The Revenue LinesWide moat

Microsoft (MSFT) — moat facet

Nine revenue lines and two of them are the company: they supplied 90% of fiscal 2026's growth, and the faster of the two earns less on every dollar each year.

Microsoft reports nine revenue lines, and two of them are most of the company. In fiscal 2026 Server products and cloud services brought in $129.4 billion and Microsoft 365 Commercial $102.0 billion, together about 70% of the $331.8 billion total1. The other seven share the rest: XBOX $21.8 billion, LinkedIn $19.8 billion, Windows and Devices $17.1 billion, Search advertising $15.2 billion, Microsoft 365 Consumer $9.2 billion, Dynamics $9.0 billion and Enterprise and partner services $8.3 billion2.

Share of the FY2026 revenue increase, by line (%)Server & cloud61.8%M365 Commercial28.4%LinkedIn4.0%M365 Consumer3.5%Search advertising2.6%Dynamics2.4%Enterprise services1.0%Windows & Devices-0.5%XBOX-3.3%Calc from Microsoft Form 10-K FY2026: line increase / $50.1B total; declines at magnitude
Two lines supplied 90% of the growth; XBOX and Windows and Devices subtracted from it.

Growth is more lopsided still. Revenue rose $50.1 billion in the year, and the two largest lines supplied $45.2 billion of it, about 90%3. Server products and cloud services alone added $31.0 billion, more than the whole of XBOX, LinkedIn or Windows and Devices4. Two lines shrank: XBOX by $1.7 billion and Windows and Devices by $230 million5.

Microsoft does not report a profit for any of the nine. It reports three segments, and each holds several lines. Productivity and Business Processes, which holds both Microsoft 365 lines, LinkedIn and Dynamics, earned $83,879 million on $139,996 million of revenue in fiscal 2026; Intelligent Cloud, which holds Server products and cloud services with Enterprise and partner services, earned $56,972 million on $137,791 million; More Personal Computing, which holds Windows and Devices, XBOX and Search advertising, earned $14,386 million on $54,052 million6. That is 59.9%, 41.3% and 26.6% of revenue7.

So profit is concentrated in a different place from growth. The segment that holds the Office franchise earned 54% of segment operating income on 42% of revenue8. The segment that holds Azure grew fastest, 30%, and earns less on each dollar every year: Intelligent Cloud's gross margin went from 66.1% in fiscal 2024 to 62.2% and then 58.0%9, which the filing puts down to the continued investments in AI infrastructure as well as the mix shift to Azure10. The line that makes the most money for Microsoft and the line that makes Microsoft grow are no longer the same line.

The nine are also paid in different ways, which is why they behave differently in a bad year. Microsoft 365 Commercial, Microsoft 365 Consumer and Dynamics are sold per user, by subscription. Azure is metered by consumption. LinkedIn sells subscriptions to recruiters, salespeople and members, and advertising. XBOX sells consoles, games and Game Pass. Windows is a licence on each new PC, sold to the manufacturer. Search advertising is an auction, and Enterprise and partner services is support, consulting and training11. A year of slow PC sales touches mainly one of the nine; a year of slow hiring touches two or three; a year in which companies cut software budgets touches most.

The definitions keep moving, and anyone reading a long series should know it. In fiscal 2025 Microsoft recast its segments, "bringing the commercial components of Microsoft 365 together in the Productivity and Business Processes segment"12. The same fiscal 2023 reads $79,970 million for Server products and cloud services on the old basis and $65,007 million on the new one1314. In fiscal 2026 it renamed Gaming to XBOX and Search and news advertising to Search advertising15. The chart that follows starts in fiscal 2023 for that reason, and each line's page gives the older history on the definitions used at the time.

Two pages already cover what sits behind the largest line: The Backlog That One Customer Filled, on the $678 billion of commercial commitments, and The AI Capex Bet, on the capital behind them. The pages below take one line at a time.

