Microsoft Revenue Rises 19% to $92.3 Billion in Q1 FY2027

Microsoft  reported revenue of $92.3 billion for the first quarter of its 2027 financial year, representing a 19% increase year-on-year, as growth in its cloud and artificial intelligence businesses contributed to a strong start to the fiscal year.

For the quarter ended 30 September 2026, operating income rose by 21% to $45.9 billion, while net income under generally accepted accounting principles (GAAP) increased by 32% to $36.6 billion. Diluted earnings per share climbed 32% to $4.92.

Excluding the impact of investments in OpenAI, Microsoft’s non-GAAP net income increased by 18% to $36.4 billion, while diluted earnings per share rose by 18% to $4.89. The company said its non-GAAP figures adjust for gains and losses associated with its OpenAI investments to provide additional insight into its operating performance.

Microsoft Cloud revenue reached $63.9 billion, up 30% year-on-year, or 31% in constant currency. Azure revenue increased by 48%, while commercial remaining performance obligations rose by 73% to $677 billion, reflecting contracted future revenue from commercial customers.

Microsoft Chairman and Chief Executive Officer Satya Nadella said the company was delivering greater capabilities, choice, control and cost efficiency across its technology offerings. He added that helping organisations build and manage their own AI capabilities, while maintaining trust through agent safety and security, was supporting wider adoption across industries.

Chief Financial Officer Amy Hood said Microsoft had exceeded expectations for revenue, operating income and earnings per share during the quarter. She also highlighted the acceleration in Microsoft Cloud growth as a key part of the company’s performance.

Revenue from Microsoft’s Agents and Infrastructure segment reached $76.8 billion, an increase of 25% year-on-year. Microsoft 365 commercial cloud revenue grew by 17% on a reported basis and 18% in constant currency, while consumer cloud revenue increased by 17%, or 16% in constant currency. Revenue from industry solutions cloud rose by 10%.

The company’s Devices and Consumer segment recorded revenue of $15.5 billion, down 3% from the previous year. Search and advertising revenue, excluding traffic acquisition costs, increased by 12%, while Xbox content and services revenue declined by 2%. Windows original equipment manufacturer (OEM) and devices revenue fell by 22%.

Microsoft returned $10.2 billion to shareholders through dividends and share repurchases during the first quarter of fiscal 2027.

The company said it would provide forward-looking financial guidance during its quarterly earnings conference call. Its results reflect changes to its reporting segments announced in September 2026, with certain prior-period figures recast to align with the updated structure.

Microsoft’s first-quarter results underline the continued contribution of cloud services and AI-related infrastructure to its business, alongside mixed performance in its consumer and device operations.