Microsoft Revenue Rises 19% to US$92.3 Billion

Microsoft’s revenue rose 19% to US$92.3 billion in its fiscal first quarter ended 30 September, as its Azure cloud business grew 48% and outpaced the company’s own forecast, Zacks Equity Research reported. The results, released on Wednesday, came in above the US$89.85 billion to US$90.95 billion range management had guided.

Adjusted earnings per share, which exclude the impact of Microsoft’s OpenAI investment, rose 18% to US$4.89, beating the Zacks consensus estimate by 3.82%. Revenue topped the consensus by 1.88%. On a GAAP basis, earnings per share climbed 32% to US$4.92 and net income rose 32% to US$36.6 billion, according to Zacks.

Azure and cloud drive the beat

Azure revenue reached US$33.2 billion, up 48% in constant currency, accelerating from 42% in the previous quarter. Stock Titan noted that Microsoft had forecast Azure growth of 44% to 45% for the period. Total Microsoft Cloud revenue rose 30% to US$63.9 billion, while commercial remaining performance obligation jumped 73% to US$677 billion, Zacks said.

Under the two-segment structure Microsoft adopted from fiscal 2027, the Agents and Infra unit posted revenue of US$76.8 billion, up 25%, with an operating margin of 53%. The Devices and Consumer segment slipped 3% to US$15.5 billion, as Windows OEM and devices revenue fell 22% and Xbox content and services declined 2%.

Microsoft Revenue, Spending and cash flow

Capital expenditure, including finance leases, came to US$45.2 billion. Zacks said this was below expectations because some third-party capacity deliveries were delayed, while Stock Titan reported the figure was 30% higher than a year earlier but under Microsoft’s earlier outlook of more than US$50 billion.

Operating cash flow increased 29% to US$58 billion, while free cash flow fell to US$18.6 billion from US$25.7 billion. Microsoft booked net gains of US$207 million from its OpenAI investments, adding 3 cents to earnings per share. Stock Titan reported the company also raised its quarterly dividend by 8% to US$0.98 a share, payable on 10 December.

Market reaction

Microsoft shares rose about 4.1% to US$552.55 in after-hours trading on Wednesday, according to Stock Titan, and were up 2.61% in premarket trading on Thursday, TheStreet reported. TheStreet said the S&P 500 fell after Alphabet and Microsoft delivered divergent earnings, with Alphabet shares sliding on negative free cash flow. Capital.com analyst Daniela Hathorn said the two reports offered “competing narratives about the profitability of AI investment.”

What’s next

For the fiscal second quarter, Microsoft expects revenue of US$96.0 billion to US$97.1 billion, or growth of 18% to 19%, and Azure growth of 49% to 50% in constant currency, with demand continuing to exceed available supply, Zacks reported. Capital expenditure is expected to exceed US$50 billion in the quarter, and the company expects free cash flow to remain positive in fiscal 2027. Zacks added that the estimated cost of an employee voluntary exit offer is included in the second-quarter guidance.

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