Photo: Brian Smale / Microsoft / CC BY-SA 4.0 (cropped)
Microsoft reported a 48% jump in Azure revenue and a 19% increase in companywide sales Wednesday, as its cloud business grew while Windows and device revenue fell sharply.
The company posted revenue of $92.3 billion for its fiscal 2027 first quarter, which ended September 30. Net income rose 32% to $36.6 billion, or $4.92 a diluted share, under generally accepted accounting principles.
Azure revenue reached $33.165 billion, compared with $22.384 billion a year earlier. The broader Microsoft Cloud measure increased 30% to $63.9 billion.
Cloud and business software pull ahead
Revenue in Agents and Infra, Microsoft’s division covering cloud and business software, rose 25% to $76.8 billion. Commercial remaining performance obligations, a measure of contracted future revenue, increased 73% to $677 billion.
Microsoft 365 commercial cloud revenue grew 17% as reported. The company put the increase at 18% after adjusting for a benefit from revenue recognized in the year-earlier quarter. Microsoft 365 consumer cloud revenue grew 17%.
Windows and devices decline
The picture was weaker in Devices and Consumer, where revenue fell 3% to $15.5 billion. Windows OEM and Devices revenue dropped 22%, while Xbox content and services revenue fell 2%. Search and advertising revenue excluding traffic acquisition costs increased 12%.
The contrast puts Microsoft’s cloud growth alongside a decline in the business that includes Windows sold through computer makers and its devices.
OpenAI investment affects profit comparison
Excluding the impact of its OpenAI investments, adjusted net income was $36.4 billion, up 18%, and adjusted diluted earnings were $4.89 a share. Those adjusted figures are not GAAP results.
Microsoft recorded a $207 million gain from OpenAI investments in the quarter, compared with a $3.086 billion loss a year earlier. That difference helped make reported profit growth faster than the adjusted increase.
Operating income increased 21% to $45.9 billion. Microsoft returned $10.2 billion to shareholders through dividends and share repurchases during the quarter.
The company said it would provide forward-looking guidance on its earnings conference call at 5:30 p.m. Eastern time Wednesday.
JBizNews Desk | Redmond, Washington
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