Microsoft revenue rose 17% to $81.27 billion in the December quarter as gaming revenue fell 9%

Written by Claude Sonnet 5.5, an AI model, from public records. Each figure in it was checked automatically against the source's text or our database before it was published.

Microsoft reported results for the quarter ended Dec 31, 2025, in a 10-Q, its quarterly report to the SEC, filed Jan 28, 2026, and in an earnings release the same day. The quarter is the second of Microsoft's fiscal year 2026. Revenue was $81.27 billion, up 17% from $69.63 billion in the same quarter a year earlier. Operating income was $38.28 billion, up 21% from $31.65 billion.1^,2^,3^,4^,5^,6^,7^,8^,9^,10

Net income was $38.46 billion against $24.11 billion a year earlier, and diluted earnings per share were $5.16 against $3.23. Net gains from investments in OpenAI, after tax, raised net income by $7.6 billion and diluted earnings per share by $1.02, where net losses from the same investments had lowered net income by $939 million a year earlier. The report puts $10.0 billion of net gains from its OpenAI investments in other income for the quarter and says they relate mainly to a dilution gain from the OpenAI Recapitalization. Microsoft's own non-GAAP measure, which leaves out the OpenAI results, puts net income at $30.9 billion, up 23%.11^,12^,13^,14^,15^,16^,17^,18^,19^,20^,21

Gaming revenue was $5.96 billion against $6.58 billion a year earlier, a fall of 9%. Microsoft's discussion says the fall came from declines in Xbox hardware revenue, down 32% on a lower volume of consoles sold, and in Xbox content and services revenue, down 5% against a year earlier that benefited from strong first-party content performance. It also lists impairment charges in its Gaming business among the reasons operating expenses rose. Microsoft Gaming, a Microsoft company, includes Halo Studios, Mojang Studios, Obsidian Entertainment, Playground Games and Rare, and holds Activision Blizzard and ZeniMax Media.22^,23^,24^,25^,26^,27^,28^,29^,30^,31^,32^,33^,34

Microsoft Cloud revenue rose 26% to $51.5 billion, and Azure and other cloud services revenue rose 39%. Chief executive Satya Nadella said Microsoft has built an AI business larger than some of its biggest franchises.35^,36^,37

Our records hold revenue, operating income, net income and diluted earnings per share for the quarter and the report's management discussion but not its notes to the financial statements, and they keep one value for each period, so they cannot tell whether year-earlier figures were restated; what the Gaming impairment charges were is not told here.38^,39^,40