Microsoft First Quarter Revenue Hits $92.3 Billion on Azure Growth

Microsoft reported first-quarter fiscal 2027 financial results that exceeded analyst expectations for revenue and earnings. Total revenue reached $92.3 billion, a 19 percent increase year-over-year, with adjusted earnings per share of $4.89. The growth was primarily driven by the Azure cloud business, which grew 48 percent in constant currency to approximately $33.2 billion, signaling that the company's heavy investments in artificial intelligence are yielding returns.

Despite the cloud success, the company faced headwinds in its consumer segments. Revenue for the Devices and Consumer segment decreased by 3 percent, while Windows OEM and devices revenue fell 22 percent amid a broader PC market decline. Xbox hardware revenue also dropped 14 percent. To align with its strategic shift, Microsoft consolidated its financial reporting into two new segments: Agents and Infra and Devices and Consumer.

Financial metrics showed mixed results regarding cash flow. Free cash flow dropped 27 percent to $18.6 billion as cash capital expenditures on property and equipment doubled to $39.4 billion. However, total capital expenditure of $45.2 billion remained below the company's $50 billion projection. This discrepancy was attributed to delays in third-party capacity deliveries. Other areas of slowing growth included a 12 percent year-over-year fall in commercial bookings and a slowdown in M365 commercial seat growth to 5 percent.