v3.25.4
SEGMENT INFORMATION AND GEOGRAPHIC DATA
 6 Months Ended
Dec. 31, 2025
Segment Reporting [Abstract]  
SEGMENT INFORMATION AND GEOGRAPHIC DATA

NOTE 16 — SEGMENT INFORMATION AND GEOGRAPHIC DATA

In its operation of the business, management, including our chief operating decision maker (“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 segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing.

Our reportable segments are described below.

Productivity and Business Processes

Our Productivity and Business Processes segment consists of products and services in our portfolio of productivity, communication, and information services, spanning a variety of devices and platforms. This segment primarily comprises:

•
Microsoft 365 Commercial products and cloud services, including Microsoft 365 Commercial cloud, comprising 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; and Microsoft 365 Commercial products, comprising Windows Commercial on-premises and Office licensed on-premises.
•
Microsoft 365 Consumer products and cloud services, including Microsoft 365 Consumer subscriptions, Office licensed on-premises, and other consumer services.
•
LinkedIn, including Talent Solutions, Marketing Solutions, Premium Subscriptions, and Sales Solutions.
•
Dynamics products and cloud services, including Dynamics 365, comprising a set of intelligent, cloud-based applications across ERP, CRM, Power Apps, and Power Automate; and on-premises ERP and CRM applications.

Intelligent Cloud

Our Intelligent Cloud segment consists of our public, private, and hybrid server products and cloud services that power modern business and developers. This segment primarily comprises:

•
Server products and cloud services, including Azure and other cloud services, comprising cloud and AI consumption-based services, GitHub cloud services, Nuance Healthcare cloud services, virtual desktop offerings, and other cloud services; and Server products, comprising SQL Server, Windows Server, Visual Studio, System Center, related Client Access Licenses, and other on-premises offerings.
•
Enterprise and partner services, including Enterprise Support Services, Industry Solutions, Nuance professional services, Microsoft Partner Network, and Learning Experience.

More Personal Computing

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

•
Windows and Devices, including Windows OEM licensing (Windows Pro and non-Pro licenses sold through the OEM channel) and Devices, comprising Surface and PC accessories.
•
Gaming, including Xbox hardware and 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.
•
Search and news advertising, comprising Bing and Copilot, Microsoft News, Microsoft Edge, and third-party affiliates.

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 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)

Three Months Ended

December 31,

 

 

 

Six Months Ended

December 31,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2025

2024

 

 

 

2025

 

 

 

2024

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Productivity and Business Processes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

34,116

$

29,437

 

 

$

67,136

 

 

$

57,754

 

Cost of revenue

 

 

6,110

 

 

 

5,569

 

 

 

11,831

 

 

 

10,863

 

Operating expenses

 

 

7,407

 

 

 

6,983

 

 

 

14,299

 

 

 

13,490

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

20,599

 

 

$

16,885

 

 

$

41,006

 

 

$

33,401

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intelligent Cloud

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

32,907

 

 

$

25,544

 

 

$

63,804

 

 

$

49,636

 

Cost of revenue

 

 

13,566

 

 

 

9,405

 

 

 

25,880

 

 

 

18,019

 

Operating expenses

 

 

5,468

 

 

 

5,288

 

 

 

10,660

 

 

 

10,263

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

13,873

 

 

$

10,851

 

 

$

27,264

 

 

$

21,354

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

More Personal Computing

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

14,250

 

 

$

14,651

 

 

$

28,006

 

 

$

27,827

 

Cost of revenue

 

 

6,302

 

 

 

6,825

 

 

 

12,310

 

 

 

13,016

 

Operating expenses

 

 

4,145

 

 

 

3,909

 

 

 

7,730

 

 

 

7,361

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

3,803

 

 

$

3,917

 

 

$

7,966

 

 

$

7,450

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

81,273

 

 

$

69,632

 

 

$

158,946

 

 

$

135,217

 

Cost of revenue

 

 

25,978

 

 

 

21,799

 

 

 

50,021

 

 

 

41,898

 

Operating expenses

 

 

17,020

 

 

 

16,180

 

 

 

32,689

 

 

 

31,114

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

$

38,275

 

 

$

31,653

 

 

$

76,236

 

 

$

62,205

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

No sales to an individual customer or country other than the United States accounted for more than 10% of revenue for the three or six months ended December 31, 2025 or 2024. Revenue, classified by the major geographic areas in which our customers were located, was as follows:

 

(In millions)

Three Months Ended

December 31,

 

 

 

Six Months Ended

December 31,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2025

2024

 

 

 

2025

 

 

 

2024

 

 

 

 

 

 

 

 

 

 

 

 

United States (a)

$

41,410

$

35,537

 

 

$

81,487

 

 

$

69,450

 

Other countries

39,863

34,095

 

 

 

77,459

 

 

 

65,767

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

$

81,273

$

69,632

 

 

$

158,946

 

 

$

135,217

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(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)

 

Three Months Ended

December 31,

 

 

Six Months Ended

December 31,

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2025

 

 

 

2024

 

 

2025

2024

 

 

Server products and cloud services

$

30,865

 

 

$

23,641

 

 

$

59,737

$

45,796

Microsoft 365 Commercial products and cloud services

 

24,524

 

 

 

21,117

 

 

48,490

 

41,566

 

Gaming

 

5,958

 

 

 

6,581

 

 

11,466

12,202

LinkedIn

 

5,082

 

 

 

4,587

 

 

9,796

 

8,879

 

Windows and Devices

 

4,479

 

 

 

4,512

 

 

9,030

 

8,841

 

Search and news advertising

 

 

3,812

 

 

 

3,558

 

 

 

7,509

 

 

 

6,783

 

Microsoft 365 Consumer products and cloud services

 

 

2,305

 

 

 

1,821

 

 

 

4,509

 

 

 

3,548

 

Dynamics products and cloud services

 

 

2,204

 

 

 

1,913

 

 

 

4,340

 

 

 

3,762

 

Enterprise and partner services

 

2,038

 

 

 

1,892

 

 

4,060

 

3,820

 

Other

 

6

 

 

 

10

 

 

9

 

20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

$

81,273

 

 

$

69,632

 

 

$

158,946

 

$

135,217

 

 

 

 

 

 

 

 

 

 

 

 

Our Microsoft Cloud revenue, which includes Microsoft 365 Commercial cloud, Azure and other cloud services, the commercial portion of LinkedIn, and Dynamics 365, was $51.5 billion and $100.6 billion for the three and six months ended December 31, 2025, respectively, and $40.9 billion and $79.8 billion for the three and six months ended December 31, 2024, respectively. These amounts are included in Server products and cloud services, Microsoft 365 Commercial products and cloud services, LinkedIn, and Dynamics products and cloud services in the table above.

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.