Microsoft Announces First Quarter Results
MICROSOFT CORP (MSFT) filed an SEC Form 8-K — Results of Operations and Financial Condition. Exhibit 99.1 Microsoft Announces First Quarter Results REDMOND, Wash. — October 28, 2026 — Microsoft Corp. today announced the following results for the quarter ended September 30, 2026, as compared to the corresponding period of last fiscal year: • Revenue was $92.3 billion and
How this was made
The 30-second read
Why it matters
Earnings beat and robust cloud growth reinforce bullish sentiment for the stock and the broader tech sector.
Market read
The earnings surprise is a primary catalyst for Microsoft and may lift tech indices.
What to watch
OpenAI investment impact and lack of forward guidance could temper upside.
Microsoft reported first-quarter revenue of $92,279 million, up 19%, with GAAP net income of $36,629 million, up 32%, and Microsoft Cloud revenue growth accelerating to 30%.
Revenue, operating income, GAAP net income, GAAP diluted earnings per share, Microsoft Cloud revenue, Agents and Infra revenue, Azure revenue, and commercial remaining performance obligation all grew, while Devices and Consumer revenue declined 3%.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total revenueGAAP | $92.28B | – | 19% |
| Product revenueGAAP | $14.63B | – | – |
| Service and other revenueGAAP | $77.65B | – | – |
| Total cost of revenueGAAP | $29.72B | – | – |
| Gross marginGAAP | $62.56B | – | – |
| Research and developmentGAAP | $9.05B | – | – |
| Sales and marketingGAAP | $5.72B | – | – |
| General and administrativeGAAP | $1.88B | – | – |
| Operating incomeGAAP | $45.91B | – | 21% |
| Operating income constant-currency growthnon-GAAP | 22% | – | 22% |
| Other income (expense), netGAAP | $38M | – | – |
| Income before income taxesGAAP | $45.95B | – | – |
| Provision for income taxesGAAP | $9.32B | – | – |
| Net incomeGAAP | $36.63B | – | 32% |
| Net incomenon-GAAP | $36.42B | – | 18% |
| Diluted earnings per shareGAAP | $4.92 | – | 32% |
| Diluted earnings per sharenon-GAAP | $4.89 | – | 18% |
| Basic earnings per shareGAAP | $4.93 | – | – |
| Microsoft Cloud revenueother | $63.9B | – | 30% |
| Commercial remaining performance obligationother | $677B | – | 73% |
| Azure revenueGAAP | $33.16B | – | 48% |
| Microsoft 365 cloud revenueGAAP | $27.78B | – | – |
| Productivity and server licensing revenueGAAP | $8.41B | – | – |
| Search and advertising revenueGAAP | $6.55B | – | – |
| XBOX revenueGAAP | $5.38B | – | – |
| Industry solutions revenueGAAP | $5.34B | – | – |
| Windows OEM and devices revenueGAAP | $3.55B | – | – |
| Frontier and support services revenueGAAP | $2.11B | – | – |
| Net cash from operationsGAAP | $58B | – | – |
| Additions to property and equipmentGAAP | −$39.37B | – | – |
| Cash and cash equivalentsGAAP | $20.28B | – | – |
| Total cash, cash equivalents, and short-term investmentsGAAP | $64.51B | – | – |
| Long-term debtGAAP | $31.09B | – | – |
| Current portion of long-term debtGAAP | $4.39B | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Agents and InfraMicrosoft Cloud revenue was $63.9 billion and increased 30%; Azure revenue increased 48%; commercial remaining performance obligation increased 73% to $677 billion. | $76.80B | – | 25% |
| Devices and ConsumerSearch and advertising revenue excluding traffic acquisition costs increased 12%, while XBOX content and services revenue decreased 2% and Windows OEM and Devices revenue decreased 22%. | $15.48B | – | (3)% |
Capital returns
- Microsoft returned $10.2 billion to shareholders in the form of dividends and share repurchases in the first quarter of fiscal year 2027.
- Common stock repurchased: $(4,379) million.
- Common stock cash dividends paid: $(6,757) million.
What drove it
- Agents and Infra revenue was $76.8 billion and increased 25%.
- Microsoft Cloud revenue was $63.9 billion and increased 30%, up 31% in constant currency.
- Azure revenue increased 48%.
- Microsoft 365 commercial cloud revenue increased 18%, up 19% in constant currency, on an adjusted basis normalized for a 1-point benefit from in-period revenue recognition in the prior year.
- Microsoft 365 consumer cloud revenue increased 17%.
- Commercial remaining performance obligation increased 73% to $677 billion.
- Search and advertising revenue excluding traffic acquisition costs increased 12%.
Concerns
- Devices and Consumer revenue was $15.5 billion and decreased 3%.
- Windows OEM and Devices revenue decreased 22%.
- XBOX content and services revenue decreased 2%, down 1% in constant currency.
- Product revenue was $14,631 million, compared with $15,922 million.
- Additions to property and equipment were $(39,367) million.
- Non-GAAP net income and diluted earnings per share exclude the impact from investments in OpenAI.
