Microsoft posts quarterly revenue of $92.3 billion as Azure grows 48%

Key Facts

Microsoft reported revenue of $92.3 billion on October 28 for the first quarter of its 2027 fiscal year, ended September 30, 2026, up 19% year over year. Operating income rose to $45.9 billion, up 21%, according to the company’s statement. Chief Financial Officer Amy Hood said the results "exceeded expectations across revenue, operating income and earnings per share," referring to Microsoft’s own expectations. GAAP net income was about $36.6 billion, up 32%, while diluted earnings per share reached $4.92, a similar increase. On a non-GAAP basis, net income was $36.4 billion and earnings per share were $4.89, up 18% each, or 19% after adjusting for currency effects.

Azure led cloud performance, with revenue from the service rising 48% and reaching an estimated $33.17 billion in the quarter ended in September, according to Reuters. That figure exceeded Visible Alpha’s estimate of $32.84 billion and topped the previous quarter’s revenue of $29.4 billion, Reuters reported. Microsoft Cloud revenue reached $63.9 billion, up 30% year over year, or 31% excluding currency effects, according to the company’s statement. Reuters said Microsoft began disclosing Azure revenue in dollars the previous month, rather than providing growth rates alone. Reporting the figure in dollars allows for clearer comparisons with AWS and Google Cloud revenue, the report said.

Commercial demand was reflected in remaining performance obligations, which rose 73% to $677 billion on September 30, Microsoft said. The figure represents the value of the company’s remaining commercial performance obligations, alongside cloud revenue growth delivered during the quarter. Meanwhile, net cash from operations rose to $58 billion, compared with $45.057 billion in the same period a year earlier. The company returned $10.2 billion to shareholders through dividends and share buybacks during the quarter. These cash flows and shareholder returns place operating results in their broader financial context.

Revenue growth coincided with additions to property and equipment rising to $39.367 billion in the quarter, from $19.394 billion a year earlier, according to the cash flow statement in Microsoft’s report. The company describes the line item as additions to property and equipment, while Reuters said the capital spending forecast for the quarter exceeded $50 billion, including the effect of reclassifying leases related to an update to the useful lives of assets. The difference between the definitions highlights that the additions figure in the cash flow statement is not equal to the broader capital spending estimate reported by Reuters. Alongside investment in assets, net cash from operations was $58 billion, providing a comparison for the scale of operating cash flow during the period. These metrics bring the relationship between expanding operating infrastructure and cloud business growth into focus.

By segment, Agents and Infra generated revenue of $76.8 billion, up 25%, while Devices and Consumer recorded revenue of $15.5 billion, down 3%, according to the company’s statement. Windows OEM and Devices revenue fell 22%, while Xbox content and services revenue declined 2%. By contrast, search and advertising revenue, excluding traffic acquisition costs, rose 12% year over year. Microsoft 365 commercial cloud revenue grew 17% on a reported basis and 18% excluding currency effects. After normalizing for the effect of one percentage point from the timing of revenue recognition in the prior year, growth was 18%, or 19% excluding currency effects.

Reported net income growth differed depending on the impact of OpenAI investments on the comparison periods. Investment gains increased current-quarter net income by $207 million, while losses reduced net income in the corresponding quarter of the previous fiscal year by $3.1 billion, according to Microsoft’s statement. The company said its non-GAAP results exclude the impact of its OpenAI investments. Year-over-year growth in GAAP net income and diluted earnings per share was 32%, compared with 18% each for net income and earnings per share on a non-GAAP basis, or 19% excluding currency effects. Read side by side, the metrics show the effect of investment items on the reported comparison alongside operating results.

Microsoft shares rose about 6% in extended trading after the results were announced on October 28, according to Reuters. The stock’s daily closing price that day was $527.35999, according to EL7 data. Microsoft scheduled its earnings call and webcast for the same day at 2:30 p.m. Pacific time, or 5:30 p.m. Eastern time. The company said Chief Executive Satya Nadella and Amy Hood would host the call. In the statement, Nadella said Microsoft "is turning innovation into growing adoption and real-world impact across every industry."