft 365 Consumer $9,175M / $7,404M / $6,648M; Dynamics $9,006M / $7,827M / $6,831M; Enterprise and partner services $8,260M / $7,760M / $7,594M; Other $109M / $72M / $45M; total $331,839M); Microsoft Cloud revenue $214.4B, $168.9B and $137.7B, drawn from four of the lines; additions to property and equipment $115,948M — FY2024-FY2026 · publ. July 29, 2026 · source ↗
  2. ReportedAt $102.0 billion in fiscal 2026 it is the second-largest line and 31% of the company, up 16%.
    Microsoft Form 10-K, FY2026 — Item 7 MD&A: segment results (Productivity and Business Processes revenue $139,996M, cost of revenue $25,017M, operating income $83,879M; Intelligent Cloud $137,791M, $57,876M, $56,972M; More Personal Computing $54,052M, $23,481M, $14,386M) and the drivers of each line: Server products and cloud services +$31.0B or 31% (Azure +41%, server products +1%); Microsoft 365 Commercial +$14.2B or 16% (cloud +17% on seats +6%, products +13%); Microsoft 365 Consumer +$1.8B or 24% (cloud +28% on subscribers +7%); LinkedIn +$2.0B or 11%; Dynamics +$1.2B or 15% (Dynamics 365 +18%); Enterprise and partner services +$500M or 6%; Windows and Devices -$230M or 1% (Windows OEM +5%); XBOX -$1.7B or 7% (content and services -5%, hardware -29%); Search advertising +$1.3B or 9% (ex-TAC +12%); the Microsoft 365 Consumer subscriber metric removed — FY2026 · publ. July 29, 2026 · source ↗
  3. ReportedIt added $14.2 billion in the year, nearly as much as the whole of Search advertising.
    Microsoft Form 10-K, FY2026 — Item 7 MD&A: segment results (Productivity and Business Processes revenue $139,996M, cost of revenue $25,017M, operating income $83,879M; Intelligent Cloud $137,791M, $57,876M, $56,972M; More Personal Computing $54,052M, $23,481M, $14,386M) and the drivers of each line: Server products and cloud services +$31.0B or 31% (Azure +41%, server products +1%); Microsoft 365 Commercial +$14.2B or 16% (cloud +17% on seats +6%, products +13%); Microsoft 365 Consumer +$1.8B or 24% (cloud +28% on subscribers +7%); LinkedIn +$2.0B or 11%; Dynamics +$1.2B or 15% (Dynamics 365 +18%); Enterprise and partner services +$500M or 6%; Windows and Devices -$230M or 1% (Windows OEM +5%); XBOX -$1.7B or 7% (content and services -5%, hardware -29%); Search advertising +$1.3B or 9% (ex-TAC +12%); the Microsoft 365 Consumer subscriber metric removed — FY2026 · publ. July 29, 2026 · source ↗
  4. ReportedThe cloud half, Microsoft 365 Commercial cloud, comprises Microsoft 365 Commercial, Enterprise Mobility + Security, the cloud portion of Windows Commercial, the per-user portion of Power BI, Exchange, SharePoint, Microsoft Teams, Microsoft 365 Security and Compliance, and Microsoft 365 Copilot; the products half comprises Windows Commercial on-premises and Office licensed on-premises.
    Microsoft Form 10-K, FY2026 — Item 1 Business: what each segment and line comprises, what drives each line's revenue (Azure consumption, per-user Microsoft 365 and Dynamics, Windows OEM licensing factors, XBOX content and subscriptions, LinkedIn's four products), the fiscal 2026 renaming of Gaming to XBOX and of Search and news advertising to Search advertising, and each line's competition — FY2026 · publ. July 29, 2026 · source ↗
  5. ReportedMicrosoft says the revenue depends on "installed base growth and average revenue per user expansion", and on the shift from licences to subscriptions.
    Microsoft Form 10-K, FY2026 — Item 1 Business: what each segment and line comprises, what drives each line's revenue (Azure consumption, per-user Microsoft 365 and Dynamics, Windows OEM licensing factors, XBOX content and subscriptions, LinkedIn's four products), the fiscal 2026 renaming of Gaming to XBOX and of Search and news advertising to Search advertising, and each line's competition — FY2026 · publ. July 29, 2026 · source ↗
  6. ReportedOffice products and cloud services was $25.6 billion in fiscal 2017 and $31.8 billion in fiscal 2019, $44.9 billion in fiscal 2022 and $54.9 billion in fiscal 2024 on the definition used then.
