US — The Verge
Microsoft reveals strong cloud growth amid financial reporting overhaul
Software1 min read
Microsoft reported strong results for the first quarter of its 2027 financial year. Its cloud business grew fast, and the company also changed how it groups its money reports.
Microsoft posts strong quarter
Microsoft earned $92.3 billion in revenue and $33.6 billion in net income in the first quarter of its new financial year. Revenue rose 19 percent and net income rose 32 percent. Microsoft also changed how it reports its money. It now groups its businesses into just two parts instead of three.
Key numbers
- Total revenue: $92.3 billion, up 19 percent
- Net income: $33.6 billion, up 32 percent
- Agents and Infra revenue: $76.8 billion (83 percent of total), up 25 percent
- Azure revenue: $33.17 billion, up 48 percent. Microsoft will now report Azure revenue every quarter
- Devices and Consumer revenue: $15.5 billion (17 percent of total), down 3 percent
What the new groups mean
Microsoft used to report three groups: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. Now it reports two. Agents and Infra includes Azure, Microsoft 365 for businesses and consumers, and server products. Devices and Consumer includes Windows, Xbox, Surface, and Microsoft's search and advertising businesses.
Why it matters
Cloud services are now the main source of Microsoft's money. Almost 70 percent of revenue came from Microsoft Cloud this quarter. The PC and Xbox parts of the business are shrinking. A memory chip shortage, called RAMageddon in the article, has pushed up device prices and hurt the overall PC market, which fell 20 percent in the recent quarter.
What to watch
- Whether Xbox returns to player and revenue growth by the end of fiscal year 2027, which runs through June
- More Xbox layoffs, which rumors say could come in November and January
- Whether Microsoft shares new Game Pass subscriber numbers, which it has not updated in over two years
- How the PC market holds up during the 2027 financial year and beyond
Glossary
- Azure
- Microsoft's cloud computing service, where businesses rent computer power and storage over the internet.
- Microsoft 365
- Microsoft's group of office apps and cloud services, such as Word, Excel and Outlook, for businesses and people.
- Game Pass
- Xbox's subscription service that gives players access to many games for a monthly fee.
- Surface
- Microsoft's line of laptops and tablets.
- RAMageddon
- The article's name for a memory chip shortage that has raised device prices and hurt PC sales.