How does Microsoft (MSFT) make money?

Microsoft (MSFT) generates revenue primarily from Server Products And Cloud Services, which accounted for 39.6% of total revenue in TTM through Q2 2026. The company reported $332B in revenue and converted 40.3% of it into net profit, equivalent to roughly $134B in net income — what's left after the cost of revenue, operating expenses, interest, and income taxes.

What is the gross profit margin of Microsoft (MSFT)?

Microsoft (MSFT) reported a gross profit margin of 67.9% in TTM through Q2 2026, equivalent to $225B in gross profit on $332B in revenue. Gross margin measures how much of each dollar of revenue remains after the direct cost of producing or delivering the product — a higher figure typically signals pricing power, scale, or a less capital-intensive business model.

What is the operating profit margin of Microsoft (MSFT)?

Microsoft (MSFT) reported an operating profit margin of 46.8% in TTM through Q2 2026, equivalent to $155B in operating income. Operating margin captures profitability after research & development, sales & marketing, and general & administrative expenses — but before interest, taxes, and one-off items — and is the cleanest single read on the underlying business's efficiency.

What is the net profit margin of Microsoft (MSFT)?

Microsoft (MSFT) reported a net profit margin of 40.3% in TTM through Q2 2026, equivalent to $134B in net income. Net margin is the bottom-line share of revenue that survives every expense — operating costs, interest, and income taxes — and is the figure that flows directly into earnings per share.

Is Microsoft (MSFT) profitable?

Yes. Microsoft (MSFT) reported $134B in net income for TTM through Q2 2026, with a net profit margin of 40.3%. The company earned more from its operations than it paid out in costs, interest, and income taxes, leaving positive earnings on the bottom line.

How much does Microsoft (MSFT) invest in research and development?

Microsoft (MSFT) invested $35.6B in research and development during TTM through Q2 2026, roughly 10.7% of total revenue. R&D spending funds the company's future product pipeline and is expensed in full on the income statement rather than capitalised, which makes the operating margin sensitive to how aggressively management chooses to reinvest in innovation.

How much does Microsoft (MSFT) spend on capital expenditures?

Microsoft (MSFT) spent $116B on capital expenditures (CapEx) during TTM through Q2 2026, roughly 34.9% of total revenue. CapEx represents long-lived investment in property, equipment, data centres, and other physical infrastructure, and is subtracted from operating cash flow to arrive at free cash flow.

How much free cash flow does Microsoft (MSFT) generate?

Microsoft (MSFT) generated $67B in free cash flow during TTM through Q2 2026, a free-cash-flow margin of 20.2%. Free cash flow is the cash left after capital expenditures and represents the discretionary pool the company can use to pay dividends, repurchase shares, repay debt, or fund acquisitions without raising external capital.

What is the effective tax rate of Microsoft (MSFT)?

Microsoft (MSFT) had an effective tax rate of 19.4% in TTM through Q2 2026. The effective rate is the actual share of pre-tax income paid as income taxes and can differ materially from the statutory rate due to foreign earnings mix, tax credits (such as R&D), share-based compensation deductions, and one-off discrete items.

What are the main business segments of Microsoft (MSFT)?

Microsoft (MSFT) reports revenue across 10 reportable product segments, led by Server & Cloud at 39.6% of total revenue in TTM through Q2 2026. See the revenue-by-segment table on this page for the full breakdown and how each segment feeds into the income-statement waterfall above.

Where does Microsoft (MSFT) generate most of its revenue?

UNITED STATES is the largest geographic market for Microsoft (MSFT), accounting for 51.5% of revenue in the most recent annual filing. The complete regional split — including international markets and any Rest-of-World rollup — is shown in the revenue-by-geography table on this page.

How Microsoft Makes Money: 2026 Visual Revenue Map

Microsoft (MSFT) Income Statement Flow — TTM through Q2 2026

Calculated from the four most recent reported quarters, ending June 30, 2026 (reported July 29, 2026).

Microsoft (MSFT) Revenue by Product Segment — TTM through Q2 2026

Aggregated from the four quarterly disclosures behind this TTM. Minor differences vs the company's annual filing can occur if reported segments changed mid-year.

Revenue contribution by product segment for Microsoft (MSFT), TTM through Q2 2026.
Segment	Revenue (USD)	% of total
Server & Cloud	$131B	39.6%
Microsoft 365 Commercial	$104B	31.2%
LinkedIn	$20.1B	6.1%
Windows	$17.3B	5.2%
Gaming	$17.1B	5.1%
Search Ads	$15.4B	4.6%
Microsoft 365 Consumer	$9.31B	2.8%
Dynamics	$9.14B	2.8%
Other segments	$8.5B	2.6%
Total	$332B	100%

Server & Cloud$131B
Microsoft 365 Commercial$104B
LinkedIn$20.1B
Windows$17.3B
Gaming$17.1B
Search Ads$15.4B
Microsoft 365 Consumer$9.31B
Dynamics$9.14B
Other segments$8.5B
Total$332B

Microsoft (MSFT) Revenue by Geography — TTM through Q2 2026

Aggregated from the four quarterly disclosures behind this TTM. Minor differences vs the company's annual filing can occur if reported regions changed mid-year.

Revenue contribution by geographic region for Microsoft (MSFT), TTM through Q2 2026
Region	Revenue (USD)	% of total
UNITED STATES	$171B	51.5%
Non Us	$161B	48.5%
Total	$332B	100%

UNITED STATES
Non Us
Total

Revenue Breakdown — TTM through Q2 2026

In TTM through Q2 2026, Microsoft (MSFT) reports revenue across 10 reportable product segments; the largest segment was Server & Cloud at 39.6%, followed by Microsoft 365 Commercial (31.2%) and LinkedIn (6.1%). Geographically, UNITED STATES accounted for 51.5% of revenue, followed by Non Us (48.5%).

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