    Microsoft Form 10-K, FY2019 — revenue by offering FY2017-FY2019 (Server products and cloud services $21,649M / $26,129M / $32,622M; Office products and cloud services $25,573M / $28,316M / $31,769M; Windows $18,593M / $19,518M / $20,395M; Gaming $9,051M / $10,353M / $11,386M; Search advertising $6,219M / $7,012M / $7,628M; LinkedIn $2,271M / $5,259M / $6,754M; Enterprise Services $5,542M / $5,846M / $6,124M); LinkedIn acquired 8 December 2016 for $27.0B; GitHub acquired 25 October 2018 for $7.5B — FY2017-FY2019 · publ. August 1, 2019 · source ↗
  7. ReportedOffice products and cloud services was $25.6 billion in fiscal 2017 and $31.8 billion in fiscal 2019, $44.9 billion in fiscal 2022 and $54.9 billion in fiscal 2024 on the definition used then.
    Microsoft Form 10-K, FY2022 — revenue by offering FY2020-FY2022 (Server products and cloud services $41,379M / $52,589M / $67,321M; Office products and cloud services $44,862M in FY2022; Windows $24,761M; Gaming $11,575M / $15,370M / $16,230M; LinkedIn $8,077M / $10,289M / $13,816M; Search and news advertising $8,524M / $9,267M / $11,591M; Enterprise Services $6,409M / $6,943M / $7,407M); FY2022 drivers (Azure +45%, LinkedIn +34%, Office Consumer +11% with subscribers 59.7 million, Dynamics +25% on Dynamics 365 +39%, Windows OEM +11%, search +25% and ex-TAC +27%, Surface +3%); Nuance acquired 4 March 2022 for $18.8B; ZeniMax $8.1B; Xandr acquired 6 June 2022; LinkedIn over 850 million members — FY2020-FY2022 · publ. July 28, 2022 · source ↗
  8. ReportedOffice products and cloud services was $25.6 billion in fiscal 2017 and $31.8 billion in fiscal 2019, $44.9 billion in fiscal 2022 and $54.9 billion in fiscal 2024 on the definition used then.
    Microsoft Form 10-K, FY2024 — revenue by offering FY2022-FY2024 on the pre-recast basis (Server products and cloud services $79,970M in FY2023; Office products and cloud services $54,875M in FY2024; Dynamics $4,687M in FY2022 and $5,437M in FY2023); FY2024 drivers (Azure +30%, seats +7%, Office 365 Commercial +16%, Office Commercial products -16%, Office Consumer +4% with subscribers 82.5 million, LinkedIn +9% across all four lines of business, Dynamics +19%, Windows OEM +7%, Devices -15%, Gaming +39% with 44 points of net impact from Activision Blizzard, Xbox hardware -13%, search ex-TAC +12%, Enterprise and partner services -4%); Activision Blizzard acquired 13 October 2023 for $75.4B — FY2022-FY2024 · publ. July 30, 2024 · source ↗
  9. ReportedThe fiscal 2025 recast built today's line by bringing the commercial components of Microsoft 365 together, which is why fiscal 2024 reads $77.0 billion on the current basis.
    Microsoft Form 10-K, FY2025 — revenue by product and service offering on the recast basis, FY2023-FY2025 (Server products and cloud services $65,007M in FY2023; Windows and Devices $17,147M; Dynamics $5,796M; Enterprise and partner services $7,900M); the recast 'bringing the commercial components of Microsoft 365 together'; segment results FY2024-FY2025 (Intelligent Cloud revenue $87,464M and $106,265M, cost of revenue $29,611M and $40,171M, operating income $37,813M and $44,589M); FY2025 drivers (Azure +34%, server products -3%, Microsoft 365 Commercial cloud +15% on seats +6%, Office 2024, Microsoft 365 Consumer subscribers 89.0 million after the January 2025 price increase, Dynamics 365 +19%, Gaming +9% with Xbox content and services +16% and hardware -25%, search ex-TAC +20%); More Personal Computing goodwill acquired $51,235M — FY2023-FY2025 · publ. July 30, 2025 · source ↗
  10. ReportedThe fiscal 2025 recast built today's line by bringing the commercial components of Microsoft 365 together, which is why fiscal 2024 reads $77.0 billion on the current basis.
    Microsoft Form 10-K, FY2025 — revenue by product and service offering on the recast basis, FY2023-FY2025 (Server products and cloud services $65,007M in FY2023; Windows and Devices $17,147M; Dynamics $5,796M; Enterprise and partner services $7,900M); the recast 'bringing the commercial components of Microsoft 365 together'; segment results FY2024-FY2025 (Intelligent Cloud revenue $87,464M and $106,265M, cost of revenue $29,611M and $40,171M, operating income $37,813M and $44,589M); FY2025 drivers (Azure +34%, server products -3%, Microsoft 365 Commercial cloud +15% on seats +6%, Office 2024, Microsoft 365 Consumer subscribers 89.0 million after the January 2025 price increase, Dynamics 365 +19%, Gaming +9% with Xbox content and services +16% and hardware -25%, search ex-TAC +20%); More Personal Computing goodwill acquired $51,235M — FY2023-FY2025 · publ. July 30, 2025 · source ↗
