For the first time, Microsoft has put a dollar figure on Azure: $33.2 billion in revenue for the quarter that ended Sept. 30, up 48% from a year earlier. That makes the cloud platform Microsoft’s largest single business, and it lets investors compare it directly with AWS and Google Cloud, whose parents already report cloud sales in dollars.
The number came with Microsoft’s fiscal first-quarter results on Wednesday. Total revenue rose 19% to $92.3 billion, operating income grew 21% to $45.9 billion and GAAP net income climbed 32% to $36.6 billion. Microsoft Cloud revenue reached $63.9 billion, up 30%, and commercial remaining performance obligation, the contracted business not yet recognized as revenue, jumped 73% to $677 billion.
“Results exceeded expectations across revenue, operating income, and earnings per share,” Amy Hood, Microsoft’s chief financial officer, said in the release.
A new way of slicing the company
The Azure disclosure is part of a reporting overhaul that took effect this quarter. Microsoft dropped the three segments it had used for 11 years and now reports two. Agents and Infra, which holds Azure, Microsoft 365 cloud, Dynamics and server licensing, brought in $76.8 billion, up 25%. Devices and Consumer, which covers Windows, Xbox and search advertising, fell 3% to $15.5 billion, with Windows OEM and devices revenue down 22%.
Azure’s 48% growth beat the 44% to 45% range Hood forecast in July, TechCrunch noted. Google Cloud, which also includes Workspace, posted $30.7 billion for the same quarter, so Azure is slightly larger, though Google’s unit roughly doubled from a year earlier.
A separate figure from Microsoft’s filing shows how tied the two AI partners still are. Microsoft recorded $10 billion in revenue from its commercial arrangements with OpenAI in the quarter, including revenue-sharing payments, TechCrunch reported from the filing. That is nearly 11% of total revenue.
Late capacity, lower capex
Microsoft spent $45.2 billion on capital expenditures, including finance leases, short of the $50.67 billion analysts surveyed by StreetAccount had projected. Some data center capacity that outside providers were supposed to deliver in the quarter showed up late, and Hood tied the delays to GPU-as-a-service providers. “Some third-party capacity deliveries we expected in Q1 were delayed,” she said on the earnings call, as quoted by CNBC. Shares of neocloud companies CoreWeave and Nebius slid almost 5% in extended trading after the report, a separate CNBC story said.
Hood said Microsoft expects capex of more than $50 billion in the December quarter, with spending accelerating in the second half of the fiscal year. She also said the company may tap other sources of financing “when we believe it is attractive to do so,” GeekWire wrote. Microsoft’s expense outlook includes an estimate for the buyout offer to up to 60,000 employees it announced Monday, though Hood did not give the amount. It was also Microsoft’s first earnings report since it reshuffled Azure’s leadership earlier this month.
For the December quarter, Microsoft guided to revenue of $96 billion to $97.1 billion and Azure growth of 49% to 50% in constant currency. Amazon reports AWS results Thursday afternoon.