Microsoft’s OpenAI Arrangements Generate $10 Billion in Quarterly Revenue
Key Facts
Microsoft recorded $10.0 billion in revenue from its commercial arrangements with OpenAI, including revenue-sharing payments, during the three months ended September 30, 2026, according to its quarterly filing with the U.S. Securities and Exchange Commission. The company announced the results on October 28, reporting total revenue of $92.3 billion, up 19% year over year. The disclosure combines commercial arrangements and revenue-sharing payments in one figure. Microsoft did not break out Azure revenue from the other arrangements related to the partnership in this disclosure.
The results coincided with Microsoft Cloud revenue rising to $63.9 billion, up 30% from the same quarter a year earlier, while Azure revenue increased 48%, according to the earnings announcement. The figures put cloud operations at the center of quarterly performance, but do not specify how much of it came from OpenAI within the reported amount for commercial arrangements. Chief Financial Officer Amy Hood said revenue, operating income and earnings per share exceeded expectations, without providing analysts’ forecast figures in that statement. In the market, Microsoft shares closed at $521.91 on October 30, according to EL7 data. The closing price provides a reading of the stock on that day, while the available data did not include verified prices for other technology companies suitable for comparison.
The report showed that receivables due from OpenAI to Microsoft stood at $7.2 billion on September 30, compared with $6.0 billion on June 30, 2026. These are amounts due to the company, separate from commercial-arrangement revenue recorded during the quarter, and do not represent additional revenue on top of the $10.0 billion. Microsoft also said its investment stake in OpenAI is about 24% on a fully converted basis. Funding commitments related to the investment totaled $13.0 billion, of which $12.0 billion had been funded as of September 30. The figures distinguish commercial revenue, amounts due and funding provided as part of the investment.
The investment also affected Microsoft’s accounting results, with gains on OpenAI investments adding $207 million to net income and $0.03 to diluted earnings per share in the first quarter of fiscal 2027. The year-earlier comparison carried an opposite effect: in the first quarter of fiscal 2026, losses on OpenAI investments reduced net income by $3.1 billion and diluted earnings per share by $0.41. The comparison between the two periods was therefore affected by investment gains and losses, alongside operating results. This accounting impact highlights a different aspect from the $10.0 billion in commercial revenue. The investment-gains figure also does not change the classification of that amount, which Microsoft described as revenue from commercial arrangements that include revenue sharing.
Cloud growth was accompanied by higher capital spending: cash used in investing activities rose by $7.4 billion to $42.0 billion in the quarter ended September 30, compared with the corresponding period. Microsoft attributed the increase mainly to a $20.0 billion rise in additions to property and equipment. The company linked its continued investment to expanding cloud capacity, AI training and infrastructure. Future contractual commitments also increased, with commercial remaining performance obligations rising 73% to $677 billion on September 30. These obligations represent contracted revenue allocated to future periods, and the company said it expects to recognize about 30% of total remaining performance obligations over the following twelve months.
The revenue is generated under an amended partnership agreement Microsoft announced in April 2026. Under the agreement, the company remains OpenAI’s primary cloud partner, with OpenAI’s revenue-sharing payments to Microsoft continuing through 2030, subject to an overall cap. Microsoft’s non-exclusive license to OpenAI intellectual property also continues through 2032. Separately, AP reported that Google Cloud revenue rose 103% to $30.7 billion in the quarter spanning July to September, and that the company attributed key drivers of cloud growth to infrastructure and AI solutions. The comparison places Azure growth and Microsoft Cloud revenue in the context of cloud-business expansion at a major competitor, while Microsoft’s revenue from OpenAI remains tied to the specific commercial arrangements described in the disclosure.