  11. ReportedThe new line also takes in Windows sold to companies and Enterprise Mobility + Security.
    Microsoft Form 10-K, FY2026 — Item 1 Business: what each segment and line comprises, what drives each line's revenue (Azure consumption, per-user Microsoft 365 and Dynamics, Windows OEM licensing factors, XBOX content and subscriptions, LinkedIn's four products), the fiscal 2026 renaming of Gaming to XBOX and of Search and news advertising to Search advertising, and each line's competition — FY2026 · publ. July 29, 2026 · source ↗
  12. ReportedSeats grew 11% in fiscal 2023, 7% in fiscal 2024, 6% in fiscal 2025 and 6% in fiscal 2026.
    Microsoft Form 10-K, FY2023 — FY2023 drivers (Azure +29%, server products -1%, Office 365 Commercial +13% on seats +11%, Office Commercial products -21%, Office Consumer +2% with subscribers 67.0 million, LinkedIn +10% on Talent Solutions and over 950 million members, Dynamics +16% on Dynamics 365 +24%, Windows OEM -25% and Devices -24% on elevated channel inventory, Gaming -5%, search +5% and ex-TAC +11% helped by Xandr, Enterprise Services +4% with Industry Solutions formerly Microsoft Consulting Services) — FY2023 · publ. July 27, 2023 · source ↗
  13. ReportedSeats grew 11% in fiscal 2023, 7% in fiscal 2024, 6% in fiscal 2025 and 6% in fiscal 2026.
    Microsoft Form 10-K, FY2024 — revenue by offering FY2022-FY2024 on the pre-recast basis (Server products and cloud services $79,970M in FY2023; Office products and cloud services $54,875M in FY2024; Dynamics $4,687M in FY2022 and $5,437M in FY2023); FY2024 drivers (Azure +30%, seats +7%, Office 365 Commercial +16%, Office Commercial products -16%, Office Consumer +4% with subscribers 82.5 million, LinkedIn +9% across all four lines of business, Dynamics +19%, Windows OEM +7%, Devices -15%, Gaming +39% with 44 points of net impact from Activision Blizzard, Xbox hardware -13%, search ex-TAC +12%, Enterprise and partner services -4%); Activision Blizzard acquired 13 October 2023 for $75.4B — FY2022-FY2024 · publ. July 30, 2024 · source ↗
  14. ReportedSeats grew 11% in fiscal 2023, 7% in fiscal 2024, 6% in fiscal 2025 and 6% in fiscal 2026.
    Microsoft Form 10-K, FY2025 — revenue by product and service offering on the recast basis, FY2023-FY2025 (Server products and cloud services $65,007M in FY2023; Windows and Devices $17,147M; Dynamics $5,796M; Enterprise and partner services $7,900M); the recast 'bringing the commercial components of Microsoft 365 together'; segment results FY2024-FY2025 (Intelligent Cloud revenue $87,464M and $106,265M, cost of revenue $29,611M and $40,171M, operating income $37,813M and $44,589M); FY2025 drivers (Azure +34%, server products -3%, Microsoft 365 Commercial cloud +15% on seats +6%, Office 2024, Microsoft 365 Consumer subscribers 89.0 million after the January 2025 price increase, Dynamics 365 +19%, Gaming +9% with Xbox content and services +16% and hardware -25%, search ex-TAC +20%); More Personal Computing goodwill acquired $51,235M — FY2023-FY2025 · publ. July 30, 2025 · source ↗
  15. ReportedSeats grew 11% in fiscal 2023, 7% in fiscal 2024, 6% in fiscal 2025 and 6% in fiscal 2026.
    Microsoft Form 10-K, FY2026 — Item 7 MD&A: segment results (Productivity and Business Processes revenue $139,996M, cost of revenue $25,017M, operating income $83,879M; Intelligent Cloud $137,791M, $57,876M, $56,972M; More Personal Computing $54,052M, $23,481M, $14,386M) and the drivers of each line: Server products and cloud services +$31.0B or 31% (Azure +41%, server products +1%); Microsoft 365 Commercial +$14.2B or 16% (cloud +17% on seats +6%, products +13%); Microsoft 365 Consumer +$1.8B or 24% (cloud +28% on subscribers +7%); LinkedIn +$2.0B or 11%; Dynamics +$1.2B or 15% (Dynamics 365 +18%); Enterprise and partner services +$500M or 6%; Windows and Devices -$230M or 1% (Windows OEM +5%); XBOX -$1.7B or 7% (content and services -5%, hardware -29%); Search advertising +$1.3B or 9% (ex-TAC +12%); the Microsoft 365 Consumer subscriber metric removed — FY2026 · publ. July 29, 2026 · source ↗
  16. ReportedCloud revenue, called Office 365 Commercial until fiscal 2025, grew 13% in fiscal 2023, 16% in fiscal 2024, 15% in fiscal 2025 and 17% in fiscal 2026.
