Microsoft beats expectations driven by continued strength in Cloud

Microsoft Corp on Wednesday reported a strong start to its financial year, surpassing expectations, driven by continued strength in its cloud business.

The Redmond, Washington-based software and technology company said net income rose 12% to USD27.75 billion in the three months to September, the financial first quarter, from USD24.67 billion the year prior.

Diluted earnings per share improved 13% to USD3.72 from USD3.30 a year ago, ahead of USD3.66 Visible Alpha consensus. Adjusted EPS increased to USD4.13 from USD3.37.

Revenue increased 18% to USD77.67 billion from USD65.59 billion the year prior, or by 17% at constant currency, beating VA consensus of USD75.41 billion.

"We delivered a strong start to the fiscal year, exceeding expectations across revenue, operating income, and earnings per share," said Amy Hood, executive vice president and chief financial officer of Microsoft. "Continued strength in the Microsoft Cloud reflects the growing customer demand for our differentiated platform."

Microsoft Cloud revenue was USD49.1 billion, up 26%, with commercial remaining performance obligations up 51% to USD392 billion.

Revenue in Productivity and Business Processes was USD33.0 billion, up 17%, including 17% growth in Microsoft 365 Commercial cloud, 26% growth at Microsoft 365 Consumer cloud and 10% growth at LinkedIn.

Revenue in Intelligent Cloud was USD30.9 billion, up 28%, including 40% growth at Azure, or 39% in constant currency, ahead of 38% consensus.

"Our planet-scale cloud and AI factory, together with Copilots across high value domains, is driving broad diffusion and real-world impact," said Satya Nadella, chairman and chief executive officer of Microsoft.