The chart makes Microsoft look like a nine-line company; the income statement says it is a two-line company with seven smaller businesses beside it. The number that would change that verdict is Intelligent Cloud's gross margin. A fourth year of decline with Azure still growing above 40% would say the largest line is paying for its growth. A turn upward in fiscal 2027 would say the spending was capacity being filled.

Moat trajectory: Widening

The two lines that carry the company grew faster in fiscal 2026 than in fiscal 2025, 31.5% and 16.2%, and together supplied 90% of the year's growth. The shrinking lines, XBOX and Windows and Devices, are the lowest-margin parts of the smallest segment.

The number that tests this moat
Moat Explorer calc
Share of FY2026 revenue growth from the two largest lines
90.2% — $45.2B of the $50.1B increase

Server products and cloud services added $31.0B and Microsoft 365 Commercial $14.2B; the other seven lines together added under $5B, two of them shrinking. A year in which the share fell well below 80% with total growth intact would mean the smaller lines had started to matter.

How it's calculated: (129,425 - 98,435) + (101,997 - 87,767) = 45,220; divided by 331,839 - 281,724 = 50,115.
Source: Microsoft Form 10-K, FY2026 (revenue by product and service offering) ↗
Dig deeper
DIG DEEPER 01
Server products & cloud services
Azure is growing faster every quarter at a lower gross margin every year; fiscal 2027 decides whether that is building ahead of demand or buying it.
DIG DEEPER 02
Microsoft 365 Commercial
Seats grow 6% a year and revenue 16%: the Office rent has become a pricing business, and Copilot is what the price is now paying for.
DIG DEEPER 03
XBOX
The largest purchase in Microsoft's history made the gaming line bigger without making it grow, and the console is now the part being abandoned.
DIG DEEPER 04
LinkedIn
A $27.0 billion purchase that now takes in about three-quarters of its price every year, recovering on advertising while the hiring products follow.
DIG DEEPER 05
Windows and Devices
The business that built Microsoft has not grown in four years, and fiscal 2026 borrowed its best quarters from the Windows 10 deadline.
DIG DEEPER 06
Search advertising
Bing grows faster after the partners are paid than before, and Copilot now sits inside the auction it might one day replace.
DIG DEEPER 07
Microsoft 365 Consumer
For three years households were added faster than revenue; one price rise reversed it, and the June quarter is the first test of whether it lasts.
DIG DEEPER 08
Dynamics
Business applications that have grown only as fast as Microsoft itself, with Dynamics 365 growth halving in four years to 13% in June.
DIG DEEPER 09
Enterprise & partner services
The line of people rather than software, shrinking as a share of Microsoft while support carries it and consulting is left to partners.
References
  1. ReportedIn fiscal 2026 Server products and cloud services brought in $129.4 billion and Microsoft 365 Commercial $102.0 billion, together about 70% of the $331.8 billion total.
    Microsoft Form 10-K, FY2026 — Note: revenue by significant product and service offering, FY2024-FY2026 (Server products and cloud services $129,425M / $98,435M / $79,828M; Microsoft 365 Commercial $101,997M / $87,767M / $76,969M; XBOX $21,790M / $23,455M / $21,503M; LinkedIn $19,817M / $17,812M / $16,372M; Windows and Devices $17,084M / $17,314M / $17,026M; Search advertising $15,176M / $13,878M / $12,306M; Microsoft 365 Consumer $9,175M / $7,404M / $6,648M; Dynamics $9,006M / $7,827M / $6,831M; Enterprise and partner services $8,260M / $7,760M / $7,594M; Other $109M / $72M / $45M; total $331,839M); Microsoft Cloud revenue $214.4B, $168.9B and $137.7B, drawn from four of the lines; additions to property and equipment $115,948M — FY2024-FY2026 · publ. July 29, 2026 · source ↗