    Microsoft Form 10-K, FY2023 — FY2023 drivers (Azure +29%, server products -1%, Office 365 Commercial +13% on seats +11%, Office Commercial products -21%, Office Consumer +2% with subscribers 67.0 million, LinkedIn +10% on Talent Solutions and over 950 million members, Dynamics +16% on Dynamics 365 +24%, Windows OEM -25% and Devices -24% on elevated channel inventory, Gaming -5%, search +5% and ex-TAC +11% helped by Xandr, Enterprise Services +4% with Industry Solutions formerly Microsoft Consulting Services) — FY2023 · publ. July 27, 2023 · source ↗
  17. ReportedCloud revenue, called Office 365 Commercial until fiscal 2025, grew 13% in fiscal 2023, 16% in fiscal 2024, 15% in fiscal 2025 and 17% in fiscal 2026.
    Microsoft Form 10-K, FY2024 — revenue by offering FY2022-FY2024 on the pre-recast basis (Server products and cloud services $79,970M in FY2023; Office products and cloud services $54,875M in FY2024; Dynamics $4,687M in FY2022 and $5,437M in FY2023); FY2024 drivers (Azure +30%, seats +7%, Office 365 Commercial +16%, Office Commercial products -16%, Office Consumer +4% with subscribers 82.5 million, LinkedIn +9% across all four lines of business, Dynamics +19%, Windows OEM +7%, Devices -15%, Gaming +39% with 44 points of net impact from Activision Blizzard, Xbox hardware -13%, search ex-TAC +12%, Enterprise and partner services -4%); Activision Blizzard acquired 13 October 2023 for $75.4B — FY2022-FY2024 · publ. July 30, 2024 · source ↗
  18. ReportedCloud revenue, called Office 365 Commercial until fiscal 2025, grew 13% in fiscal 2023, 16% in fiscal 2024, 15% in fiscal 2025 and 17% in fiscal 2026.
    Microsoft Form 10-K, FY2025 — revenue by product and service offering on the recast basis, FY2023-FY2025 (Server products and cloud services $65,007M in FY2023; Windows and Devices $17,147M; Dynamics $5,796M; Enterprise and partner services $7,900M); the recast 'bringing the commercial components of Microsoft 365 together'; segment results FY2024-FY2025 (Intelligent Cloud revenue $87,464M and $106,265M, cost of revenue $29,611M and $40,171M, operating income $37,813M and $44,589M); FY2025 drivers (Azure +34%, server products -3%, Microsoft 365 Commercial cloud +15% on seats +6%, Office 2024, Microsoft 365 Consumer subscribers 89.0 million after the January 2025 price increase, Dynamics 365 +19%, Gaming +9% with Xbox content and services +16% and hardware -25%, search ex-TAC +20%); More Personal Computing goodwill acquired $51,235M — FY2023-FY2025 · publ. July 30, 2025 · source ↗
  19. ReportedCloud revenue, called Office 365 Commercial until fiscal 2025, grew 13% in fiscal 2023, 16% in fiscal 2024, 15% in fiscal 2025 and 17% in fiscal 2026.
    Microsoft Form 10-K, FY2026 — Item 7 MD&A: segment results (Productivity and Business Processes revenue $139,996M, cost of revenue $25,017M, operating income $83,879M; Intelligent Cloud $137,791M, $57,876M, $56,972M; More Personal Computing $54,052M, $23,481M, $14,386M) and the drivers of each line: Server products and cloud services +$31.0B or 31% (Azure +41%, server products +1%); Microsoft 365 Commercial +$14.2B or 16% (cloud +17% on seats +6%, products +13%); Microsoft 365 Consumer +$1.8B or 24% (cloud +28% on subscribers +7%); LinkedIn +$2.0B or 11%; Dynamics +$1.2B or 15% (Dynamics 365 +18%); Enterprise and partner services +$500M or 6%; Windows and Devices -$230M or 1% (Windows OEM +5%); XBOX -$1.7B or 7% (content and services -5%, hardware -29%); Search advertising +$1.3B or 9% (ex-TAC +12%); the Microsoft 365 Consumer subscriber metric removed — FY2026 · publ. July 29, 2026 · source ↗
  20. ReportedIn fiscal 2026 the filing credits Microsoft 365 Copilot and Microsoft 365 E5 for the rise in revenue per user, and Copilot passed 30 million paid seats in the June quarter.
