Microsoft CEO Satya Nadella had a great earnings report to share with investors. He told investors that the company needs to “win back” its fans of their consumer business, as customers are unhappy with the quality and stability of the flagship Windows operating system. There are more than 1.6 billion monthly active Windows devices, but some of the users are moving to other platforms. Quality control issues in Windows are a continual issue that Microsoft will be addressing.
Microsoft’s personal computing revenues are the smallest business unit they have, which includes the Windows operating system, Xbox, Surface devices, and Bing search advertising, and posted $13.2 billion in revenues. Windows revenues from PC makers declined 2 percent in the quarter, and Xbox content and services revenues declined 5 percent, but Xbox hardware revenues took the biggest hit at a 33 percent decline. Nadella said on the earnings call, “We set new records for monthly Xbox active users in the quarter, as well as game streaming hours.”
Microsoft productivity and online services are the largest part of their business, which includes Microsoft Office, LinkedIn, and more is the company’s largest cash cow, with 35 billion in revenues. Commercial cloud revenue was up 19 percent, and Microsoft 365 Consumer cloud revenue increased 33 percent. Microsoft pointed out that they now have over 20 million paid seats for the Microsoft 365 Copilot artificial intelligence add-on for commercial productivity subscriptions.
Microsoft’s intelligent cloud infrastructure business hit revenues of $34.7 billion, which includes Azure, server products, GitHub, and other cloud services revenue.
Microsoft had a great quarter, earning a net income of $31.8 billion on revenues of $82.9 billion in the quarter ending March 31, 2026.