For years Microsoft described Azure only through growth rates. In results published on October 28 for the quarter that ended on September 30, the first of its 2027 fiscal year, the company finally gave a number: Azure took in about $33.2 billion, up 48% on a year earlier. A regulatory filing released the same day supplied a second figure that says a lot about the AI economy, $10.0 billion of revenue from commercial arrangements with OpenAI in the same three months.
The headline results were strong. Revenue reached $92.3 billion, a 19% increase, operating income rose 21% to $45.9 billion, and net income climbed 32% to $36.6 billion, or $4.92 per diluted share. Microsoft Cloud revenue was $63.9 billion, up 30%. CNBC reported that analysts surveyed by StreetAccount had pencilled in $32.32 billion for Azure, and that its growth rate in the June quarter had been 42%. TechCrunch added that the 48% pace beat the 44% to 45% range finance chief Amy Hood had guided to in July.
The dollar disclosure comes with a new reporting structure. Microsoft now uses two segments instead of the three it kept for eleven years. Agents and Infra, which combines Azure with Microsoft 365 commercial cloud, server products and related services, generated $76.8 billion, up 25%. Devices and Consumer, covering Windows, devices, Xbox and search advertising, shrank 3% to $15.5 billion, with Windows OEM and devices sales down 22%. Commercial remaining performance obligation, the contracted revenue still to be recognised, rose 73% to $677 billion.
The OpenAI line sits in the related-party note of the Form 10-Q. Microsoft says it holds an equity-method stake of roughly 24% on an as-converted basis, and that its commercial revenue from OpenAI, counting revenue-sharing payments, came to $10.0 billion in the quarter. Receivables from OpenAI rose to $7.2 billion at the end of September from $6.0 billion in June, and Microsoft has funded $12.0 billion of $13.0 billion in total investment commitments. The filing does not split the $10.0 billion between Azure compute and revenue sharing, and TechCrunch said it had asked for that breakdown.
Spending is still climbing, though less than Wall Street assumed. Capital expenditure including finance leases was $45.2 billion, up about 30%, against an analyst estimate near $50.7 billion, according to CNBC. Hood told analysts some third-party capacity deliveries expected in the quarter had slipped into the second half of the fiscal year, and CNBC reported that about three quarters of spending now goes to short-lived assets such as chips. Shares of neocloud suppliers CoreWeave and Nebius fell almost 5% after the report, while Microsoft's own stock rose about 4% in extended trading.
Guidance pointed to more of the same: Microsoft forecast fiscal second-quarter revenue of $96 billion to $97.1 billion and Azure growth of 49% to 50% in constant currency, CNBC said. Nadella told analysts that the number of Microsoft 365 Copilot users grew 50% from the prior quarter, without saying how many paid seats that represents. Free cash flow fell 27% to $18.63 billion as the build-out continued.
Put together, the figures show how far Microsoft's AI growth still runs through one partner. OpenAI accounted for close to 11% of quarterly revenue even after the two companies loosened their exclusive cloud arrangement, and that money flows partly from compute and partly from revenue sharing in proportions Microsoft has not disclosed. The new Azure number also lets investors compare Microsoft directly with Google Cloud, which Alphabet put at $30.7 billion for the same quarter, and with Amazon Web Services, which reports next.