Microsoft beat expectations across key financial metrics, and its shares rose 3.1% in after-hours trading following the results. The company said that large investments in artificial intelligence are increasingly translating into revenue.
Key figures
- Total revenue reached $90 billion, an 18% year-over-year increase and above the analyst consensus of $87.6 billion.
- Adjusted earnings per share, excluding the impact of the OpenAI investment, were $4.74 versus the $4.25 expected.
- Operating income rose 18% to $40.6 billion.
Cloud drives the performance
The cloud segment was again the focal point of the report. Azure and related cloud services revenue grew 43%, accelerating from 40% in the prior quarter and topping analysts' 40% expectation. The broader Microsoft Cloud business generated $59.3 billion in revenue, up 27% year over year.
Microsoft also said that Azure's annual revenue exceeded $100 billion in the fiscal year for the first time.
Contract backlog and customer base
The value of long-term, deferred contracts — a signal of future demand — rose to $678 billion, an 84% increase year over year. Microsoft stated that the expansion came entirely from customers outside the leading U.S. AI model builders.
AI products and user growth
AI-enabled office products showed notable traction: paid users of Microsoft 365 Copilot surpassed 30 million, up from 20 million in the prior quarter and ahead of analysts' roughly 26.9 million forecast.
Spending and investments
Quarterly capital expenditures were $41 billion, more than a 70% increase year over year but slightly below the market expectation of $42.4 billion. The company continues to plan for roughly $190 billion in investments for the current calendar year.
Market reaction and takeaway
The results indicate that Microsoft's cloud and AI-focused investments are increasingly generating tangible financial returns. Stronger Azure growth, an expanding contract backlog and rising Copilot adoption helped reassure investors, contributing to the after-hours share-price gain.
This article is not investment advice or a recommendation.