    Microsoft Form 10-K, FY2026 — Item 7 MD&A: segment results (Productivity and Business Processes revenue $139,996M, cost of revenue $25,017M, operating income $83,879M; Intelligent Cloud $137,791M, $57,876M, $56,972M; More Personal Computing $54,052M, $23,481M, $14,386M) and the drivers of each line: Server products and cloud services +$31.0B or 31% (Azure +41%, server products +1%); Microsoft 365 Commercial +$14.2B or 16% (cloud +17% on seats +6%, products +13%); Microsoft 365 Consumer +$1.8B or 24% (cloud +28% on subscribers +7%); LinkedIn +$2.0B or 11%; Dynamics +$1.2B or 15% (Dynamics 365 +18%); Enterprise and partner services +$500M or 6%; Windows and Devices -$230M or 1% (Windows OEM +5%); XBOX -$1.7B or 7% (content and services -5%, hardware -29%); Search advertising +$1.3B or 9% (ex-TAC +12%); the Microsoft 365 Consumer subscriber metric removed — FY2026 · publ. July 29, 2026 · source ↗
  21. ReportedIn fiscal 2026 the filing credits Microsoft 365 Copilot and Microsoft 365 E5 for the rise in revenue per user, and Copilot passed 30 million paid seats in the June quarter.
    Microsoft, Q4 FY2026 earnings release (Form 8-K, Exhibit 99.1) — quarter ended June 30, 2026: revenue $90,007M (+18%); operating income $40,603M (+18%); net income $35,766M GAAP and $35,286M non-GAAP; diluted EPS $4.81 and $4.74; Microsoft Cloud revenue $59.3B (+27%); commercial remaining performance obligation +84% to $678B; Azure and other cloud services +43%; Productivity and Business Processes $37,847M (+14%); Intelligent Cloud $39,306M (+32%); More Personal Computing $12,854M (-4%); Windows OEM and Devices -7%; XBOX content and services -10%; a $3.2B gain on the investment in Anthropic and lower-than-expected Voluntary Retirement Program expenses contributing $0.27 of EPS against guidance; Azure revenue surpassed $100 billion for the first time and Microsoft 365 Copilot reached over 30 million paid seats; $10.2B returned to shareholders — Q4 FY2026 (quarter ended June 30, 2026) · publ. July 29, 2026 · source ↗
  22. Moat Explorer calcOn the current basis the line grew 15.0%, 14.0% and 16.2% in fiscal 2024, 2025 and 2026, about 15.1% a year compounded.
    Moat Explorer calculation from Microsoft Forms 10-K (FY2017-FY2026) and 10-Q (FY2025-FY2026): growth = year / prior year - 1 on the revenue-by-offering tables; compound rates = (end / start)^(1/years) - 1; quarterly revenue for the fourth quarter = fiscal-year revenue less the nine-month figure in the third-quarter 10-Q; segment margins = segment operating income / segment revenue and gross margin = (segment revenue - cost of revenue) / segment revenue (Intelligent Cloud $57,853M / $87,464M = 66.1% in FY2024, $66,094M / $106,265M = 62.2% in FY2025, $79,915M / $137,791M = 58.0% in FY2026); share of FY2026 growth = line increase / total increase of $50,115M (Server products and cloud services $30,990M plus Microsoft 365 Commercial $14,230M = 90.2%); shares of revenue = line / total — FY2017-FY2026 · publ. 2026 · source ↗
    Method: Moat Explorer calculation from the revenue-by-offering tables and segment results in Microsoft's Forms 10-K and 10-Q; see the source line for the method.
  23. ReportedOffice Commercial products revenue declined 21% in fiscal 2023 and 16% in fiscal 2024 as customers moved to the cloud, then grew 7% in fiscal 2025 on Office 2024 and 13% in fiscal 2026.
    Microsoft Form 10-K, FY2023 — FY2023 drivers (Azure +29%, server products -1%, Office 365 Commercial +13% on seats +11%, Office Commercial products -21%, Office Consumer +2% with subscribers 67.0 million, LinkedIn +10% on Talent Solutions and over 950 million members, Dynamics +16% on Dynamics 365 +24%, Windows OEM -25% and Devices -24% on elevated channel inventory, Gaming -5%, search +5% and ex-TAC +11% helped by Xandr, Enterprise Services +4% with Industry Solutions formerly Microsoft Consulting Services) — FY2023 · publ. July 27, 2023 · source ↗
  24. ReportedOffice Commercial products revenue declined 21% in fiscal 2023 and 16% in fiscal 2024 as customers moved to the cloud, then grew 7% in fiscal 2025 on Office 2024 and 13% in fiscal 2026.
    Microsoft Form 10-K, FY2024 — revenue by offering FY2022-FY2024 on the pre-recast basis (Server products and cloud services $79,970M in FY2023; Office products and cloud services $54,875M in FY2024; Dynamics $4,687M in FY2022 and $5,437M in FY2023); FY2024 drivers (Azure +30%, seats +7%, Office 365 Commercial +16%, Office Commercial products -16%, Office Consumer +4% with subscribers 82.5 million, LinkedIn +9% across all four lines of business, Dynamics +19%, Windows OEM +7%, Devices -15%, Gaming +39% with 44 points of net impact from Activision Blizzard, Xbox hardware -13%, search ex-TAC +12%, Enterprise and partner services -4%); Activision Blizzard acquired 13 October 2023 for $75.4B — FY2022-FY2024 · publ. July 30, 2024 · source ↗
  25. ReportedOffice Commercial products revenue declined 21% in fiscal 2023 and 16% in fiscal 2024 as customers moved to the cloud, then grew 7% in fiscal 2025 on Office 2024 and 13% in fiscal 2026.
