MS
MSFT
Latest · Mar 31, 2026
Quarter ended Mar 31, 2026 · FY2026 Q3

Microsoft Corporation stock research

Microsoft (MSFT) Free Cash Flow — Quarter Ended Mar 31, 2026

Cash conversion improved sharply from the prior quarter as free cash flow more than offset a higher capital expenditure. Versus the same quarter last year, cash conversion weakened due to a larger increase in capital spending relative to operating cash flow growth.

Free cash flow takeaway

A quick read on the company's cash generation and what it means for investors.

Cash conversion improved sharply from the prior quarter as free cash flow more than offset a higher capital expenditure. Versus the same quarter last year, cash conversion weakened due to a larger increase in capital spending relative to operating cash flow growth.

  • Revenue increased from the prior quarter, and operating cash flow grew at a higher pace, resulting in a stronger free cash flow and a higher free cash flow margin. Capital expenditure rose from the previous period but at a slower rate than operating cash flow.
  • Compared to the prior quarter, free cash flow margin improved from a lower level as free cash flow increased while revenue grew moderately. Relative to the same quarter one year earlier, free cash flow margin weakened as capital expenditure rose substantially more than operating cash flow.

FCF snapshot

Quarterly and TTM cash-flow metrics with the minimum valuation context.

TTM free cash flow

$72.9B

Trailing twelve-month free cash flow.

Quarter free cash flow

$15.8B

Free cash flow in the selected fiscal quarter.

Operating cash flow

$46.7B

Cash generated by operations before capital spending.

CapEx

$30.9B

Capital spending and related asset purchases.

FCF margin

19.1%

The share of revenue converted into free cash flow.

TTM FCF yield

2.5%

TTM FCF divided by market capitalization.

Cash flow trend

A short quarterly history shows whether FCF is scaling with revenue or only spiking for one period.

PeriodRevenueOperating CFCapExFCFFCF margin
2025-06-30$76.4B$42.6B$17.1B$25.6B33.4%
2025-09-30$77.7B$45.1B$19.4B$25.7B33.0%
2025-12-31$81.3B$35.8B$29.9B$5.9B7.2%
2026-03-31$82.9B$46.7B$30.9B$15.8B19.1%

Cash conversion quality

Checks that separate high-quality free cash flow from accounting noise or working-capital timing.

FCF / net income49.7%Shows whether accounting earnings convert into cash.
CapEx / revenue37.3%Lower capital intensity usually supports FCF margin.
Net cash-$8.2BCash and equivalents minus total debt.

Recent events shaping cash flow

Near-term business events that help explain the free cash flow result.

Supportive

Operating Cash Flow Growth

Operating cash flow rose from the prior quarter at a faster pace than revenue, providing the primary support for the improvement in free cash flow. This was the strongest observable driver of the quarter's cash conversion change.

The increase in operating cash flow was the main factor behind the quarter-over-quarter improvement in free cash flow and margin.

What the cash flow says

How to interpret the company's free cash flow beyond the headline number.

Revenue increased from the prior quarter, and operating cash flow grew at a higher pace, resulting in a stronger free cash flow and a higher free cash flow margin. Capital expenditure rose from the previous period but at a slower rate than operating cash flow.

Compared to the prior quarter, free cash flow margin improved from a lower level as free cash flow increased while revenue grew moderately. Relative to the same quarter one year earlier, free cash flow margin weakened as capital expenditure rose substantially more than operating cash flow.

Monitor the trend in capital expenditure relative to operating cash flow, as the gap widened year-over-year and compressed quarter-over-quarter.

Valuation context

A cash-flow page should show how much investors are paying for the cash stream, without turning into a full DCF.

Market capitalization$2.9TUsed as the denominator for FCF yield.
TTM FCF yield2.5%TTM free cash flow divided by market capitalization.
EV / TTM FCF39.3xA quick valuation bridge, not a full DCF.

Peer context

Free cash flow quality is easier to read against related public companies.

MS
MSFT

Microsoft Corporation

FCF margin

19.1%

FCF yield

2.5%

GO
GOOGL

Alphabet Inc.

FCF margin

9.2%

FCF yield

n/a

AM
AMZN

Amazon.com, Inc.

FCF margin

-10.0%

FCF yield

-0.1%