Microsoft reports fiscal Q3 results showing cloud and productivity deeply embedded in enterprise spending, with Azure revenue up 40% and Microsoft 365 Copilot seats exceeding 20 million

On April 29, 2026, Microsoft reported fiscal third-quarter results where Microsoft Cloud revenue rose 29% to $54.5 billion, Azure and other cloud services revenue increased 40%, and Microsoft 365 Commercial cloud revenue rose 19%.

Commercial remaining performance obligation—a measure of contracted future revenue—jumped 99% to $627 billion, and paid Microsoft 365 Copilot seats (AI-assisted productivity features) exceeded 20 million, with ARPU (average revenue per user) growth led by both E5 and Microsoft 365 Copilot.

Morningstar has characterized Microsoft's competitive advantage as primarily driven by switching costs, with network effects and cost advantage as secondary sources, supported by the breadth and integration of its applications across multiple product lines.