    Microsoft Form 10-K, FY2025 — revenue by product and service offering on the recast basis, FY2023-FY2025 (Server products and cloud services $65,007M in FY2023; Windows and Devices $17,147M; Dynamics $5,796M; Enterprise and partner services $7,900M); the recast 'bringing the commercial components of Microsoft 365 together'; segment results FY2024-FY2025 (Intelligent Cloud revenue $87,464M and $106,265M, cost of revenue $29,611M and $40,171M, operating income $37,813M and $44,589M); FY2025 drivers (Azure +34%, server products -3%, Microsoft 365 Commercial cloud +15% on seats +6%, Office 2024, Microsoft 365 Consumer subscribers 89.0 million after the January 2025 price increase, Dynamics 365 +19%, Gaming +9% with Xbox content and services +16% and hardware -25%, search ex-TAC +20%); More Personal Computing goodwill acquired $51,235M — FY2023-FY2025 · publ. July 30, 2025 · source ↗
  26. ReportedOffice Commercial products revenue declined 21% in fiscal 2023 and 16% in fiscal 2024 as customers moved to the cloud, then grew 7% in fiscal 2025 on Office 2024 and 13% in fiscal 2026.
    Microsoft Form 10-K, FY2026 — Item 7 MD&A: segment results (Productivity and Business Processes revenue $139,996M, cost of revenue $25,017M, operating income $83,879M; Intelligent Cloud $137,791M, $57,876M, $56,972M; More Personal Computing $54,052M, $23,481M, $14,386M) and the drivers of each line: Server products and cloud services +$31.0B or 31% (Azure +41%, server products +1%); Microsoft 365 Commercial +$14.2B or 16% (cloud +17% on seats +6%, products +13%); Microsoft 365 Consumer +$1.8B or 24% (cloud +28% on subscribers +7%); LinkedIn +$2.0B or 11%; Dynamics +$1.2B or 15% (Dynamics 365 +18%); Enterprise and partner services +$500M or 6%; Windows and Devices -$230M or 1% (Windows OEM +5%); XBOX -$1.7B or 7% (content and services -5%, hardware -29%); Search advertising +$1.3B or 9% (ex-TAC +12%); the Microsoft 365 Consumer subscriber metric removed — FY2026 · publ. July 29, 2026 · source ↗
  27. Moat Explorer calcThe June 2026 quarter was the slowest of the year at 14.8%, against 17.0% in March; Microsoft said the cloud part would have grown 16% but for a prior-year quarter that benefited from 2 points of in-period revenue recognition.
    Moat Explorer calculation from Microsoft Forms 10-K (FY2017-FY2026) and 10-Q (FY2025-FY2026): growth = year / prior year - 1 on the revenue-by-offering tables; compound rates = (end / start)^(1/years) - 1; quarterly revenue for the fourth quarter = fiscal-year revenue less the nine-month figure in the third-quarter 10-Q; segment margins = segment operating income / segment revenue and gross margin = (segment revenue - cost of revenue) / segment revenue (Intelligent Cloud $57,853M / $87,464M = 66.1% in FY2024, $66,094M / $106,265M = 62.2% in FY2025, $79,915M / $137,791M = 58.0% in FY2026); share of FY2026 growth = line increase / total increase of $50,115M (Server products and cloud services $30,990M plus Microsoft 365 Commercial $14,230M = 90.2%); shares of revenue = line / total — FY2017-FY2026 · publ. 2026 · source ↗
    Method: Moat Explorer calculation from the revenue-by-offering tables and segment results in Microsoft's Forms 10-K and 10-Q; see the source line for the method.
  28. ReportedThe June 2026 quarter was the slowest of the year at 14.8%, against 17.0% in March; Microsoft said the cloud part would have grown 16% but for a prior-year quarter that benefited from 2 points of in-period revenue recognition.
    Microsoft, Q4 FY2026 earnings release (Form 8-K, Exhibit 99.1) — quarter ended June 30, 2026: revenue $90,007M (+18%); operating income $40,603M (+18%); net income $35,766M GAAP and $35,286M non-GAAP; diluted EPS $4.81 and $4.74; Microsoft Cloud revenue $59.3B (+27%); commercial remaining performance obligation +84% to $678B; Azure and other cloud services +43%; Productivity and Business Processes $37,847M (+14%); Intelligent Cloud $39,306M (+32%); More Personal Computing $12,854M (-4%); Windows OEM and Devices -7%; XBOX content and services -10%; a $3.2B gain on the investment in Anthropic and lower-than-expected Voluntary Retirement Program expenses contributing $0.27 of EPS against guidance; Azure revenue surpassed $100 billion for the first time and Microsoft 365 Copilot reached over 30 million paid seats; $10.2B returned to shareholders — Q4 FY2026 (quarter ended June 30, 2026) · publ. July 29, 2026 · source ↗
  29. Moat Explorer calcProductivity and Business Processes earned 59.9% of revenue in fiscal 2026, and its gross margin rose, driven by efficiency gains in Microsoft 365 Commercial cloud.