  2. ReportedThe other seven share the rest: XBOX $21.8 billion, LinkedIn $19.8 billion, Windows and Devices $17.1 billion, Search advertising $15.2 billion, Microsoft 365 Consumer $9.2 billion, Dynamics $9.0 billion and Enterprise and partner services $8.3 billion.
    Microsoft Form 10-K, FY2026 — Note: revenue by significant product and service offering, FY2024-FY2026 (Server products and cloud services $129,425M / $98,435M / $79,828M; Microsoft 365 Commercial $101,997M / $87,767M / $76,969M; XBOX $21,790M / $23,455M / $21,503M; LinkedIn $19,817M / $17,812M / $16,372M; Windows and Devices $17,084M / $17,314M / $17,026M; Search advertising $15,176M / $13,878M / $12,306M; Microsoft 365 Consumer $9,175M / $7,404M / $6,648M; Dynamics $9,006M / $7,827M / $6,831M; Enterprise and partner services $8,260M / $7,760M / $7,594M; Other $109M / $72M / $45M; total $331,839M); Microsoft Cloud revenue $214.4B, $168.9B and $137.7B, drawn from four of the lines; additions to property and equipment $115,948M — FY2024-FY2026 · publ. July 29, 2026 · source ↗
  3. Moat Explorer calcRevenue rose $50.1 billion in the year, and the two largest lines supplied $45.2 billion of it, about 90%.
    Moat Explorer calculation from Microsoft Forms 10-K (FY2017-FY2026) and 10-Q (FY2025-FY2026): growth = year / prior year - 1 on the revenue-by-offering tables; compound rates = (end / start)^(1/years) - 1; quarterly revenue for the fourth quarter = fiscal-year revenue less the nine-month figure in the third-quarter 10-Q; segment margins = segment operating income / segment revenue and gross margin = (segment revenue - cost of revenue) / segment revenue (Intelligent Cloud $57,853M / $87,464M = 66.1% in FY2024, $66,094M / $106,265M = 62.2% in FY2025, $79,915M / $137,791M = 58.0% in FY2026); share of FY2026 growth = line increase / total increase of $50,115M (Server products and cloud services $30,990M plus Microsoft 365 Commercial $14,230M = 90.2%); shares of revenue = line / total — FY2017-FY2026 · publ. 2026 · source ↗
    Method: Moat Explorer calculation from the revenue-by-offering tables and segment results in Microsoft's Forms 10-K and 10-Q; see the source line for the method.
  4. ReportedServer products and cloud services alone added $31.0 billion, more than the whole of XBOX, LinkedIn or Windows and Devices.
    Microsoft Form 10-K, FY2026 — Item 7 MD&A: segment results (Productivity and Business Processes revenue $139,996M, cost of revenue $25,017M, operating income $83,879M; Intelligent Cloud $137,791M, $57,876M, $56,972M; More Personal Computing $54,052M, $23,481M, $14,386M) and the drivers of each line: Server products and cloud services +$31.0B or 31% (Azure +41%, server products +1%); Microsoft 365 Commercial +$14.2B or 16% (cloud +17% on seats +6%, products +13%); Microsoft 365 Consumer +$1.8B or 24% (cloud +28% on subscribers +7%); LinkedIn +$2.0B or 11%; Dynamics +$1.2B or 15% (Dynamics 365 +18%); Enterprise and partner services +$500M or 6%; Windows and Devices -$230M or 1% (Windows OEM +5%); XBOX -$1.7B or 7% (content and services -5%, hardware -29%); Search advertising +$1.3B or 9% (ex-TAC +12%); the Microsoft 365 Consumer subscriber metric removed — FY2026 · publ. July 29, 2026 · source ↗
  5. ReportedTwo lines shrank: XBOX by $1.7 billion and Windows and Devices by $230 million.
