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Microsoft — FY27 Q1 Earnings Explained simply: where the money came from, and where it went

FY27 Q1 · Quarter ended 2026-09-30
Reported 2026-10-28

Microsoft grew 19% to $92.3B on Azure's 48% surge, and customers have now committed $677B of future cloud spending — the AI boom is real, and so is the bill to build it.

Revenue growth+19%EPS (GAAP)$4.92Azure growth+48%Microsoft Cloud$63.9B

Follow the money, left → right. Hover or tap any block or band to trace where that money comes from and where it goes. Tap a block to pin it and read what it means below. Tap the background to reset.

Revenue

In plain English

This quarter

Follow $100 of revenue

Charts in billions are hard to feel. Here is the same quarter, shrunk down: for every $100 Microsoft took in, this is where it went.

Agents and Infra
$83.22
Devices and Consumer
$16.78
Cost of revenue
−$32.21
R&D
−$9.80
Sales & marketing
−$6.19
G&A
−$2.04
Other income
$0.04
Tax
−$10.10
Kept as profit
$39.69

Kept-as-profit includes +$0.04 of other income per $100 of revenue; the rows add to $100.01 due to rounding.

Three things to take away

If you only remember three numbers from this quarter, make it these.

+48%

AI is the growth engine

Azure grew 48%, and Microsoft Cloud revenue hit $63.9B — about 69% of all revenue. The growth story is the data centers.

$677B

Customers have already committed

Commercial remaining performance obligation — contracted future cloud revenue — reached $677B, up 73%. That is years of AI spending already signed.

-3%

The consumer side is shrinking

Devices & Consumer fell 3%, dragged by Windows OEM and devices revenue down 22%. PCs, Xbox and search ads are now just 17% of revenue — a side business next to the cloud.

One-time items to know about

Things that make this quarter look different from a normal one — so you don't mistake them for the trend.

  • Non-GAAP results exclude a $207M net gain from investments in OpenAI in Q1 FY27 (vs a $3,086M net loss a year ago) — the reason GAAP net income (+32%) grew much faster than non-GAAP net income (+18%).

Other quarters

The same chart, for every quarter we've covered.