Microsoft (MSFT) Q1 2027 Earnings Report
PL:MSFT Q1 2027 EPS Results
- Actual EPS
- PLN 19.16
- Consensus EPS
- PLN 18.49
- Beat/Miss
- Beat by +PLN 0.67
- One Year Ago EPS
- PLN 16.18
PL:MSFT Q1 2027 Revenue Results
- Actual Revenue
- PLN 361.54B
- Expected Revenue
- PLN 355.03B
- Beat/Miss
- Beat by +PLN 6.51B
- YoY Revenue Growth
- +18.80%
Earnings Announcement Details
- Quarter
- Q1 2027
- Date
- 10/28/2026
- Time
- After Close
- Conference Call
- Wednesday, October 28, 2026
Microsoft's next earnings date is estimated for January 26, 2027, based on past reporting schedules.
Q1 2027 Earnings Call Audio
Q1 2027 Earnings Slide Deck
Q1 2027 Earnings Call Summary
The call was strongly positive overall. Microsoft reported accelerated Microsoft Cloud growth, 48% Azure growth, expanding Copilot and Foundry adoption, strong AI infrastructure efficiency gains, record remaining performance obligations and robust cash generation. The main challenges were weaker commercial bookings, execution issues in M365 E3 and stand-alone SKUs, declining Windows OEM and Xbox-related revenue, moderating industry bookings, lower cloud gross margin percentage and continued capacity constraints. Management nevertheless provided a strong second-quarter outlook and expressed confidence in long-term returns from its investments.
For the second quarter, Microsoft expects Agents and Infra revenue of USD 80.1 billion to USD 80.7 billion, or growth of 24% to 25%; Azure revenue growth of 49% to 50% in constant currency; M365 Commercial Cloud growth of approximately 19% in constant currency, with FX expected to reduce reported growth by less than 1 point; M365 Consumer Cloud revenue growth in the low teens; Productivity and server licensing revenue to decline in the mid-to-high single digits; Industry Solutions Cloud revenue growth in the mid-to-high single digits; Frontier and Support Services revenue growth in the low to mid-single digits; Microsoft Cloud gross margin percentage of roughly 65%; Devices and Consumer revenue of USD 15.9 billion to USD 16.4 billion; Search and advertising revenue ex-TAC growth in the low double digits; Xbox Content and Services revenue growth in the mid-to-high single digits; Windows OEM and devices revenue to decline in the mid-30s; total company revenue of USD 96 billion to USD 97.1 billion, or growth of 18% to 19%; COGS of USD 32.7 billion to USD 32.9 billion, or growth of 26% to 27%; operating expense of USD 18.5 billion to USD 18.6 billion, or growth of 9%; operating margins down slightly year-over-year; other income expense roughly negative $300 million; an effective tax rate of approximately 20%; Q2 CapEx over $50 billion; calendar year spend approximately $170 billion; and continued free cash flow positivity in FY '27.
- Strong First-Quarter Financial PerformanceRevenue was $92.3 billion, up 19%; gross margin dollars increased 17%, gross margin percentage was 68%, operating income increased 21% (22% in constant currency), and adjusted earnings per share was $4.89, up 18% (19% in constant currency) excluding the impact from the investment in OpenAI. Operating margin increased slightly year-over-year to 50%.
- Microsoft Cloud Growth AcceleratedMicrosoft Cloud revenue was $63.9 billion, with growth accelerating to 30% (31% in constant currency). Sequential dollars added nearly doubled year-over-year, reflecting strong demand across Azure and M365 Commercial Cloud.
- Azure Delivered 48% GrowthAzure revenue increased 48% and was ahead of expectations, driven by Foundry and improved CPU monetization. Azure growth was broad-based across enterprises and small and medium businesses, spanning core cloud services and AI infrastructure.
- Copilot Adoption and Engagement AcceleratedMicrosoft brought Chat, Cowork, Autopilot and Code together in one Copilot experience across commercial and consumer products. Automated tasks nearly doubled since July, daily users increased nearly 50% quarter-over-quarter and over 5x year-over-year, and user satisfaction improved nearly 20% quarter-over-quarter to another all-time high. 90% of Copilot queries use Auto mode.
- Large-Scale Copilot Deployments and Consumption GrowthThe number of customers with more than 50,000 Copilot seats increased over 8x year-over-year, and Volkswagen announced plans to deploy Copilot to more than 330,000 employees. Thousands of customers have purchased the E7 suite, while the number of Copilot customers actively consuming usage-based credits grew over 75% during the quarter.
- GitHub Agentic Development MomentumAgent-generated pull requests increased 6x over the past six months and agents now open more than one-third of all pull requests on GitHub. Copilot Fusion became broadly available, delivering frontier-level quality up to 40% faster and at up to 77% lower cost. Credit consumption from GitHub agentic features more than doubled since usage-based billing began.
- GitHub Security Revenue GrowthGitHub Advanced Security revenue increased over 50% year-over-year as customers used its AI capabilities to scan entire repositories and fix vulnerabilities in real time.
- Business Applications and Healthcare AdoptionMicrosoft introduced 30 new Copilot skills across Dynamics 365. More than 10 million LinkedIn members use AI-powered job search daily, and 25,000 customers use agentic hiring solutions; recruiters using Hiring Assistant found interview-quality applicants 33% faster while reviewing 83% fewer profiles. Microsoft automated 30 million healthcare patient encounters during the quarter, up 70% year-over-year.