    Microsoft Form 10-K, FY2026 — Item 7 MD&A: segment results (Productivity and Business Processes revenue $139,996M, cost of revenue $25,017M, operating income $83,879M; Intelligent Cloud $137,791M, $57,876M, $56,972M; More Personal Computing $54,052M, $23,481M, $14,386M) and the drivers of each line: Server products and cloud services +$31.0B or 31% (Azure +41%, server products +1%); Microsoft 365 Commercial +$14.2B or 16% (cloud +17% on seats +6%, products +13%); Microsoft 365 Consumer +$1.8B or 24% (cloud +28% on subscribers +7%); LinkedIn +$2.0B or 11%; Dynamics +$1.2B or 15% (Dynamics 365 +18%); Enterprise and partner services +$500M or 6%; Windows and Devices -$230M or 1% (Windows OEM +5%); XBOX -$1.7B or 7% (content and services -5%, hardware -29%); Search advertising +$1.3B or 9% (ex-TAC +12%); the Microsoft 365 Consumer subscriber metric removed — FY2026 · publ. July 29, 2026 · source ↗
  6. ReportedProductivity and Business Processes, which holds both Microsoft 365 lines, LinkedIn and Dynamics, earned $83,879 million on $139,996 million of revenue in fiscal 2026; Intelligent Cloud, which holds Server products and cloud services with Enterprise and partner services, earned $56,972 million on $137,791 million; More Personal Computing, which holds Windows and Devices, XBOX and Search advertising, earned $14,386 million on $54,052 million.
    Microsoft Form 10-K, FY2026 — Item 7 MD&A: segment results (Productivity and Business Processes revenue $139,996M, cost of revenue $25,017M, operating income $83,879M; Intelligent Cloud $137,791M, $57,876M, $56,972M; More Personal Computing $54,052M, $23,481M, $14,386M) and the drivers of each line: Server products and cloud services +$31.0B or 31% (Azure +41%, server products +1%); Microsoft 365 Commercial +$14.2B or 16% (cloud +17% on seats +6%, products +13%); Microsoft 365 Consumer +$1.8B or 24% (cloud +28% on subscribers +7%); LinkedIn +$2.0B or 11%; Dynamics +$1.2B or 15% (Dynamics 365 +18%); Enterprise and partner services +$500M or 6%; Windows and Devices -$230M or 1% (Windows OEM +5%); XBOX -$1.7B or 7% (content and services -5%, hardware -29%); Search advertising +$1.3B or 9% (ex-TAC +12%); the Microsoft 365 Consumer subscriber metric removed — FY2026 · publ. July 29, 2026 · source ↗
  7. Moat Explorer calcThat is 59.9%, 41.3% and 26.6% of revenue.
    Moat Explorer calculation from Microsoft Forms 10-K (FY2017-FY2026) and 10-Q (FY2025-FY2026): growth = year / prior year - 1 on the revenue-by-offering tables; compound rates = (end / start)^(1/years) - 1; quarterly revenue for the fourth quarter = fiscal-year revenue less the nine-month figure in the third-quarter 10-Q; segment margins = segment operating income / segment revenue and gross margin = (segment revenue - cost of revenue) / segment revenue (Intelligent Cloud $57,853M / $87,464M = 66.1% in FY2024, $66,094M / $106,265M = 62.2% in FY2025, $79,915M / $137,791M = 58.0% in FY2026); share of FY2026 growth = line increase / total increase of $50,115M (Server products and cloud services $30,990M plus Microsoft 365 Commercial $14,230M = 90.2%); shares of revenue = line / total — FY2017-FY2026 · publ. 2026 · source ↗
    Method: Moat Explorer calculation from the revenue-by-offering tables and segment results in Microsoft's Forms 10-K and 10-Q; see the source line for the method.
  8. Moat Explorer calcThe segment that holds the Office franchise earned 54% of segment operating income on 42% of revenue.
