Microsoft Tops Estimates as Azure Grows 48% — SkimNews
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- Microsoft reported adjusted EPS of $4.89 versus $4.73 expected and revenue of $92.28 billion versus $90.69 billion; revenue rose 19% year over year, and shares gained 4% in extended trading.
- Azure grew 48% and posted $33.17 billion in quarterly revenue, above StreetAccount's $32.32 billion estimate; the cloud business is now Microsoft's biggest single business, after 42% growth in the June quarter.
- Amy Hood guided fiscal second-quarter revenue to $96 billion-$97.1 billion and Azure growth to 49%-50% at constant currency, above the 45.1% StreetAccount consensus, while demand still exceeds supply.
- Microsoft reported $45.2 billion in capital expenditures and finance leases, up about 30% year over year but below StreetAccount's $50.67 billion projection; it aims for more than $50 billion in fiscal Q2 and $170 billion across calendar 2027, with delayed third-party capacity expected in the second half.
- Microsoft remained free-cash-flow positive at $18.63 billion even as free cash flow declined 27%; Alphabet reported more than $9 billion in negative free cash flow, and Meta said its cash flow turned negative for the first time.
- Microsoft 365 Copilot users rose 50% from the prior quarter, but the company disclosed no paid-seat count; the Microsoft 365 E7 bundle now has millions of seats, according to Amy Hood.
- Microsoft cut 4,800 jobs during fiscal Q1 and then offered buyouts to up to 60,000 employees as it worked to balance its costly AI build-out with capital efficiency.
Why it matters: Microsoft beat LSEG forecasts, and Azure's 49%-50% constant-currency growth outlook topped the 45.1% consensus. Serving demand that exceeds supply comes with more than $50 billion in fiscal-Q2 capital spending and leases, while free cash flow fell 27% to $18.63 billion, making infrastructure funding the central trade-off behind Microsoft's cloud strength.
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