REDMOND, WASHINGTON / ConSynSer / – Microsoft reported strong growth in its fiscal first-quarter results on Wednesday, October 28, with net income rising to $36.63 billion from $27.75 billion a year earlier. Earnings per share increased to $4.92 from $3.72. Total revenue rose 19% to $92.28 billion for the quarter ended September 30. Growth was driven mainly by services revenue, particularly Microsoft Cloud. Shares rose about 4% in after-hours trading.
Microsoft Cloud revenue climbed 30% year on year to $63.9 billion. Azure grew 48%, ahead of the company’s own forecast of 44% to 45%. For the first time, Microsoft disclosed Azure revenue in dollar terms, at $33.17 billion. Operating income rose 21% to $45.9 billion. Adjusted earnings per share of $4.89 beat the analyst consensus of $4.73. Revenue also topped the $90.69 billion that analysts had expected.
Amy Hood, executive vice president and chief financial officer, said results exceeded expectations across revenue, operating income and earnings per share. Satya Nadella, chairman and chief executive, said Microsoft is focused on delivering greater capability and efficiency for customers. That includes helping them build their own AI systems and strengthening trust through security. Nadella said the company is translating innovation into tangible impact across industries. Hood also said Microsoft has not yet tapped debt markets to fund its expansion.
New segments show AI-driven growth
Microsoft reported results under a new two-segment structure. The Agents and Infra segment, which includes Azure and Microsoft 365, generated $76.8 billion, up 25%. Devices and Consumer, covering Windows, Xbox, search and advertising, brought in $15.48 billion, down 3%. Nadella attributed weakness in devices to higher memory and storage costs. Microsoft 365 Copilot usage rose 50% from the previous quarter, according to Nadella. Hood said the new Microsoft 365 E7 bundle has reached millions of seats.
Capital expenditure, including finance leases, reached $45.2 billion, up about 30% from a year earlier. That was below some analyst projections of more than $50 billion. Hood said about 75% of spending now goes to short-lived assets such as GPUs and CPUs. Hood added that demand still exceeds supply. Commercial remaining performance obligation stood at $677 billion, up 73% year on year. Free cash flow fell 27% to $18.63 billion.
Azure guidance points to faster growth
For the fiscal second quarter, Microsoft expects revenue of $96 billion to $97.1 billion. Analysts had forecast about $95.6 billion. The guidance implies revenue growth of about 19% at the midpoint. The company projects Azure growth of 49% to 50% in constant currency, above Wall Street’s estimate of about 45%. Ahead of the report, analysts had expected earnings per share of $4.72, as noted in previews of a busy week for Big Tech earnings.
Microsoft returned $10.2 billion to shareholders during the quarter, including $7.3 billion in dividends and $2.9 billion in share buybacks. The company raised its quarterly dividend by 8% to $0.98 per share in September. Microsoft has also expanded its work in AI beyond the cloud, including a research tool that diagnoses patients step by step. The results came as investors watch whether heavy AI spending is producing growth.