    Moat Explorer calculation from Microsoft Forms 10-K (FY2017-FY2026) and 10-Q (FY2025-FY2026): growth = year / prior year - 1 on the revenue-by-offering tables; compound rates = (end / start)^(1/years) - 1; quarterly revenue for the fourth quarter = fiscal-year revenue less the nine-month figure in the third-quarter 10-Q; segment margins = segment operating income / segment revenue and gross margin = (segment revenue - cost of revenue) / segment revenue (Intelligent Cloud $57,853M / $87,464M = 66.1% in FY2024, $66,094M / $106,265M = 62.2% in FY2025, $79,915M / $137,791M = 58.0% in FY2026); share of FY2026 growth = line increase / total increase of $50,115M (Server products and cloud services $30,990M plus Microsoft 365 Commercial $14,230M = 90.2%); shares of revenue = line / total — FY2017-FY2026 · publ. 2026 · source ↗
    Method: Moat Explorer calculation from the revenue-by-offering tables and segment results in Microsoft's Forms 10-K and 10-Q; see the source line for the method.
  9. Moat Explorer calcThe segment that holds Azure grew fastest, 30%, and earns less on each dollar every year: Intelligent Cloud's gross margin went from 66.1% in fiscal 2024 to 62.2% and then 58.0%, which the filing puts down to the continued investments in AI infrastructure as well as the mix shift to Azure.
    Moat Explorer calculation from Microsoft Forms 10-K (FY2017-FY2026) and 10-Q (FY2025-FY2026): growth = year / prior year - 1 on the revenue-by-offering tables; compound rates = (end / start)^(1/years) - 1; quarterly revenue for the fourth quarter = fiscal-year revenue less the nine-month figure in the third-quarter 10-Q; segment margins = segment operating income / segment revenue and gross margin = (segment revenue - cost of revenue) / segment revenue (Intelligent Cloud $57,853M / $87,464M = 66.1% in FY2024, $66,094M / $106,265M = 62.2% in FY2025, $79,915M / $137,791M = 58.0% in FY2026); share of FY2026 growth = line increase / total increase of $50,115M (Server products and cloud services $30,990M plus Microsoft 365 Commercial $14,230M = 90.2%); shares of revenue = line / total — FY2017-FY2026 · publ. 2026 · source ↗
    Method: Moat Explorer calculation from the revenue-by-offering tables and segment results in Microsoft's Forms 10-K and 10-Q; see the source line for the method.
  10. ReportedThe segment that holds Azure grew fastest, 30%, and earns less on each dollar every year: Intelligent Cloud's gross margin went from 66.1% in fiscal 2024 to 62.2% and then 58.0%, which the filing puts down to the continued investments in AI infrastructure as well as the mix shift to Azure.
    Microsoft Form 10-K, FY2026 — Item 7 MD&A: segment results (Productivity and Business Processes revenue $139,996M, cost of revenue $25,017M, operating income $83,879M; Intelligent Cloud $137,791M, $57,876M, $56,972M; More Personal Computing $54,052M, $23,481M, $14,386M) and the drivers of each line: Server products and cloud services +$31.0B or 31% (Azure +41%, server products +1%); Microsoft 365 Commercial +$14.2B or 16% (cloud +17% on seats +6%, products +13%); Microsoft 365 Consumer +$1.8B or 24% (cloud +28% on subscribers +7%); LinkedIn +$2.0B or 11%; Dynamics +$1.2B or 15% (Dynamics 365 +18%); Enterprise and partner services +$500M or 6%; Windows and Devices -$230M or 1% (Windows OEM +5%); XBOX -$1.7B or 7% (content and services -5%, hardware -29%); Search advertising +$1.3B or 9% (ex-TAC +12%); the Microsoft 365 Consumer subscriber metric removed — FY2026 · publ. July 29, 2026 · source ↗
  11. ReportedSearch advertising is an auction, and Enterprise and partner services is support, consulting and training.
    Microsoft Form 10-K, FY2026 — Item 1 Business: what each segment and line comprises, what drives each line's revenue (Azure consumption, per-user Microsoft 365 and Dynamics, Windows OEM licensing factors, XBOX content and subscriptions, LinkedIn's four products), the fiscal 2026 renaming of Gaming to XBOX and of Search and news advertising to Search advertising, and each line's competition — FY2026 · publ. July 29, 2026 · source ↗
