Microsoft’s results for FY27 Q1 are out and, once again, the numbers are bigger than last time. It’s always difficult to reconcile such huge results with layoff announcements and that has happened again with news that Microsoft have made a voluntary exit offer to approx. 60,000 staff – almost a quarter of the workforce.
Talking about the recent Copilot “super app” that combines Chat, Cowork, Autopilot, and Code, Satya Nadella said “We think of Copilot as the new OS for work” – make of that what you will!
It’s clear that AI, Copilot, and consumption billing are the big drivers of Microsoft’s revenue and future direction.
- Revenue = $92.3 billion, up 19%
- Net Income = $36.6 billion, up 32%
- Microsoft Cloud revenue = $63.9 billion, up 30%
For several years, revenue has been split into different categories:
- Productivity and Business Processes
- Intelligent Cloud
- More Personal Computing
but it now seems to be:
- Agents and Infra
- Devices and Consumer
so the Agents & Infra segment includes Azure and M365. I assume it will include Dynamics 365 too but, for the first time in a long time, that isn’t mentioned specifically…does that mean D365 hasn’t grown in Q1 FY27?
Nadella did say that they’re “bringing the business logic and capabilities of Dynamics 365 directly into Copilot and helping every organization stand up their own infinite SaaS Factory” – perhaps there’s a shift in focus happening?
Amy Hood, CFO, stated that:
“Capital expenditures were $45.2 billion,. Roughly three quarters of…capex was for short-lived assets, primarily CPUs and GPUs, including higher memory and storage costs.”
That’s over $33 billion on CPUs and GPUs in a single quarter!
Agents & Infra numbers
- Revenue increased 25% to $76.8 billion
- Azure revenue grew 48%
- M365 Commercial increased 17%
M365 Copilot, E5, and E7 helped drive higher average revenue per user as well as more consumption billing, particularly of GitHub Copilot.
Earnings Call highlights
- The number of Copilot customers actively consuming credits through usage-based billing grew over 75 percent over the quarter.
- Credit consumption from agentic features on GitHub has more than doubled since usage-based billing went into effect.
- Over 44,000 paid Fabric customers, up more than 50 percent year over year.
- Microsoft added 24 new data centers across five continents this quarter.
See the Microsoft page here – FY27 Q1 – Press Releases – Investor Relations – Microsoft