What to watch
- Microsoft said it will provide forward-looking guidance on its earnings conference call and webcast.
- Azure revenue increased 48%.
- Commercial remaining performance obligation increased 73% to $677 billion.
- Microsoft Cloud revenue growth accelerated to 30%.
- Windows OEM and Devices revenue decreased 22%.
- The impact from investments in OpenAI resulted in an increase in net income and diluted earnings per share of $207 million and $0.03, respectively.
Balance sheet and cash flow
- Net cash from operations was $58,000 million, compared with $45,057 million.
- Additions to property and equipment were $(39,367) million, compared with $(19,394) million.
- Net cash used in investing was $(41,965) million, compared with $(34,559) million.
- Net cash used in financing was $(16,640) million, compared with $(11,799) million.
- Cash and cash equivalents were $20,281 million at September 30, 2026, compared with $20,935 million at June 30, 2026.
- Total cash, cash equivalents, and short-term investments were $64,509 million at September 30, 2026, compared with $76,843 million at June 30, 2026.
- Long-term debt was $31,090 million at September 30, 2026, compared with $31,067 million at June 30, 2026.
Analysis
Microsoft began fiscal year 2027 with $92,279 million of GAAP revenue, up 19% from $77,673 million. GAAP operating income was $45,915 million, up 21% from $37,961 million, while GAAP net income was $36,629 million, up 32% from $27,747 million. GAAP diluted earnings per share was $4.92, up 32% from $3.72. Non-GAAP net income was $36,422 million and non-GAAP diluted earnings per share was $4.89 after excluding the impact from investments in OpenAI.
Agents and Infra was the central source of growth. Segment revenue was $76,795 million, up 25% from $61,672 million, and segment operating income was $40,558 million versus $32,718 million. Microsoft Cloud revenue was $63.9 billion and increased 30%, with growth accelerating to 30%, while Azure revenue increased 48%. Commercial remaining performance obligation increased 73% to $677 billion. Microsoft 365 commercial cloud revenue increased 18% on an adjusted basis normalized for a 1-point benefit from in-period revenue recognition in the prior year.
Devices and Consumer revenue was $15,484 million, down 3% from $16,001 million. Search and advertising revenue excluding traffic acquisition costs increased 12%, but XBOX content and services revenue decreased 2% and Windows OEM and Devices revenue decreased 22%. Product revenue was $14,631 million compared with $15,922 million, while service and other revenue was $77,648 million compared with $61,751 million, underscoring the period's service-led mix.
Gross margin was $62,559 million, compared with $53,630 million, and operating expenses were led by research and development of $9,047 million, compared with $8,146 million. Cash generation was $58,000 million of net cash from operations, compared with $45,057 million. Additions to property and equipment were $(39,367) million, compared with $(19,394) million, and net cash used in investing was $(41,965) million. The company returned $10.2 billion to shareholders in dividends and share repurchases.
The release contains no numeric forward guidance. Microsoft stated that it will provide forward-looking guidance in connection with the earnings announcement on its earnings conference call and webcast. The key reported operating markers for the next update are Microsoft Cloud growth, Azure revenue growth, commercial remaining performance obligation, the pace of property and equipment additions, and the performance of Windows OEM and Devices and XBOX content and services.
Management, verbatim
We are delivering greater capability, choice, control, and cost efficiency for customers across our entire stack. By helping organizations build and own their own intelligence, and earning trust through agent safety and security, we are translating our innovation into growing adoption and real-world impact across every industry.
Satya Nadella, chairman and chief executive officer of Microsoft
We delivered a strong start to the fiscal year with Microsoft Cloud revenue of $63.9 billion, with growth accelerating to 30% (up 31% in constant currency) year-over-year. Results exceeded expectations across revenue, operating income, and earnings per share.
Amy Hood, executive vice president and chief financial officer of Microsoft
Not in the filing
stated, not guessed- Numeric forward revenue guidance was not provided in the filing text.
- Forward gross-margin guidance was not provided in the filing text.
- Forward operating-expense guidance was not provided in the filing text.
- Forward tax-rate guidance was not provided in the filing text.
- Free cash flow was not reported.
- Gross margin percentage was not reported.
- Prior-quarter income-statement comparisons were not reported.
- Prior guidance was not provided.
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
Microsoft's Q1 FY2027 earnings release filed via SEC Form 8‑K.
Ticker impact
Microsoft reported Q1 FY2027 results with 19% revenue growth and 32% earnings increase, beating expectations.
likely upward as market prices in the earnings beat
Revenue and earnings both rose sharply year‑over‑year, surpassing consensus; guidance was not provided but the beat alone supports a positive move.
Market effects
Cloud and AI services sector may see broader optimism.
U.S. tech indices likely to rise.
Global markets may react to the AI‑driven growth narrative.
Counterpoint
If the market had already priced in strong AI demand, the rally could be muted.
Key entities
- ExecutiveSatya Nadella
CEO who highlighted AI and cloud growth.
- ExecutiveAmy Hood
CFO who presented the financial results.