Microsoft Corporation (MSFT.US) Q1 revenue grew 19% year-over-year to nearly US$92.3 billion; Azure revenue surged 48%

Microsoft Corporation (MSFT.US) on Wednesday reported financial results for the first quarter of fiscal year 2027. Data showed that the company's revenue for the quarter reached US$92.279 billion, up 19% year-over-year; GAAP net income was US$36.629 billion, up 32% from US$27.747 billion in the prior-year period; GAAP diluted earnings per share were US$4.92, up 32% year-over-year from US$3.72 in the prior-year period. Non-GAAP adjusted net income reached US$36.422 billion, up 18% year-over-year; adjusted earnings per share were US$4.89, up 18% year-over-year from US$4.13 in the prior-year period. Microsoft Corporation said the non-GAAP results exclude the impact of its investment in OpenAI. In terms of profitability, Microsoft Corporation's first-quarter operating income reached US$45.915 billion, up 21% year-over-year, or up 22% in constant currency; operating margin was approximately 49.8%, up from 48.9% in the prior-year period. Gross profit for the quarter was US$62.559 billion, up approximately 17% year-over-year, with gross margin of approximately 67.8%. Microsoft Corporation Chief Financial Officer Amy Hood said the company got off to a strong start in the new fiscal year, with Microsoft Corporation's cloud revenue reaching US$63.9 billion, up 30% year-over-year, or up 31% in constant currency, with growth further accelerating. The company's revenue, operating income and earnings per share for the quarter all exceeded internal expectations. Azure revenue grew 48%; cloud business continues to benefit from AI demand The cloud computing business continued to be an important driver of Microsoft Corporation's performance growth. In the first quarter, Microsoft Corporation's Azure revenue reached US$33.165 billion, up 48% from US$22.384 billion in the prior-year period, reflecting continued expansion of enterprise demand for cloud computing and artificial intelligence infrastructure. Microsoft Corporation's total cloud revenue reached US$63.9 billion, up 30% year-over-year, or up 31% in constant currency. Meanwhile, Microsoft Corporation's commercial remaining performance obligation reached US$677 billion, up 73% year-over-year, indicating continued growth in the scale of signed commercial contracts not yet recognized as revenue. Microsoft 365 Commercial cloud revenue grew 17% year-over-year, or 18% in constant currency. After adjusting for a one-percentage-point impact from revenue recognition in the prior-year period, commercial cloud revenue grew 18% year-over-year, or 19% in constant currency. Microsoft 365 Consumer cloud revenue grew 17% year-over-year, and Industry Solutions cloud revenue grew 10% year-over-year. Microsoft Corporation Chairman and Chief Executive Officer Satya Nadella said the company is providing customers with greater capabilities, more choices, more control and more cost-effective solutions through its full technology stack. Nadella noted that by helping enterprises build and master their own intelligence capabilities while enhancing the security and reliability of AI agents, Microsoft Corporation is driving broader adoption of innovative technologies across industries and converting them into real business outcomes. Under new business structure, Agents and Infra revenue grew 25% It is worth noting that starting in fiscal year 2027, Microsoft Corporation adjusted its business segment structure, reclassifying its businesses into two major segments: Agents and Infra and Devices and Consumer. Among them, Agents and Infra first-quarter revenue reached US$76.795 billion, up 25% year-over-year; operating income was US$40.558 billion, up approximately 24% from US$32.718 billion in the prior-year period. The segment covers Azure, Microsoft 365 cloud services, and productivity and server licensing businesses, and is currently Microsoft Corporation's main source of revenue and profit. By comparison, the Devices and Consumer segment's first-quarter revenue was US$15.484 billion, down 3% year-over-year; operating income was US$5.357 billion, up approximately 2% year-over-year. Specifically, search and advertising revenue grew 12% year-over-year excluding traffic acquisition costs; Xbox content and services revenue fell 2% year-over-year, or 1% in constant currency. Windows OEM and devices business performed relatively weakly, with revenue down 22% year-over-year. By product and service revenue, Microsoft Corporation's first-quarter Azure revenue was US$33.165 billion, Microsoft 365 cloud revenue was US$27.778 billion; productivity and server licensing revenue was US$8.407 billion, search and advertising revenue was US$6.554 billion, and Xbox revenue was US$5.379 billion. OpenAI investment gains affect GAAP profit performance It is worth noting that Microsoft Corporation's GAAP net income growth rate this quarter was significantly higher than its non-GAAP net income growth rate, mainly related to the accounting impact of its investment in OpenAI. Microsoft Corporation disclosed that in the first quarter of fiscal year 2027, net gains from its investment in OpenAI increased the company's GAAP net income by US$207 million, equivalent to a US$0.03 increase in diluted earnings per share. By comparison, in the prior-year period, net losses from its investment in OpenAI reduced the company's net income by approximately US$3.1 billion and earnings per share by US$0.41. Therefore, after excluding the impact of the OpenAI investment, Microsoft Corporation's first-quarter adjusted net income grew 18% year-over-year and adjusted earnings per share grew 18% year-over-year, lower than the 32% growth under GAAP. Capital expenditures doubled year-over-year; operating cash flow grew 29% In terms of cash flow, Microsoft Corporation's first-quarter operating cash flow reached US$58 billion, up approximately 29% from US$45.057 billion in the prior-year period. At the same time, the company continued to increase infrastructure investment. Capital expenditures for purchases of property and equipment during the quarter reached US$39.367 billion, up approximately 103% from US$19.394 billion in the prior-year period. Calculated as operating cash flow minus expenditures for purchases of property and equipment, Microsoft Corporation's first-quarter free cash flow was approximately US$18.633 billion, lower than US$25.663 billion in the prior-year period. On the balance sheet, as of September 30, 2026, Microsoft Corporation held cash, cash equivalents and short-term investments totaling US$64.509 billion, lower than US$76.843 billion as of the end of June 2026. Microsoft Corporation returned US$10.2 billion to shareholders through share repurchases and dividends in the first quarter. Among this, share repurchase spending was approximately US$4.379 billion, and cash dividend payments were approximately US$6.757 billion.