Microsoft Corporation stock research
FY2026 Q3
Microsoft (MSFT) Gross Margin — Quarter Ended Mar 31, 2026
Revenue increased while cost of revenue also increased, leading to a higher gross profit. However, gross margin weakened compared to both the immediately preceding quarter and the same quarter one year earlier.
Gross margin takeaway
Quarter ended Mar 31, 2026 · FY2026 Q3
Revenue increased while cost of revenue also increased, leading to a higher gross profit. However, gross margin weakened compared to both the immediately preceding quarter and the same quarter one year earlier.
- Revenue growth outpaced the increase in cost of revenue on an absolute basis, producing a higher gross profit. The decline in gross margin indicates that cost of revenue grew at a faster rate than revenue relative to the base.
- Compared to the immediately preceding quarter, gross margin was slightly lower. Versus the same quarter one year earlier, gross margin was also lower, as the increase in cost of revenue was proportionally larger than the revenue increase over that period.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
67.6%
Gross profit
$56.1B
Revenue
$82.9B
Cost of revenue
$26.8B
Quarter-over-quarter change
-0.4 pts
Year-over-year change
-1.1 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 |
|---|---|---|---|---|
| Jun 30, 2025 | $76.4B | $52.4B | $24.0B | 68.6% |
| Sep 30, 2025 | $77.7B | $53.6B | $24.0B | 69.0% |
| Dec 31, 2025 | $81.3B | $55.3B | $26.0B | 68.0% |
| Mar 31, 2026 | $82.9B | $56.1B | $26.8B | 67.6% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Dec 31, 2025
-0.4 pts
Year-over-year change
Mar 31, 2025
-1.1 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
Revenue growth outpaced the increase in cost of revenue on an absolute basis, producing a higher gross profit. The decline in gross margin indicates that cost of revenue grew at a faster rate than revenue relative to the base.
Compared to the immediately preceding quarter, gross margin was slightly lower. Versus the same quarter one year earlier, gross margin was also lower, as the increase in cost of revenue was proportionally larger than the revenue increase over that period.
Monitor the relative growth rates of service and other cost of revenue against service and other revenue, as these segments represent the largest components of both revenue and cost.
Peer context
Latest available gross margins for related public companies.
| Company | Gross margin |
|---|---|
| Microsoft Corporation (MSFT) | 67.6% |