Microsoft reported a 32 per cent year-on-year rise in net income to $36.6 billion in the July-September quarter, days after announcing a voluntary buyout offer for around 60,000 employees, more than a quarter of its global workforce.India is among the four countries where the offer applies, alongside the US, Canada and the UK.The technology major began fiscal year 2027 with higher revenue and earnings, supported by strong growth in its cloud business. Revenue for the first quarter ended September 30, 2026, rose 19 per cent to $92.3 billion from $77.7 billion in the corresponding quarter last year. Operating income increased 21 per cent to $45.9 billion.
Microsoft Cloud revenue rises 30%, Azure grows 48%
Microsoft’s cloud business remained a key contributor to its results, with Microsoft Cloud revenue reaching $63.9 billion, up 30 per cent year-on-year and 31 per cent in constant currency. Azure revenue grew 48 per cent during the quarter.Microsoft CEO Satya Nadella highlighted the performance in a post on X. “Just wrapped our earnings call. It was a fast start to our fiscal year. Microsoft Cloud revenue surpassed $63B, with growth accelerating to 30% YoY,” he said.Revenue from Microsoft’s Agents and Infra segment rose 25 per cent to $76.8 billion. The company’s commercial remaining performance obligation, which represents contracted revenue yet to be recognised, increased 73 per cent to $677 billion.“We delivered a strong start to the fiscal year with Microsoft Cloud revenue of $63.9 billion, with growth accelerating to 30% (up 31% in constant currency) year-over-year,” said Amy Hood, Microsoft’s executive vice president and chief financial officer. She added that the company exceeded expectations across revenue, operating income and earnings per share.
Microsoft projects December-quarter revenue of up to $97.1 billion
Diluted earnings per share increased 32 per cent to $4.92 on a reported basis. Excluding the impact of investments in OpenAI, adjusted net income rose 18 per cent to $36.4 billion, while adjusted earnings per share increased 18 per cent to $4.89.Microsoft expects revenue of $96 billion to $97.1 billion in the December quarter, representing growth of 18-19 per cent. Azure revenue growth is projected at 49-50 per cent in constant currency.Hood said customer demand continues to exceed available supply, while improvements in the efficiency of the company’s computing infrastructure are helping it serve more demand.
Capital expenditure expected to exceed $50 billion in December quarter
Microsoft’s capital expenditure stood at $45.2 billion in the September quarter. Hood expects spending to exceed $50 billion in the December quarter, with capital expenditure for calendar year 2026 projected at approximately $170 billion. The estimate partly reflects capacity deliveries delayed from earlier periods.However, not all business segments recorded growth. Revenue from Microsoft’s Devices and Consumer segment declined 3 per cent to $15.5 billion. Windows OEM and devices revenue fell 22 per cent, while Xbox content and services revenue declined 2 per cent. Search and advertising revenue, excluding traffic acquisition costs, grew 12 per cent.
Microsoft offers voluntary buyouts to around 60,000 employees
The company’s financial performance comes as it offers voluntary buyouts to around 60,000 employees, more than a quarter of its global workforce. Chief people officer Amy Coleman announced the Voluntary Exit Offer (VEO) in a memo to staff on Monday, presenting it as an option for employees already considering a future outside Microsoft to leave with financial support and career planning assistance.The terms mirror Microsoft’s standard severance arrangements. Eligible employees in the US, Canada, the UK and India at level 70 and below have until the first week of December to decide whether to accept the offer. The level band extends up to general managers and some vice presidents. Employees who accept will leave the company at the end of the year.Unlike the retirement buyout Microsoft offered earlier this year, the VEO has no age or tenure requirement, and performance does not determine eligibility.However, the offer is not available to every employee at level 70 or below. Microsoft has left the decision on participation to individual business leaders. Coleman’s memo said participation would depend on each unit’s priorities, customer commitments and workforce needs.