    Moat Explorer calculation from Microsoft Forms 10-K (FY2017-FY2026) and 10-Q (FY2025-FY2026): growth = year / prior year - 1 on the revenue-by-offering tables; compound rates = (end / start)^(1/years) - 1; quarterly revenue for the fourth quarter = fiscal-year revenue less the nine-month figure in the third-quarter 10-Q; segment margins = segment operating income / segment revenue and gross margin = (segment revenue - cost of revenue) / segment revenue (Intelligent Cloud $57,853M / $87,464M = 66.1% in FY2024, $66,094M / $106,265M = 62.2% in FY2025, $79,915M / $137,791M = 58.0% in FY2026); share of FY2026 growth = line increase / total increase of $50,115M (Server products and cloud services $30,990M plus Microsoft 365 Commercial $14,230M = 90.2%); shares of revenue = line / total — FY2017-FY2026 · publ. 2026 · source ↗
    Method: Moat Explorer calculation from the revenue-by-offering tables and segment results in Microsoft's Forms 10-K and 10-Q; see the source line for the method.
  30. ReportedProductivity and Business Processes earned 59.9% of revenue in fiscal 2026, and its gross margin rose, driven by efficiency gains in Microsoft 365 Commercial cloud.
    Microsoft Form 10-K, FY2026 — Item 7 MD&A: segment results (Productivity and Business Processes revenue $139,996M, cost of revenue $25,017M, operating income $83,879M; Intelligent Cloud $137,791M, $57,876M, $56,972M; More Personal Computing $54,052M, $23,481M, $14,386M) and the drivers of each line: Server products and cloud services +$31.0B or 31% (Azure +41%, server products +1%); Microsoft 365 Commercial +$14.2B or 16% (cloud +17% on seats +6%, products +13%); Microsoft 365 Consumer +$1.8B or 24% (cloud +28% on subscribers +7%); LinkedIn +$2.0B or 11%; Dynamics +$1.2B or 15% (Dynamics 365 +18%); Enterprise and partner services +$500M or 6%; Windows and Devices -$230M or 1% (Windows OEM +5%); XBOX -$1.7B or 7% (content and services -5%, hardware -29%); Search advertising +$1.3B or 9% (ex-TAC +12%); the Microsoft 365 Consumer subscriber metric removed — FY2026 · publ. July 29, 2026 · source ↗
  31. ReportedThe new cost is visible in the same paragraph: cost of revenue rose 12% "driven by investments in AI infrastructure to support Microsoft 365 Copilot seat and usage growth".
    Microsoft Form 10-K, FY2026 — Item 7 MD&A: segment results (Productivity and Business Processes revenue $139,996M, cost of revenue $25,017M, operating income $83,879M; Intelligent Cloud $137,791M, $57,876M, $56,972M; More Personal Computing $54,052M, $23,481M, $14,386M) and the drivers of each line: Server products and cloud services +$31.0B or 31% (Azure +41%, server products +1%); Microsoft 365 Commercial +$14.2B or 16% (cloud +17% on seats +6%, products +13%); Microsoft 365 Consumer +$1.8B or 24% (cloud +28% on subscribers +7%); LinkedIn +$2.0B or 11%; Dynamics +$1.2B or 15% (Dynamics 365 +18%); Enterprise and partner services +$500M or 6%; Windows and Devices -$230M or 1% (Windows OEM +5%); XBOX -$1.7B or 7% (content and services -5%, hardware -29%); Search advertising +$1.3B or 9% (ex-TAC +12%); the Microsoft 365 Consumer subscriber metric removed — FY2026 · publ. July 29, 2026 · source ↗
  32. Moat Explorer calcOver eight quarters the line's revenue climbed from $20.4 billion to $27.9 billion.
    Moat Explorer calculation from Microsoft Forms 10-K (FY2017-FY2026) and 10-Q (FY2025-FY2026): growth = year / prior year - 1 on the revenue-by-offering tables; compound rates = (end / start)^(1/years) - 1; quarterly revenue for the fourth quarter = fiscal-year revenue less the nine-month figure in the third-quarter 10-Q; segment margins = segment operating income / segment revenue and gross margin = (segment revenue - cost of revenue) / segment revenue (Intelligent Cloud $57,853M / $87,464M = 66.1% in FY2024, $66,094M / $106,265M = 62.2% in FY2025, $79,915M / $137,791M = 58.0% in FY2026); share of FY2026 growth = line increase / total increase of $50,115M (Server products and cloud services $30,990M plus Microsoft 365 Commercial $14,230M = 90.2%); shares of revenue = line / total — FY2017-FY2026 · publ. 2026 · source ↗
    Method: Moat Explorer calculation from the revenue-by-offering tables and segment results in Microsoft's Forms 10-K and 10-Q; see the source line for the method.
