Microsoft Discloses Azure Revenue for First Time: $33.2 Billion
Microsoft beat Wall Street forecasts as Azure revenue rose 48% to $33.2 billion, a figure the company had never disclosed in dollars before.
Microsoft reported quarterly results on Wednesday that beat Wall Street expectations. For the first time, the company also put a dollar figure on its Azure cloud business: $33.2 billion in revenue for the July-to-September quarter, up 48% from a year earlier. Shares rose more than 4% in extended trading after the report, according to Yahoo Finance.
The quarter was the first of Microsoft’s 2027 fiscal year, which began in July. Total revenue rose 19% to $92.3 billion, and net income climbed 32% to $36.6 billion, the company said in a statement. Microsoft also gave its sharpest view yet of how much money flows to it from its partnership with OpenAI, the maker of ChatGPT.
What happened
Revenue topped the $90.63 billion analysts had expected, according to a Bloomberg consensus cited by Yahoo Finance. Excluding the effect of Microsoft’s investment in OpenAI, earnings came to $4.89 per share, ahead of the $4.73 consensus. On a standard accounting basis, diluted earnings were $4.92 per share.
The year-over-year profit comparison is flattered by one item. A year earlier, Microsoft booked a $3.1 billion net loss tied to its OpenAI investment. This quarter the same line showed a gain of $207 million. Without those effects, net income rose 18%, the company’s figures show.
Azure is Microsoft’s platform for renting computing power, storage and artificial intelligence tools to businesses. Its 48% growth beat the 44% to 45% range that Amy Hood, Microsoft’s chief financial officer, had forecast in July, TechCrunch reported. The $33.2 billion figure was also about $850 million above analysts’ estimates, according to TechCrunch. Yahoo Finance put Azure revenue a year earlier at $22.38 billion.
- Microsoft Cloud, a broader measure that includes Azure and cloud versions of Office software, brought in $63.9 billion, up 30%.
- The commercial backlog of contracted future revenue, which Microsoft calls remaining performance obligation, jumped 73% to $677 billion.
- Windows revenue from device makers fell 22%, and Xbox content and services slipped 2%.
Microsoft also reorganized how it reports results. It now has two segments, Agents and Infra and Devices and Consumer, in place of the three it used before. Agents and Infra, which combines Azure with the cloud business behind Microsoft 365, the company’s subscription office software, generated $76.8 billion, up 25%. Devices and Consumer slipped 3% to $15.5 billion.
Why it matters
Until now, Microsoft had reported only Azure’s growth rates and occasional milestones. That made it hard to compare the business directly with Amazon Web Services and Google Cloud, whose parent companies report cloud revenue in dollars every quarter. Alphabet reported $30.7 billion in Google Cloud revenue for the same period, leaving Azure slightly ahead, TechCrunch noted. The Google figure includes Workspace subscriptions, however, and by TechCrunch’s calculations Google Cloud grew roughly twice as fast as Azure. Amazon Web Services remains the market leader. Amazon is scheduled to report on Thursday.
The results also showed how closely Microsoft’s fortunes are tied to OpenAI. Microsoft said it recorded $10 billion in revenue from commercial arrangements with the AI company, including revenue-sharing payments. That is nearly 11% of total quarterly revenue, TechCrunch reported. Receivables owed by OpenAI rose to $7.2 billion from $6 billion at the end of June, and Microsoft’s ownership stake slipped to about 24% from about 25%, according to TechCrunch. Microsoft did not explain the dilution.
What comes next
Hood forecast Azure growth of 49% to 50% in the current quarter, Yahoo Finance reported, which would mark a further acceleration. She also guided to capital spending of more than $50 billion for the quarter and about $170 billion for the fiscal year, much of it for processors and third-party data center capacity.
Spending at that scale has made investors watch closely for signs that AI demand will keep paying off. Satya Nadella, Microsoft’s chairman and chief executive, said the company brought 24 new data centers online across five continents during the quarter, according to Yahoo Finance. In the earnings statement, he said Microsoft is “delivering greater capability, choice, control, and cost efficiency for customers across our entire stack.” Hood told analysts that Microsoft expects to remain cash-flow positive. She added that it would consider other ways to raise capital if they were attractive but had not needed to so far.
