Microsoft reported fiscal first-quarter 2027 revenue of $92.3 billion on Wednesday, up 19% year over year, as Azure revenue grew 48% and the company's contracted backlog climbed to $677 billion. Shares rose about 4% in after-hours trading.
Azure brought in $33.2 billion in the quarter ended Sept. 30, up from $22.4 billion a year earlier. It is the first time Microsoft has disclosed Azure revenue in dollars rather than as a growth rate alone. The result topped the $32.3 billion StreetAccount consensus, and growth accelerated from 42% in the prior quarter.
“We are delivering greater capability, choice, control, and cost efficiency for customers across our entire stack”— Satya Nadella, Microsoft chairman and CEO
Microsoft Cloud revenue reached $63.9 billion, up 30%, or 31% in constant currency. Commercial remaining performance obligation, the measure of contracted revenue not yet recognized, rose 73% to $677 billion.
Key facts
- 01Microsoft reported fiscal Q1 2027 revenue of $92.3 billion, up 19%, with GAAP net income up 32% to $36.6 billion.
- 02Azure revenue rose 48% to $33.2 billion, the first quarter Microsoft disclosed Azure revenue in dollars.
- 03Commercial remaining performance obligation grew 73% to $677 billion.
- 04Additions to property and equipment reached $39.4 billion, up from $19.4 billion a year earlier.
- 05Microsoft recorded a $207 million net gain from OpenAI, versus a $3.1 billion net loss a year earlier.
Microsoft's profit grew faster than its sales. Operating income rose 21% to $45.9 billion, GAAP net income rose 32% to $36.6 billion, and GAAP diluted earnings per share came in at $4.92. Excluding one-time items, EPS was $4.89, up 18% and ahead of the $4.73 analysts expected.
Part of the GAAP jump traces to Microsoft's stake in OpenAI. Microsoft recorded a $207 million net gain, or $0.03 per diluted share, from its OpenAI investments in the quarter, compared with a $3.1 billion net loss, or $0.41 per share, a year earlier.
“Results exceeded expectations across revenue, operating income, and earnings per share”— Amy Hood, Microsoft EVP and CFO
Microsoft now reports two segments. Agents and Infra posted revenue of $76.8 billion, up 25%, and operating income of $40.6 billion, up from $32.7 billion. Microsoft 365 commercial cloud revenue grew 17%, while Microsoft 365 consumer cloud revenue also rose 17%.
Devices and Consumer revenue fell 3% to $15.5 billion, though it still beat the $15.05 billion consensus, and the segment's operating income edged up to $5.4 billion. Windows OEM and Devices revenue dropped 22%, a decline tied to higher memory and storage costs that raised device prices. Search and advertising revenue excluding traffic acquisition costs grew 12%, and Xbox content and services slipped 2%.
Spending on AI capacity kept climbing. Additions to property and equipment totaled $39.4 billion, roughly double the $19.4 billion from a year earlier. Including finance leases, capital expenditures reached $45.2 billion, below the $50.67 billion StreetAccount estimate. Free cash flow fell 27% to $18.6 billion.
Microsoft returned $10.2 billion to shareholders through dividends and buybacks in the quarter. The company also cut 4,800 jobs during the quarter, and it has offered voluntary buyouts to about 60,000 employees, more than a quarter of its global workforce.
Nadella tied the results to Microsoft's push to help organizations build and own their own intelligence, saying in the earnings release that earning trust "through agent safety and security" is translating into growing adoption across every industry.
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