v3.25.4

LEASES | 6 Months Ended
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Dec. 31, 2025
Leases [Abstract] |
LEASES | NOTE 12 — LEASES We have operating and finance leases for datacenters, corporate offices, research and development facilities, Microsoft Experience Centers, and certain equipment. Our leases have remaining lease terms of less than 1 year to 20 years, some of which include options to extend the leases for up to 5 years, and some of which include options to terminate the leases within 1 year. The components of lease expense were as follows:
(In millions) |  | Three Months Ended December 31, |  |  |  | Six Months Ended December 31, |
|  |  | 2025 |  |  |  | 2024 |  |  |  | 2025 |  |  |  | 2024 |
Operating lease cost |  | $ | 1,742 |  |  | $ | 1,293 |  |  | $ | 3,397 |  |  | $ | 2,453 |
Finance lease cost: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Amortization of right-of-use assets |  | $ | 1,277 |  |  | $ | 830 |  |  | $ | 2,450 |  |  | $ | 1,524 |
Interest on lease liabilities |  |  | 615 |  |  |  | 337 |  |  |  | 1,161 |  |  |  | 611 |
Total finance lease cost |  | $ | 1,892 |  |  | $ | 1,167 |  |  | $ | 3,611 |  |  | $ | 2,135 |
Supplemental cash flow information related to leases was as follows:
(In millions) |  | Three Months Ended December 31, |  |  |  | Six Months Ended December 31, |
|  |  | 2025 |  |  |  | 2024 |  |  |  | 2025 |  |  |  | 2024 |
Cash paid for amounts included in the measurement of lease liabilities: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating cash flows from operating leases |  | $ | 1,506 |  |  | $ | 962 |  |  | $ | 3,161 |  |  | $ | 2,169 |
Operating cash flows from finance leases |  |  | 615 |  |  |  | 319 |  |  |  | 1,161 |  |  |  | 594 |
Financing cash flows from finance leases |  |  | 701 |  |  |  | 480 |  |  |  | 1,340 |  |  |  | 1,282 |
Right-of-use assets obtained in exchange for lease obligations: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Operating leases |  |  | 1,477 |  |  |  | 3,098 |  |  |  | 2,894 |  |  |  | 4,991 |
Finance leases |  |  | 6,330 |  |  |  | 6,435 |  |  |  | 15,477 |  |  |  | 10,767 |
Supplemental balance sheet information related to leases was as follows:
(In millions, except lease term and discount rate) |  |  |  |  |  |
|  | December 31, 2025 |  |  | June 30, 2025 |
Operating Leases |  |  |  |  |  |  |  |
Operating lease right-of-use assets |  | $ | 25,103 |  |  | $ | 24,823 |
Other current liabilities |  | $ | 5,520 |  |  | $ | 5,424 |
Operating lease liabilities |  |  | 17,345 |  |  |  | 17,437 |
Total operating lease liabilities |  | $ | 22,865 |  |  | $ | 22,861 |
Finance Leases |  |  |  |  |  |  |  |
Property and equipment, at cost |  | $ | 73,201 |  |  | $ | 53,876 |
Accumulated depreciation |  |  | (12,556 | ) |  |  | (9,861 | )
Property and equipment, net |  | $ | 60,645 |  |  | $ | 44,015 |
Other current liabilities |  | $ | 3,738 |  |  | $ | 3,172 |
Other long-term liabilities |  |  | 56,413 |  |  |  | 43,000 |
Total finance lease liabilities |  | $ | 60,151 |  |  | $ | 46,172 |
Weighted Average Remaining Lease Term |  |  |  |  |  |  |  |
Operating leases |  |  | 6 years |  |  |  | 6 years |
Finance leases |  |  | 13 years |  |  |  | 13 years |
Weighted Average Discount Rate |  |  |  |  |  |  |  |
Operating leases |  |  | 3.6% |  |  |  | 3.5% |
Finance leases |  |  | 4.3% |  |  |  | 4.2% |
The following table outlines maturities of our lease liabilities as of December 31, 2025:
(In millions) |  |  |  |  |  |
Year Ending June 30, |  | Operating Leases |  |  | Finance Leases |
2026 (excluding the six months ended December 31, 2025) |  | $ | 3,248 |  |  | $ | 3,059 |
2027 |  |  | 5,811 |  |  |  | 6,404 |
2028 |  |  | 4,078 |  |  |  | 6,467 |
2029 |  |  | 2,891 |  |  |  | 5,829 |
2030 |  |  | 2,361 |  |  |  | 5,718 |
Thereafter |  |  | 7,192 |  |  |  | 53,590 |
Total lease payments |  |  | 25,581 |  |  |  | 81,067 |
Less imputed interest |  |  | (2,716 | ) |  |  | (20,916 | )
Total |  | $ | 22,865 |  |  | $ | 60,151 |
As of December 31, 2025, we had additional leases, primarily for datacenters, that had not yet commenced of $155.1 billion. These leases will commence between fiscal year 2026 and fiscal year 2031 with lease terms of 1 year to 20 years.

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