The Meridian Data Desk · Analysis
Microsoft Corporation: revenue grew 18.8% — what changed in operating margin
Produced automatically using a documented statistical method. Calculations, comparisons and charts by The Meridian from Company Form 10-Q filed with the U.S. SEC data. No interviews or independently verified explanation of causes is claimed.
Microsoft Corporation reported revenue of $92.28 billion for 2026-07-01 to 2026-09-30. Operating margin increased to 49.8%. We compare the same company’s year-earlier quarter and separate the arithmetic effect of revenue from the change in margin.
| Measure | 2025-09-30 | 2026-09-30 | Change |
|---|---|---|---|
| Revenue | 77.67 | 92.28 | +18.8% |
| Operating income | 37.96 | 45.92 | +7.95 billion |
| Operating margin | 48.87% | 49.76% | +0.88 pp |
| Net income | 27.75 | 36.63 | +8.88 billion |
Reading the comparison
The quarter in context
The useful question in this filing is whether a change in sales translated into a proportionate change in operating income. Revenue moved +18.8% year on year, while the operating margin moved +0.88 percentage points. Those figures measure different things: one compares the size of the business’s reported sales; the other compares operating income with each dollar of those sales.
The current period runs from 2026-07-01 to 2026-09-30. Its comparator is 2025-07-01 to 2025-09-30. Both sets of numbers are disclosed in the same Form 10-Q, filed on 2026-10-28. Using the comparative column in one filing avoids silently combining a current amount with an older version that the company may subsequently have reclassified. This is a quarter-to-quarter annual comparison, not a comparison with the immediately preceding quarter.
Revenue and operating margin
Revenue was $92.28 billion, against $77.67 billion a year earlier: an increase of $14.61 billion. The percentage change is calculated from the unrounded dollar amounts. Displaying billions makes the table easier to read, but small differences can disappear after rounding; calculations therefore retain the source values until the final display step.
Operating income was $45.92 billion, versus $37.96 billion. That is an increase of $7.95 billion. Dividing each amount by revenue in its own period produces an operating margin of 49.76% now and 48.87% previously. The margin change is a subtraction of these percentages, expressed in percentage points, rather than the percentage growth rate of profit.
For each $100 of reported revenue, the company recorded $49.76 of operating income in the current quarter and $48.87 in the comparator. A negative figure represents an operating loss. This common denominator helps distinguish a larger sales base from a higher share of sales remaining after the costs included in operating income.
Separating scale from margin
One way to inspect the change is to hold the old margin constant. Applied to current revenue, the earlier margin would produce $45.10 billion of operating income. Relative to the previous quarter a year earlier, the revenue change at that old margin accounts arithmetically for $7.14 billion. The remaining $0.82 billion comes from applying the margin difference to current revenue.
These two components add back to the reported operating-income change. They are an accounting identity, not evidence that a particular product, cost cut or investment caused the result. A different decomposition order would allocate the interaction between revenue and margin differently. Establishing a business explanation requires the company’s segment disclosures and management discussion, both available through the linked filing.
Net income and the limits of the comparison
Net income was $36.63 billion, compared with $27.75 billion. As a share of revenue, it was 39.69% versus 35.72%. Net income and operating income are separate lines: taxes, financing and non-operating items can make them move differently. This comparison does not describe the difference as a tax effect or an investment gain without examining the corresponding notes.
Revenue is not cash collected during the quarter, and net income is not free cash flow. These figures use the company’s reported US-GAAP tags; adjusted earnings, bookings, annual recurring revenue and management forecasts are excluded. Nor does higher revenue automatically establish organic growth. Currency translation, acquisitions and changes in the business mix can affect comparability; the three income-statement lines alone cannot quantify those effects.
To use the table, start with the period and then read the revenue and operating-margin rows together. If sales and margin move in the same direction, their arithmetic effects reinforce one another; if they move in opposite directions, one offsets part of the other. The decomposition above puts dollar amounts on that offset without turning it into a forecast. A single quarter does not establish how durable either movement will be.
What to examine next
The next useful checks are the cash-flow statement, segment detail and any explicit outlook in the filing. This article makes no claim about valuation, share-price reaction or the attractiveness of the stock: none of those can be inferred from these figures alone. It also does not compare margins across unrelated companies, whose revenue recognition and cost classifications may differ.
Source and reproducibility
The SEC hosts the company’s disclosures; that does not make the SEC an independent verifier of the company’s accounting. Checks require matching company, accession, USD units and explicit quarter dates, a comparable year-earlier period, unambiguous values and a filing no more than 45 days old. The calculation ledger and source snapshot are retained privately. No hands-on reporting or independent audit of the issuer is claimed.
Data retrieved . Source dataset checksum: 464cc12cc4796c90a6a0c709eb4920788aa7d4d5eee8b44f2d11d7d44804ae37.
Official source and definitions · Machine-readable source data · Source policies
Selection rules and calculation method