Microsoft Q1 revenue hits $92.3 billion as Azure grows 48%

Headline numbers for the quarter

Microsoft announced results for the quarter ended September 30, 2026, on October 28, 2026. Revenue was $92.3 billion, an increase of 19% compared with the same period a year earlier. Operating income was $45.9 billion, up 21%, or 22% in constant currency.

Net income was $36.6 billion on a GAAP basis, up 32%. Diluted earnings per share was $4.92 on the same basis, also up 32%. On a non-GAAP basis, which excludes the impact of Microsoft's investments in OpenAI, net income was $36.4 billion, up 18% (19% in constant currency), and diluted earnings per share was $4.89, up 18%.

The gap between the GAAP and non-GAAP growth rates comes from OpenAI. According to Microsoft, net gains from its OpenAI investments raised net income by $207 million and earnings per share by $0.03 in the latest quarter. In the first quarter of fiscal 2026, net losses from those investments lowered net income by $3.1 billion and earnings per share by $0.41.

Cloud and the Agents and Infra segment

Amy Hood, Microsoft's chief financial officer, said Microsoft Cloud revenue was $63.9 billion, with growth accelerating to 30% (31% in constant currency) year over year. Azure revenue increased 48%.

Revenue in the Agents and Infra segment was $76.8 billion, up 25%. Microsoft also said commercial remaining performance obligation increased 73% to $677 billion. Other highlights in the segment:

• Microsoft 365 commercial cloud revenue rose 17% as reported (18% in constant currency), or 18% (19% in constant currency) on an adjusted basis that normalizes for a 1-point benefit from in-period revenue recognition in the prior year.
• Microsoft 365 consumer cloud revenue rose 17% (16% in constant currency).
• Industry solutions cloud revenue rose 10%.

Microsoft noted that it recast certain prior-period amounts to reflect segment changes for fiscal year 2027 that it announced in September 2026.

Devices and Consumer declines

Revenue in the Devices and Consumer segment was $15.5 billion, down 3%. Search and advertising revenue excluding traffic acquisition costs grew 12%. Xbox content and services revenue fell 2% (down 1% in constant currency), and Windows OEM and Devices revenue dropped 22%.

What management said and what comes next

CEO Satya Nadella said Microsoft is "delivering greater capability, choice, control, and cost efficiency for customers across our entire stack." He added that by helping organizations build and own their own intelligence, and by earning trust through agent safety and security, the company is turning innovation into "growing adoption and real-world impact across every industry."

Microsoft returned $10.2 billion to shareholders through dividends and share repurchases in the quarter. The release did not include forward-looking guidance, which the company said it would provide on its earnings call and webcast, held at 2:30 p.m. Pacific time on the day of the announcement.

For investors and customers, the figures show the cloud and infrastructure business carrying the company's growth, while the consumer and devices side shrank. The 73% rise in commercial remaining performance obligation, to $677 billion, points to a large volume of contracted commercial business, though the release does not break down its timing.