Treasury
3-MO 3.83% -7bp 6-MO 3.97% -10bp 1-YR 4.04% -5bp 2-YR 4.22% -4bp 3-YR 4.29% -2bp 5-YR 4.37% +2bp 7-YR 4.51% +4bp 10-YR 4.67% +6bp 20-YR 5.21% +10bp 30-YR 5.20% +11bp 3-MO 3.83% -7bp 6-MO 3.97% -10bp 1-YR 4.04% -5bp 2-YR 4.22% -4bp 3-YR 4.29% -2bp 5-YR 4.37% +2bp 7-YR 4.51% +4bp 10-YR 4.67% +6bp 20-YR 5.21% +10bp 30-YR 5.20% +11bp 3-MO 3.83% -7bp 6-MO 3.97% -10bp 1-YR 4.04% -5bp 2-YR 4.22% -4bp 3-YR 4.29% -2bp 5-YR 4.37% +2bp 7-YR 4.51% +4bp 10-YR 4.67% +6bp 20-YR 5.21% +10bp 30-YR 5.20% +11bp 3-MO 3.83% -7bp 6-MO 3.97% -10bp 1-YR 4.04% -5bp 2-YR 4.22% -4bp 3-YR 4.29% -2bp 5-YR 4.37% +2bp 7-YR 4.51% +4bp 10-YR 4.67% +6bp 20-YR 5.21% +10bp 30-YR 5.20% +11bp 3-MO 3.83% -7bp 6-MO 3.97% -10bp 1-YR 4.04% -5bp 2-YR 4.22% -4bp 3-YR 4.29% -2bp 5-YR 4.37% +2bp 7-YR 4.51% +4bp 10-YR 4.67% +6bp 20-YR 5.21% +10bp 30-YR 5.20% +11bp 3-MO 3.83% -7bp 6-MO 3.97% -10bp 1-YR 4.04% -5bp 2-YR 4.22% -4bp 3-YR 4.29% -2bp 5-YR 4.37% +2bp 7-YR 4.51% +4bp 10-YR 4.67% +6bp 20-YR 5.21% +10bp 30-YR 5.20% +11bp
US Treasury par yield curve · Jul 29 · Source: U.S. Treasury
Wednesday, July 29, 2026
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Accounting

Microsoft's adjusted earnings take out a $480m gain on OpenAI, and leave a $3.2bn gain on Anthropic where it is

Money & World
The Editorial Team ·
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The sentence that matters is at the foot of the release.

Microsoft reported revenue of $90,007m for the three months to 30 June on Wednesday, up 18 percent, and net income of $35,766m, up 31 percent, at $4.81 of diluted earnings per share. It also reported a second set of figures for the same quarter. Excluding what the company calls the impact from investments in OpenAI, net income was $35,286m and the increase was 22 percent, and diluted earnings per share were $4.74 rather than $4.81.

The definition is in the release. Microsoft states that its investments in OpenAI produced net gains in the fiscal year to 30 June 2026 that raised net income by $480m in the fourth quarter and by $4,963m across the twelve months, and raised diluted earnings per share by $0.07 and $0.67 respectively. In the previous fiscal year the same investments produced net losses, cutting net income by $1,575m in the fourth quarter and $3,620m for the year. So the adjustment ran one way last year and runs the other way now. Taking OpenAI out lifted the year-ago fourth quarter from $27,233m to $28,808m of net income, and it takes this year's quarter down.

The gain that stays in

A separate paragraph of the release lists the items that moved the quarter against the forward-looking guidance Microsoft gave on 29 April, and puts them at a benefit of $0.27 on diluted earnings per share. The largest named item is a $3.2 billion gain from Microsoft's investment in Anthropic. The others are lower than expected expenses on the Voluntary Retirement Program, partly offset by severance expense and by impairment charges in XBOX. None of those is taken out of the non-GAAP figures. Only OpenAI is.

Microsoft gives its reason for publishing the measure at all, and the reason is about comparability. The release says the company has provided the non-GAAP measures "to aid investors in better understanding our performance", and that it believes they "assist investors by providing additional insight into its operational performance and help clarify trends affecting its business." What the release does not say is why one investment is separated out and another one, four times larger this quarter, is not. This desk is not going to supply a reason the document withholds.

Where these figures land is visible in one line. Other income and expense, net, was positive $3,444m in the quarter against negative $1,707m a year earlier, and positive $10,697m for the fiscal year against negative $4,901m. On the balance sheet, equity and other investments stood at $36,348m at 30 June against $15,405m a year earlier.

The provision for income taxes was $8,281m for the quarter and $32,185m for the year, against $5,383m and $21,795m.

The document: Microsoft Corp., 'Microsoft Cloud and AI Strength Fuels Fourth Quarter Results', Exhibit 99.1 to a Form 8-K filed 29 July 2026, accession 0001193125-26-323632, accepted by EDGAR at 16:04:53 Eastern on 29 July 2026, Item 2.02 and Item 9.01. Three months ended 30 June, $m: revenue 90,007 (76,441); operating income 40,603 (34,323); other income (expense), net 3,444 ((1,707)); net income 35,766 (27,233); net income as adjusted 35,286 (28,808); diluted EPS 4.81 (3.65); diluted EPS as adjusted 4.74 (3.86). Twelve months: net income 133,749 (101,832); as adjusted 128,786 (105,452); diluted EPS 17.95 (13.64); as adjusted 17.28 (14.13); other income (expense), net 10,697 ((4,901)). The Non-GAAP Definition section states the OpenAI impact as an increase of $480m and $0.07 in the fourth quarter and $4,963m and $0.67 for the year, against decreases of $1,575m and $0.21, and $3,620m and $0.49, in fiscal 2025. Exhibit read in full 29 July 2026. Microsoft's Form 10-K for the year ended 30 June 2026 was filed the same day, accession 0001193125-26-323660..

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