Microsoft reported fiscal first-quarter revenue of $92.279 billion and GAAP net income of $36.629 billion, as Azure revenue growth accelerated to 48% and commercial cloud demand continued to outpace the company’s slower consumer-facing businesses. The results, for the quarter ended Sept. 30, put a sharper focus on how quickly Microsoft can add computing capacity for AI and cloud customers.
Revenue rose 19% from a year earlier, while operating income increased 21% to $45.915 billion and net income climbed 32%. Microsoft reported GAAP diluted earnings per share of $4.92. The company’s earnings release came in above the revenue and adjusted-EPS expectations tracked by LSEG, according to CNBC, which reported that the shares rose 4% in extended trading.
Cloud growth drives the quarter
Microsoft Cloud generated $63.9 billion in revenue, up 30% from a year earlier, or 31% in constant currency. Azure and other cloud services grew 48%, a material acceleration in a business that has become the company’s principal gauge of enterprise demand for AI infrastructure and cloud workloads.
Microsoft did not include an Azure dollar total in its earnings release, but CNBC reported that the company disclosed $33.17 billion of quarterly Azure revenue, above StreetAccount’s $32.32 billion consensus estimate. That figure puts Azure at roughly 36% of Microsoft’s total quarterly revenue, based on the company’s reported sales total, although Azure growth is also reported within broader product and cloud-service categories.
The company’s supplementary metrics showed commercial remaining performance obligations of $677 billion, up 73% year over year. The measure represents contracted commercial revenue that has not yet been recognized, rather than current-quarter sales, but its growth provides a view of the volume of business Microsoft is scheduled to serve over time. The size of that balance also raises the importance of data-center construction, server delivery and power availability in converting commitments into revenue.
Microsoft Chief Financial Officer Amy Hood said on the earnings call that demand continued to exceed supply, CNBC reported. For the fiscal second quarter, she projected revenue of $96 billion to $97.1 billion and Azure growth of 49% to 50% in constant currency. Those are company projections, not reported results, and growth will depend in part on the pace at which Microsoft can bring additional capacity online.
New segments show a widening split
The quarter was Microsoft’s first under a revised operating structure announced in September. The company now reports an Agents and Infra segment and a Devices and Consumer segment, and it recast prior-period amounts to make the comparisons consistent. That change means comparisons with Microsoft’s former three-segment presentation require care, even where underlying products remain familiar.
Agents and Infra produced $76.795 billion in revenue, up 25%, accounting for about 83% of company sales in the quarter. Devices and Consumer generated $15.484 billion, down 3%. The two segments sum to the $92.279 billion consolidated revenue total, making the split useful as a broad measure of the company’s changing economic mix: infrastructure, cloud and agent-related operations are carrying the expansion, while device-linked businesses are contracting.
Within the weaker segment, Windows OEM and Devices revenue fell 22% from a year earlier, and Xbox content and services revenue declined 2%. Those results contrast with the cloud figures and help explain why Microsoft’s 19% consolidated revenue growth should not be read as uniform demand across its businesses. The company returned $10.2 billion to shareholders through dividends and repurchases during the quarter.
OpenAI investment changes the EPS comparison
Microsoft also disclosed an accounting detail that complicates the conventional distinction between GAAP and adjusted earnings. Its investment in OpenAI added $207 million to GAAP net income and increased GAAP earnings per share during the quarter. Microsoft’s non-GAAP diluted EPS was therefore $4.89, lower than the $4.92 GAAP figure, because the non-GAAP calculation removes that investment effect.
That presentation reverses the more typical pattern in which adjusted earnings exceed GAAP earnings after companies exclude costs. Investors comparing Microsoft’s $4.89 non-GAAP result with the LSEG consensus of $4.73, as cited by CNBC, should therefore recognize that the official reconciliation treats the OpenAI item as a gain in the reported GAAP result, not an operating expense being added back.
Hood also said Microsoft was targeting more than $50 billion in capital expenditures and finance leases in the fiscal second quarter and about $170 billion for calendar 2027, CNBC reported. The scale of that planned spending underscores the trade-off embedded in the quarter: Azure’s growth and the $677 billion obligation balance point to unusually strong demand, while meeting it will require a much larger infrastructure commitment before much of that contracted revenue is recognized.
