Microsoft Q1 FY27: Azure revenue $33.2 billion (+48%), about $10 billion from OpenAI
Microsoft disclosed Azure's quarterly revenue in dollars for the first time and a filing shows roughly 11% of its $92.3 billion revenue came from OpenAI.
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Microsoft's results for the quarter ended 30 September 2026 gave two numbers it had never put in front of investors before: Azure's revenue in dollars, $33.2 billion, and how much of its revenue comes from OpenAI, about $10 billion. Together they show how much of the company's growth now rests on one cloud product and one customer. Total revenue was $92.3 billion, up 19% from a year earlier.
Key points
- Microsoft reported Q1 fiscal 2027 revenue of $92.3 billion (up 19% from $77.7 billion), operating income of $45.9 billion (up 21%) and GAAP net income of $36.6 billion (up 32%).
- Azure revenue was $33.2 billion, up 48% from $22.4 billion a year earlier; Microsoft had not previously disclosed Azure's quarterly revenue in dollars, according to TechCrunch.
- A regulatory filing shows about $10 billion of revenue from commercial arrangements with OpenAI in the quarter, nearly 11% of the total, with $7.2 billion in receivables from OpenAI at the end of September.
- Microsoft now reports two segments, Agents and Infra ($76.8 billion, up 25%) and Devices and Consumer ($15.5 billion, down 3%).
- Commercial remaining performance obligation, the revenue already contracted but not yet recognised, rose 73% to $677 billion.
What happened
Microsoft published its first-quarter results for fiscal 2027 on 28 October 2026. The company's investor release gives revenue of $92.3 billion against $77.7 billion in the same quarter a year earlier. Operating income was $45.9 billion, up from $38.0 billion. GAAP net income was $36.6 billion, up from $27.7 billion, and GAAP diluted earnings per share were $4.92 against $3.72. On a non-GAAP basis, which excludes the effect of Microsoft's investments in OpenAI, net income was $36.4 billion (up 18% from $30.8 billion) and earnings per share were $4.89 against $4.13. The OpenAI investments were a net gain of $207 million this quarter and a net loss of $3.1 billion in the year-ago quarter, which explains why the GAAP growth rate is higher than the non-GAAP one.
Microsoft Cloud revenue was $63.9 billion, up 30%. Chief financial officer Amy Hood said, "Results exceeded expectations across revenue, operating income, and earnings per share."
The headline new disclosure is Azure. Microsoft reported Azure revenue of $33.2 billion, up 48%. The release puts the year-ago figure at $22.4 billion. TechCrunch reports that Microsoft had only ever shared growth percentages or vague milestones for Azure, and that analysts had expected $32.3 billion, so Azure beat by about $850 million. The 48% growth also topped the 44% to 45% that Hood had forecast on the July earnings call, according to TechCrunch. Azure is roughly 36% of Microsoft's quarterly revenue by our arithmetic ($33.2 billion of $92.3 billion).
Capital spending hit another record. TechCrunch reports capital expenditures above $45.2 billion for the quarter, and that commercial remaining performance obligation rose 73% to $677 billion, which it describes as largely future revenue from AI labs.
Background
Until this report Microsoft sorted its results into Productivity and Business Processes, Intelligent Cloud and More Personal Computing. For fiscal 2027 it reports Agents and Infra, which includes Azure and Microsoft 365's cloud business, and Devices and Consumer. Agents and Infra brought in $76.8 billion, up 25% from $61.7 billion, and Devices and Consumer $15.5 billion, down 3% from $16.0 billion. The change makes year-on-year comparisons with older segment tables awkward, but the release gives the year-ago figures on the new basis.
The OpenAI relationship has been reworked twice in a year. TechCrunch notes that in October 2025 Microsoft gave up its exclusive hold on OpenAI and OpenAI committed to buying an additional $250 billion of Azure services; that under an April 2026 agreement OpenAI keeps sharing revenue with Microsoft through 2030, subject to a cap, and may work with competing cloud providers; and that Microsoft has invested more than $13 billion. TechCrunch says Microsoft's stake fell from about 25% in June 2026 to 24% in September 2026, from roughly 27% after the October 2025 recapitalisation, and that Microsoft did not say why. Our earlier coverage of the company's cost side includes its voluntary exit offer.
The numbers
Azure grew faster than the company as a whole, and now sits within a few billion dollars of Google Cloud. TechCrunch puts Google Cloud's revenue in the same quarter at $30.7 billion, noting that Google Cloud includes Workspace subscriptions. The two businesses are defined differently, so the comparison is not like for like. Amazon had not yet reported AWS at the time of writing.
| US$ billion | |
|---|---|
| Q1 FY26 | 22.4 |
| Q1 FY27 | 33.2 |
Source: Microsoft FY27 Q1 investor release
The OpenAI figures come from Microsoft's quarterly filing as reported by TechCrunch. The roughly $10 billion for the quarter compares with $24.1 billion for all of fiscal 2026. At the latest quarterly pace the arrangement would be worth about $40 billion a year, TechCrunch calculates. That annualised figure is an extrapolation, not a Microsoft forecast.
| US$ billion | |
|---|---|
| Fiscal 2026 (full year) | 24.1 |
| Q1 FY27 (one quarter) | 10.0 |
Source: Microsoft filing, as reported by TechCrunch
What it means
For investors, the two disclosures change what they can model. Azure's dollar figure lets analysts track the business directly rather than infer it from percentages, and the OpenAI line shows how concentrated the growth is. Almost 11% of the quarter's revenue came from one customer, which is also the company whose stock Microsoft owns about a quarter of. The $7.2 billion in receivables, up from $6 billion at the end of June, is money owed for past transactions rather than new revenue, TechCrunch notes.
For developers and companies buying cloud capacity, a 48% growth rate at this size is a sign that AI workloads, not only traditional hosting, are driving demand for Azure. The $677 billion contracted backlog suggests customers have committed capacity years ahead, which can matter when GPU supply is tight. We cannot say from these sources how much of that backlog is OpenAI.
For the consumer side of the business, Devices and Consumer fell 3% to $15.5 billion. We have not seen a breakdown of that decline by product in the sources we read.
What we don't know yet
- How the $10 billion splits between revenue-sharing payments and Azure services. TechCrunch says Microsoft did not say, and it has asked for more.
- What caused the dilution of Microsoft's OpenAI stake from about 25% to 24%.
- Capex detail. We have not seen a primary breakdown of the $45.2 billion, or how it compares with Microsoft's own projection.
- How much of the $677 billion backlog is tied to AI labs and to OpenAI specifically.
What to watch next
Amazon's AWS results, due the day after Microsoft's, will show whether Azure's lead over Google Cloud holds against the largest provider. Watch also for Microsoft's full Form 10-Q for the exact OpenAI wording, any detail on the revenue-sharing cap that applies through 2030, and the guidance Microsoft gave on the call, which we have not covered here.
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