  12. ReportedIn fiscal 2025 Microsoft recast its segments, "bringing the commercial components of Microsoft 365 together in the Productivity and Business Processes segment".
    Microsoft Form 10-K, FY2025 — revenue by product and service offering on the recast basis, FY2023-FY2025 (Server products and cloud services $65,007M in FY2023; Windows and Devices $17,147M; Dynamics $5,796M; Enterprise and partner services $7,900M); the recast 'bringing the commercial components of Microsoft 365 together'; segment results FY2024-FY2025 (Intelligent Cloud revenue $87,464M and $106,265M, cost of revenue $29,611M and $40,171M, operating income $37,813M and $44,589M); FY2025 drivers (Azure +34%, server products -3%, Microsoft 365 Commercial cloud +15% on seats +6%, Office 2024, Microsoft 365 Consumer subscribers 89.0 million after the January 2025 price increase, Dynamics 365 +19%, Gaming +9% with Xbox content and services +16% and hardware -25%, search ex-TAC +20%); More Personal Computing goodwill acquired $51,235M — FY2023-FY2025 · publ. July 30, 2025 · source ↗
  13. ReportedThe same fiscal 2023 reads $79,970 million for Server products and cloud services on the old basis and $65,007 million on the new one.
    Microsoft Form 10-K, FY2024 — revenue by offering FY2022-FY2024 on the pre-recast basis (Server products and cloud services $79,970M in FY2023; Office products and cloud services $54,875M in FY2024; Dynamics $4,687M in FY2022 and $5,437M in FY2023); FY2024 drivers (Azure +30%, seats +7%, Office 365 Commercial +16%, Office Commercial products -16%, Office Consumer +4% with subscribers 82.5 million, LinkedIn +9% across all four lines of business, Dynamics +19%, Windows OEM +7%, Devices -15%, Gaming +39% with 44 points of net impact from Activision Blizzard, Xbox hardware -13%, search ex-TAC +12%, Enterprise and partner services -4%); Activision Blizzard acquired 13 October 2023 for $75.4B — FY2022-FY2024 · publ. July 30, 2024 · source ↗
  14. ReportedThe same fiscal 2023 reads $79,970 million for Server products and cloud services on the old basis and $65,007 million on the new one.
    Microsoft Form 10-K, FY2025 — revenue by product and service offering on the recast basis, FY2023-FY2025 (Server products and cloud services $65,007M in FY2023; Windows and Devices $17,147M; Dynamics $5,796M; Enterprise and partner services $7,900M); the recast 'bringing the commercial components of Microsoft 365 together'; segment results FY2024-FY2025 (Intelligent Cloud revenue $87,464M and $106,265M, cost of revenue $29,611M and $40,171M, operating income $37,813M and $44,589M); FY2025 drivers (Azure +34%, server products -3%, Microsoft 365 Commercial cloud +15% on seats +6%, Office 2024, Microsoft 365 Consumer subscribers 89.0 million after the January 2025 price increase, Dynamics 365 +19%, Gaming +9% with Xbox content and services +16% and hardware -25%, search ex-TAC +20%); More Personal Computing goodwill acquired $51,235M — FY2023-FY2025 · publ. July 30, 2025 · source ↗
  15. ReportedIn fiscal 2026 it renamed Gaming to XBOX and Search and news advertising to Search advertising.
    Microsoft Form 10-K, FY2026 — Item 1 Business: what each segment and line comprises, what drives each line's revenue (Azure consumption, per-user Microsoft 365 and Dynamics, Windows OEM licensing factors, XBOX content and subscriptions, LinkedIn's four products), the fiscal 2026 renaming of Gaming to XBOX and of Search and news advertising to Search advertising, and each line's competition — FY2026 · publ. July 29, 2026 · source ↗
Sources
Generated September 22, 2026