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How Microsoft (MSFT) makes money
Microsoft (MSFT) made $92.3B of revenue in the first quarter fiscal 2027 (Q1 FY27), +19% from a year earlier. Azure brought in $33.2B (36%); Microsoft 365 Cloud brought in $27.8B (30%); Productivity and Server Licensing brought in $8.4B (9%). Of every dollar of revenue, 68¢ was left as gross profit, 50¢ was left as operating profit, 40¢ was left as net earnings.
Drawing the Sankey…
Revenue by segment, Q1 FY27
| Segment | Revenue | Share | Q/Q | Y/Y |
|---|---|---|---|---|
| Azure | $33.2B | 35.9% | — | +48% |
| Microsoft 365 Cloud | $27.8B | 30.1% | — | +17% |
| Productivity and Server Licensing | $8.4B | 9.1% | — | -3% |
| Search and Advertising | $6.6B | 7.1% | — | +10% |
| XBOX | $5.4B | 5.8% | — | -2% |
| Industry Solutions | $5.3B | 5.8% | — | +9% |
| Windows OEM and Devices | $3.6B | 3.8% | — | -22% |
| Frontier and Support Services | $2.1B | 2.3% | — | +4% |
Where each dollar of revenue goes
| Line | Q1 FY27 | % of revenue |
|---|---|---|
| Revenue | $92.3B | 100.0% |
| Cost of revenue | $29.7B | 32.2% |
| Gross profit | $62.6B | 67.8% |
| Operating expenses | $16.6B | 18.0% |
| Operating profit | $45.9B | 49.8% |
| Income tax | $9.3B | 10.1% |
| Net earnings | $36.6B | 39.7% |
| Operating cash flow | $58.0B | 62.9% |
| Free cash flow | $18.6B | 20.2% |
Revenue, quarter by quarter
| Quarter | Revenue | Y/Y |
|---|---|---|
| Q1 FY27 | $92.3B | +19% |
| Q4 FY26 | $90.0B | +18% |
| Q3 FY26 | $82.9B | +18% |
| Q2 FY26 | $81.3B | +17% |
| Q1 FY26 | $77.7B | +18% |
| Q4 FY25 | $76.4B | +18% |
| Q3 FY25 | $70.1B | +13% |
From Microsoft's 10-Q filed Oct 28, 2026 (on EDGAR).
Questions
How does Microsoft make money?
Microsoft (MSFT) made $92.3B of revenue in the first quarter fiscal 2027 (Q1 FY27), +19% from a year earlier. Azure brought in $33.2B (36%); Microsoft 365 Cloud brought in $27.8B (30%); Productivity and Server Licensing brought in $8.4B (9%). Of every dollar of revenue, 68¢ was left as gross profit, 50¢ was left as operating profit, 40¢ was left as net earnings.
What is Microsoft's biggest business?
Azure: $33.2B in the first quarter fiscal 2027, 36% of revenue, +48% from a year earlier.
What is Microsoft's profit margin?
Net earnings were $36.6B, 39.7% of revenue, in the first quarter fiscal 2027; the operating margin was 49.8%.
Updated Nov 8, 2026. Read automatically from SEC filings and public data; errors are possible. Not investment advice.