Highlights

  • Q1 FY2027 Revenue was $92.3 billion, up 19% year-over-year, beating management guidance; GAAP EPS was $4.92 and non-GAAP EPS was $4.89, up 32% and 18% respectively.
  • Azure and other cloud services revenue grew 48% year-over-year, the fastest quarterly growth rate in recent years, driving Microsoft Cloud revenue up 30% to $63.9 billion.
  • Commercial remaining performance obligations rose 73% to $677 billion, providing multi-year revenue visibility significantly ahead of reported growth.
  • Operating income rose 21% to $45.9 billion, with capital expenditures of $45.2 billion in the quarter as Microsoft builds AI infrastructure.

Microsoft (NASDAQ:MSFT) reported first-quarter fiscal 2027 results that exceeded expectations across revenue, operating income, and earnings per share, as cloud and AI Demand accelerated across the company's commercial customer base. Q1 FY2027 revenue was $92.3 billion, up 19% year-over-year, beating management guidance; GAAP EPS was $4.92 and non-GAAP EPS was $4.89, up 32% and 18% respectively.

Revenue Exceeds Guidance on Broad-Based Strength

Revenue for the quarter ended September 30, 2026 reached $92.3 billion, up 19% year-over-year and above management's guided range of $89.85 billion–$90.95 billion. GAAP Net Income was $36.6 billion, up 32%, while non-GAAP net income was $36.4 billion, up 18%. GAAP diluted EPS was $4.92 and non-GAAP diluted EPS was $4.89. The divergence between GAAP and non-GAAP growth rates reflects net gains from OpenAI investments included in GAAP results. During the quarter, Microsoft returned $10.2 billion to shareholders through dividends and share repurchases.

Azure Accelerates to 48% Growth

Microsoft's Azure cloud platform delivered 48% year-over-year revenue growth in Q1 FY2027, the fastest reported rate in recent memory and significantly above the 43% growth posted in Q4 FY2026. This acceleration reflects strong demand from enterprise customers deploying AI workloads on Azure's infrastructure, as well as the continued adoption of Microsoft's Copilot and agent-based products. Microsoft Cloud revenue — which aggregates Azure, Microsoft 365, and Dynamics — reached $63.9 billion, up 30%.

Agents and Copilot Drive Commercial Backlog Surge

The company's Agents and Infra segment generated $76.8 billion in revenue, up 25% year-over-year, while the Devices and Consumer segment saw revenue decline 3% to $15.5 billion, partly due to weak Windows OEM and devices sales. Microsoft 365 commercial cloud revenue rose 18% on an adjusted basis, with paid commercial seats growing 5% and premium offerings including Copilot and E5/E7 subscriptions driving higher average revenue per user. Commercial remaining performance obligations grew 73% to $677 billion, representing a sharp acceleration in forward-looking contracted revenue far outpacing reported growth.

Capex Rises as AI Infrastructure Buildout Continues

Capital expenditures including finance leases were $45.2 billion for the quarter, below some market expectations as certain third-party capacity deliveries were delayed into future periods. Free Cash Flow was $18.6 billion, down 27% year-over-year as infrastructure spending intensified. Microsoft highlighted its biggest-ever Copilot update during the quarter, combining Chat, Cowork, Autopilot, and Code into a single unified experience. The company also issued a voluntary employee exit offer, the estimated cost of which is included in its Q2 FY2027 guidance.