LEASES

3 Months Ended

Sep. 30, 2025

Leases [Abstract]

LEASES

NOTE 12 — LEASES

We have operating and finance leases for datacenters, corporate offices, research and development facilities, Microsoft Experience Centers, and certain equipment. Our leases have remaining lease terms of less than 1 year to 20 years, some of which include options to extend the leases for up to 5 years, and some of which include options to terminate the leases within 1 year.

The components of lease expense were as follows:

(In millions)
Three Months Ended September 30,	2025		2024
Operating lease cost	$	1,656	$	1,161
Finance lease cost:
Amortization of right-of-use assets	$	1,173	$	696
Interest on lease liabilities		546		275
Total finance lease cost	$	1,719	$	971

Supplemental cash flow information related to leases was as follows:

(In millions)
Three Months Ended September 30,		2025		2024
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	1,656	$	1,207
Operating cash flows from finance leases		546		275
Financing cash flows from finance leases		639		802
Right-of-use assets obtained in exchange for lease obligations:
Operating leases		1,417		1,892
Finance leases		9,147		4,332

Supplemental balance sheet information related to leases was as follows:

(In millions, except lease term and discount rate)
	September 30, 2025			June 30, 2025
Operating Leases
Operating lease right-of-use assets	$	24,791		$	24,823
Other current liabilities	$	5,385		$	5,424
Operating lease liabilities		17,348			17,437
Total operating lease liabilities	$	22,733		$	22,861
Finance Leases
Property and equipment, at cost	$	66,435		$	53,876
Accumulated depreciation		(11,330	)		(9,861	)
Property and equipment, net	$	55,105		$	44,015
Other current liabilities	$	3,435		$	3,172
Other long-term liabilities		50,999			43,000
Total finance lease liabilities	$	54,434		$	46,172
Weighted Average Remaining Lease Term
Operating leases		6 years			6 years
Finance leases		13 years			13 years
Weighted Average Discount Rate
Operating leases		3.6%			3.5%
Finance leases		4.3%			4.2%

The following table outlines maturities of our lease liabilities as of September 30, 2025:

(In millions)
Year Ending June 30,	Operating Leases			Finance Leases
2026 (excluding the three months ended September 30, 2025)	$	4,627		$	4,218
2027		5,506			5,862
2028		3,770			5,909
2029		2,641			5,259
2030		2,162			5,136
Thereafter		6,586			46,450
Total lease payments		25,292			72,834
Less imputed interest		(2,559	)		(18,400	)
Total	$	22,733		$	54,434

As of September 30, 2025, we had additional leases, primarily for datacenters, that had not yet commenced of $106.2 billion. These leases will commence between fiscal year 2026 and fiscal year 2031 with lease terms of 1 year to 20 years.