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Microsoft announced its fiscal 2027 first-quarter results with net income reaching $36.63 billion, a 32 percent rise from the prior-year period on a GAAP basis. Revenue for the three months ended September 30 totaled $92.3 billion, reflecting 19 percent growth, while operating income advanced 21 percent to $45.9 billion. The company said the performance beat expectations across key metrics as demand for its artificial intelligence offerings continued to expand. Microsoft Cloud revenue climbed to $63.9 billion, up 30 percent from a year earlier and accelerating from previous quarters, according to the company’s earnings release.
Azure contributed $33.17 billion to that total with 48 percent growth, marking the first time the company disclosed the precise dollar figure for the cloud platform in its quarterly filing. The release showed that this Azure performance exceeded analyst estimates of $32.32 billion. Under a revised reporting structure the Agents and Infra segment generated $76.8 billion in revenue for a 25 percent increase that accounted for the vast majority of overall sales. Devices and Consumer revenue slipped 3 percent to $15.5 billion as Windows OEM sales declined even while search and advertising revenue excluding traffic acquisition costs rose 12 percent.
Microsoft’s commercial remaining performance obligation jumped 73 percent to $677 billion, providing visibility into future revenue streams that extend an average of 2.3 years. Chief Financial Officer Amy Hood said in the earnings call, Our results exceeded expectations across revenue, operating income, and earnings per share, driven by strong demand across the Microsoft Cloud. Operating expenses rose 6 percent to $16.6 billion on continued investment in research, development and compute capacity while the effective tax rate stood at 20 percent compared with 19 percent a year earlier.
On a non-GAAP basis that adjusts for the impact of its OpenAI investment net income stood at $36.4 billion with an 18 percent increase. Diluted earnings per share reached $4.89 on that adjusted basis. Capital expenditures totaled $45.2 billion tied to data center expansion and free cash flow came in at $18.6 billion for the quarter according to the earnings materials.
Chairman and Chief Executive Satya Nadella stated during the earnings discussion that it was a fast start to our fiscal year. Nadella added that Microsoft Cloud revenue surpassed $63 billion with growth accelerating to 30% year over year. The executive emphasized three priorities including designing AI to empower people, ensuring every organization has sovereignty over its own learning, and building trust with controls that ensure agency safety and security. The company reported that the number of people using the Microsoft 365 Copilot AI assistant is up 50 percent from last quarter.