- Foundry Expansion and Multimodel GrowthFoundry surpassed 120,000 customers and revenue more than tripled year-over-year. The number of customers building agentic solutions with multiple models increased 5x year-over-year, while revenue from open-source models on Foundry increased 10%.
- Progress in First-Party AI ModelsMicrosoft stated that its goal is to deliver capabilities comparable to leading models within 3 to 6 months of their release at a fraction of the training cost. MAI-Cyber powers over 40% of scans in the agentic code scanner at 18% lower cost per scan; MAI Code Flash had 3 million GitHub Copilot users last month; Microsoft Decision-1 was used by over 4,000 customers in its first month; and MAI-Base-2 achieved 4 to 12x greater training compute efficiency than other open-weight models tested.
- Fabric, Database and Enterprise Data AdoptionPaid Fabric customers reached 44,000, up more than 50% year-over-year. More than 19,000 customers use Foundry and Fabric together, while PostgreSQL growth accelerated for the fourth consecutive quarter. The number of PostgreSQL customers also using Foundry accelerated to 90% year-over-year.
- Growth in Enterprise Context and Agent GovernanceNearly 60,000 customers are accessing context across Microsoft IQ, up 25% quarter-over-quarter. More than 50 million agents are in the Agent 365 registry, up over 30% quarter-over-quarter. Customers have used Microsoft Purview to audit over 7.6 billion agent activities, up 5x quarter-over-quarter.
- Infrastructure Capacity and Efficiency ImprovementsMicrosoft added 24 data centers across five continents during the quarter and reduced dock-to-live times for new GB300s in its largest regions by about 20% quarter-over-quarter. Copilot workload throughput increased over 50% quarter-over-quarter. Maia 200 is delivering up to 1.7x more tokens per watt across Teams and Copilot AI experiences, while Maia 300 is expected to deliver 40% more tokens per watt than leading GPU-based systems.
- Strong Remaining Performance ObligationsCommercial remaining performance obligation increased 73% to $677 billion. Approximately 30% is expected to be recognized as revenue in the next 12 months, up from 29% year-over-year, while the portion recognized beyond the next 12 months increased 98%.
- M365 Commercial Cloud and Search PerformanceM365 Commercial Cloud revenue increased 18% (19% in constant currency when adjusted for the prior-year comparable), driven by stronger GitHub Copilot adoption and usage. Copilot revenue growth accelerated quarter-over-quarter, and paid M365 commercial seats grew 5%. Search and advertising revenue excluding traffic acquisition costs increased 12%, driven by higher volume and rate across LinkedIn, Edge and Bing; Bing and Edge also took share.
- Positive Cash Flow and Shareholder ReturnsCash flow from operations was $58 billion, up 29%, driven by strong cloud billings and collections. Free cash flow was $18.6 billion, and Microsoft returned $10.2 billion to shareholders through dividends and share repurchases.
- Gaming and LinkedIn Engagement AchievementsMinecraft delivered a record quarter with all-time highs in engagement and revenue, and World of Warcraft had its largest beta in franchise history. Microsoft entered the holiday season with one of its strongest first- and third-party lineups in years. LinkedIn time spent viewing feed content increased 15% year-over-year across more than 1.4 billion members.
- Constructive Second-Quarter and Fiscal-Year OutlookMicrosoft expects second-quarter total revenue of $96 billion to $97.1 billion, representing growth of 18% to 19%. Agents and Infra revenue is expected to be $80.1 billion to $80.7 billion, or growth of 24% to 25%, while Azure growth is expected at 49% to 50% in constant currency. Management expects revenue growth to accelerate through the year in M365 Commercial Cloud and expects to remain free cash flow positive in fiscal 2027.
- Continued AI Infrastructure InvestmentCapital expenditures were $45.2 billion in the quarter, with roughly three-quarters allocated to short-lived assets, primarily CPUs and GPUs, including higher memory and storage costs. Microsoft expects second-quarter CapEx to exceed $50 billion and calendar-year spending to be approximately $170 billion, with second-half spending accelerating due primarily to CPUs, GPUs and delayed third-party capacity deliveries.
PL:MSFT Earnings History
| Report Date | Fiscal Quarter | Forecast / EPS | Last Year's EPS | EPS YoY Change | Press Release |
|---|---|---|---|---|---|
| Jan 26, 2027 | 2027 (Q2) | 19.06- | 16.22 | ― | ― |
| Oct 28, 2026 | 2027 (Q1) | 18.4919.16 | 16.18 | 18.40% (+2.98) | |
| Jul 29, 2026 | 2026 (Q4) | 16.6118.57 | 14.3 | 29.86% (+4.27) | |
| Apr 29, 2026 | 2026 (Q3) | 15.9116.73 | 13.56 | 23.41% (+3.17) | |
| Jan 28, 2026 | 2026 (Q2) | 15.2916.22 | 12.65 | 28.17% (+3.57) | |
| Oct 29, 2025 | 2026 (Q1) | 14.3916.18 | 12.93 | 25.15% (+3.25) | |
| Jul 30, 2025 | 2025 (Q4) | 13.2214.30 | 11.56 | 23.73% (+2.74) | |
| Apr 30, 2025 | 2025 (Q3) | 12.6213.56 | 11.52 | 17.69% (+2.04) | |
| Jan 29, 2025 | 2025 (Q2) | 12.2212.65 | 11.48 | 10.24% (+1.18) | |
| Oct 30, 2024 | 2025 (Q1) | 12.1512.93 | 11.71 | 10.37% (+1.21) |
The table shows recent earnings report dates and whether the forecast was beat or missed. See the change in forecast and EPS from the previous year.