Microsoft Corporation stock research
FY2026 Q1
Microsoft (MSFT) Gross Margin — Quarter Ended Sep 30, 2025
Revenue and gross profit both increased compared to the prior quarter and the same quarter last year, while cost of revenue was stable sequentially but higher year-over-year. Gross margin improved slightly from the prior quarter but was lower than the same quarter last year.
Gross margin takeaway
Quarter ended Sep 30, 2025 · FY2026 Q1
Revenue and gross profit both increased compared to the prior quarter and the same quarter last year, while cost of revenue was stable sequentially but higher year-over-year. Gross margin improved slightly from the prior quarter but was lower than the same quarter last year.
- The strongest observable margin driver is the increase in gross profit relative to revenue, as gross margin improved sequentially despite stable cost of revenue.
- Compared to the immediately preceding quarter, revenue and gross profit were higher, cost of revenue was stable, and gross margin improved. Compared to the same quarter one year earlier, revenue and gross profit were higher, cost of revenue was higher, and gross margin weakened.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
69.0%
Gross profit
$53.6B
Revenue
$77.7B
Cost of revenue
$24.0B
Quarter-over-quarter change
+0.5 pts
Year-over-year change
-0.3 pts
Quarterly gross margin trend
A four-quarter view of the revenue and direct-cost bridge behind gross margin.
| Period | Revenue | Gross profit | Cost of revenue | Gross margin |
|---|---|---|---|---|
| Dec 31, 2024 | $69.6B | $47.8B | $21.8B | 68.7% |
| Mar 31, 2025 | $70.1B | $48.1B | $21.9B | 68.7% |
| Jun 30, 2025 | $76.4B | $52.4B | $24.0B | 68.6% |
| Sep 30, 2025 | $77.7B | $53.6B | $24.0B | 69.0% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Jun 30, 2025
+0.5 pts
Year-over-year change
Sep 30, 2024
-0.3 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The strongest observable margin driver is the increase in gross profit relative to revenue, as gross margin improved sequentially despite stable cost of revenue.
Compared to the immediately preceding quarter, revenue and gross profit were higher, cost of revenue was stable, and gross margin improved. Compared to the same quarter one year earlier, revenue and gross profit were higher, cost of revenue was higher, and gross margin weakened.
Monitor the trend in cost of revenue, which remained stable sequentially but increased year-over-year, as its movement relative to revenue will influence future gross margin.