  33. ReportedThe licensed half is the volatile part: Microsoft 365 Commercial products revenue grew 17% in September on Office 2024 purchasing and only 1% in March, while the cloud half grew between 17% and 19% in each of the first three quarters.
    Microsoft Form 10-Q, quarter ended 30 September 2025 — revenue by offering for the quarter and a year earlier, and the drivers (Azure +40%, Windows Server 2025, Windows OEM +18% ahead of Windows 10 end of support, Xbox hardware -29%, LinkedIn +10% on Marketing Solutions, search ex-TAC +16%, Microsoft 365 Commercial products +17% on Office 2024, Industry Solutions decline) — Q1 FY2026 · publ. October 29, 2025 · source ↗
  34. ReportedThe licensed half is the volatile part: Microsoft 365 Commercial products revenue grew 17% in September on Office 2024 purchasing and only 1% in March, while the cloud half grew between 17% and 19% in each of the first three quarters.
    Microsoft Form 10-Q, quarter ended 31 March 2026 — revenue by offering for the quarter, nine months and a year earlier, and the drivers (Azure +40%, Microsoft 365 Commercial cloud +19% and products +1%, Microsoft 365 Consumer cloud +33%, LinkedIn +12% across all lines, Dynamics 365 +22%, OEMs building inventory on rising memory prices, Xbox hardware -33%, search ex-TAC +12%) — Q3 FY2026 · publ. April 29, 2026 · source ↗
  35. ReportedThe licensed half is the volatile part: Microsoft 365 Commercial products revenue grew 17% in September on Office 2024 purchasing and only 1% in March, while the cloud half grew between 17% and 19% in each of the first three quarters.
    Microsoft Form 10-Q, quarter ended 30 September 2025 — revenue by offering for the quarter and a year earlier, and the drivers (Azure +40%, Windows Server 2025, Windows OEM +18% ahead of Windows 10 end of support, Xbox hardware -29%, LinkedIn +10% on Marketing Solutions, search ex-TAC +16%, Microsoft 365 Commercial products +17% on Office 2024, Industry Solutions decline) — Q1 FY2026 · publ. October 29, 2025 · source ↗
  36. ReportedThe licensed half is the volatile part: Microsoft 365 Commercial products revenue grew 17% in September on Office 2024 purchasing and only 1% in March, while the cloud half grew between 17% and 19% in each of the first three quarters.
    Microsoft Form 10-Q, quarter ended 31 December 2025 — revenue by offering for the quarter, six months and a year earlier, and the drivers (Azure +39%, SQL Server 2025, Windows OEM +5% with continued benefit from Windows 10 end of support, Xbox hardware -32%, LinkedIn +11% on Marketing Solutions, search ex-TAC +10%, impairment charges in Gaming) — Q2 FY2026 · publ. January 28, 2026 · source ↗
  37. ReportedThe licensed half is the volatile part: Microsoft 365 Commercial products revenue grew 17% in September on Office 2024 purchasing and only 1% in March, while the cloud half grew between 17% and 19% in each of the first three quarters.
    Microsoft Form 10-Q, quarter ended 31 March 2026 — revenue by offering for the quarter, nine months and a year earlier, and the drivers (Azure +40%, Microsoft 365 Commercial cloud +19% and products +1%, Microsoft 365 Consumer cloud +33%, LinkedIn +12% across all lines, Dynamics 365 +22%, OEMs building inventory on rising memory prices, Xbox hardware -33%, search ex-TAC +12%) — Q3 FY2026 · publ. April 29, 2026 · source ↗
  38. ReportedThe cloud half also counts toward Microsoft Cloud, the $214.4 billion total that gathers the cloud parts of four lines.
    Microsoft Form 10-K, FY2026 — Note: revenue by significant product and service offering, FY2024-FY2026 (Server products and cloud services $129,425M / $98,435M / $79,828M; Microsoft 365 Commercial $101,997M / $87,767M / $76,969M; XBOX $21,790M / $23,455M / $21,503M; LinkedIn $19,817M / $17,812M / $16,372M; Windows and Devices $17,084M / $17,314M / $17,026M; Search advertising $15,176M / $13,878M / $12,306M; Microsoft 365 Consumer $9,175M / $7,404M / $6,648M; Dynamics $9,006M / $7,827M / $6,831M; Enterprise and partner services $8,260M / $7,760M / $7,594M; Other $109M / $72M / $45M; total $331,839M); Microsoft Cloud revenue $214.4B, $168.9B and $137.7B, drawn from four of the lines; additions to property and equipment $115,948M — FY2024-FY2026 · publ. July 29, 2026 · source ↗
Sources
Generated September 22, 2026