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See the full story · 1 sourcesMicrosoft Chief Financial Officer Amy Hood Bloomberg/Getty Images
Microsoft's top finance executive sent her quarterly memo to employees after earnings on Wednesday.
The latest memo touted "important progress in key areas," such as Azure and Microsoft 365 Copilot.
These two important businesses have faced pressure amid the generative AI boom.
Microsoft's latest earnings were as much about reassurance as results.
In a memo to employees after the company reported quarterly earnings, CFO Amy Hood pointed to Azure's growth and Copilot's momentum as evidence that Microsoft's biggest AI bets are paying off, even as the company spends tens of billions of dollars to keep pace in the AI race.
Microsoft shares were up 2% on Wednesday in after-hours trading following the company's earnings release, reporting $90 billion in fourth-quarter revenue, above Wall Street expectations. Hood sends these emails to employees every quarter when Microsoft discloses its financials.
"We begin this new year with clear priorities, strong customer demand, and significant opportunity ahead," Hood wrote in the memo, recapping Microsoft's fourth quarter and fiscal year. "At the same time, capturing the opportunity in front of us will require us to continue evolving, raising our ambition, and finding new ways to deliver for our customers."
The emails mostly repeat what the company reports publicly — such as how revenue and profit are growing, or what is discussed on analyst earnings calls — but they provide some insight into what Microsoft executives deem most important, and what they want employees to know.
The latest memo touted "important progress in key areas" like the company's Azure cloud business and its Copilot AI inside its suite of Microsoft 365 applications.
As Business Insider recently reported , these two important businesses have faced pressure as the generative AI boom drives soaring demand for computing capacity and fuels rapid advances by competitors. Hood's emphasis on both businesses suggests Microsoft believes it is beginning to weather those headwinds.
Hood also highlighted Microsoft invested more than $41 billion in capital expenditures during the quarter to expand data center capacity and reiterated a message Microsoft executives have emphasized for more than a year: security remains a top priority.
Read the memo:
"Team,
Thank you all for a strong finish to our fiscal year.
Our Q4 results exceeded the outlook for revenue and operating income that we shared with Wall Street and we showed important progress in key areas like Azure and M365 Copilot.
You can see our earnings announcement here. Microsoft Cloud revenue was $59.3 billion in Q4 and $214 billion for the full fiscal year, growing 27% across both time periods.
Commercial bookings grew 18%, excluding OpenAI, driven by strength across our core annuity business. Commercial remaining performance obligation, which is a measure of the business we already have under contract, increased to $678 billion, up over $50 billion sequentially.
Thank you for staying focused on security, quality, and reliability. The trust customers place in us to power their most important workloads is earned every day through the work you do.
A few other key points from the quarter:
We generated $19.6 billion in free cash flow, highlighting the strength of our business and the flexibility it creates.
We invested over $41 billion in capex to support the demand we continue to see. A big thank you to our infrastructure teams for bringing new capacity online and to our engineering teams for creating efficiencies that enable us to do more with every gigawatt we deploy.
Azure and other cloud services revenue growth accelerated to 43%. And for FY26, Azure surpassed $100 billion in revenue, up 41%.
Microsoft 365 commercial cloud revenue increased 16% on an adjusted basis, ahead of expectations. Building on the Copilot momentum we saw in Q3, net paid seat adds more than doubled sequentially and are now over 30 million.
Microsoft 365 consumer cloud revenue increased 24% with subscriber growth of 7%.
Search advertising revenue ex-TAC increased 10%, and Bing and Edge both took share again this year.
Windows OEM and Devices revenue decreased 7%, which is higher than overall PC market demand, as our OEM and channel partners continued to build inventory in response to higher component prices.
XBOX content and services revenue decreased 10%, against a prior-year quarter that benefited from strong first-party content. During the quarter, Forza Horizon 6 saw strong player reception, reaching a record 6 million players in its first two days.
And, LinkedIn revenue increased 12% primarily driven by Marketing Solutions.
Before we turn the final page on FY26, I want to recognize what we accomplished together. It was a year of meaningful progress as we expanded capacity, improved our product quality, evolved business models, and changed how we operate thru new rhythms like cohorts and missions. We built momentum throughout the year and delivered our strongest execution and operating performance in the final quarter of the year. Most importantly, we remained grounded that our own success at Microsoft will not come unless we continue to create meaningful value for our customers and help them accelerate their own growth.
Thank you to teams across the company for the focus, discipline, and commitment you brought every day. From quality, security, and compliance to the countless decisions that improved how we serve customers, your work made an impact. The results we delivered in FY26 and the momentum we carry into FY27 are a direct reflection of your efforts.
We begin this new year with clear priorities, strong customer demand, and significant opportunity ahead. At the same time, capturing the opportunity in front of us will require us to continue evolving, raising our ambition, and finding new ways to deliver for our customers. I'm confident in what we can achieve to...
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