By Shak Chee Hoi
Publication Date: 2026-11-09 01:00:00
Microsoft opened the fiscal year with strong operational momentum across Azure and M365 Commercial cloud, despite minor macroeconomic headwinds and supply-capacity timing dynamics. The company also benefited from the recent introduction of usage-based billing.
| Financial indicator | Q1 2026 (US$ million) | Q1 2027 (US$ million) | Percentage change |
| Revenue | 77,673 | 92,279 | +18.8% |
| Agents and Infra | 61,672 | 76,795 | +24.5% |
| Devices and Consumer | 16,001 | 15,484 | -3.2% |
| Operating income | 37,961 | 45,915 | +21.0% |
| Net income | 27,747 | 36,629 | +32.0% |
Gross margin dropped from 69.0% in Q1 2026 to 67.8% in Q1 2027, impacted by the ongoing infrastructure buildout and a sales mix shift toward lower-margin Azure consumption. Operating margin increased slightly from 48.9% in Q1 2026 to 49.8% in Q1 2027, driven by revenue growth, platform efficiencies, and focused investments. The decline in devices and consumer revenue was due to lower revenue from Windows OEM and devices.
- Microsoft Cloud revenue grew 30% year-over-year…
