Microsoft revenue hits record $92 billion

Microsoft reported revenue of $92.28 billion for the three months ended in September, a 19% increase from the same period last year. The figure exceeded the LSEG consensus estimate of $90.69 billion. Adjusted earnings per share reached $4.92, up 32% year over year and above the $4.73 estimate. The company posted these results Wednesday evening, prompting a 3% rise in after-hours trading.

The cloud division drove much of the performance. Azure revenue grew 48% year over year to $33.17 billion. This pace outpaced the FactSet consensus of 44% and 45% on a constant-currency basis. The acceleration comes after shares lost about 25% earlier this year amid concerns regarding the company's position in the AI race. The stock has since recovered roughly 51% from its late June low.

Management attributed the revenue beat to gains in GPU efficiency. This allowed the firm to allocate additional capacity to customers while increasing revenue per token. Microsoft added 24 new data centers across five continents during the quarter. These additions helped offset delays in third-party capacity deliveries that had previously limited Azure growth.

Chief Executive Officer Satya Nadella stated that daily users of the Copilot tool increased by 50% year over year. He noted that user satisfaction improved by nearly 20% quarter over quarter, reaching an all-time high. The company described Copilot as the new operating system for work, signaling continued momentum in its AI productivity tools.

Capital expenditures totaled $45.2 billion, up from $41 billion in the prior quarter. This spending level was below the $51 billion forecast by analysts and the $50 billion projected by management. Chief Financial Officer Amy Hood acknowledged that the company will access additional funding sources when attractive. Despite the investment in AI infrastructure, Microsoft maintained positive free cash flow.

The firm returned $2.9 billion to shareholders through buybacks during the quarter. This contrasts with peers like Alphabet and Meta, which issued equity to fund AI efforts. Microsoft guided total company revenue for the current quarter to between $96 billion and $97.1 billion. This outlook sits above the Street's estimate of $95.6 billion.

For the full calendar year, Microsoft plans to spend over $170 billion on capital projects. This figure is slightly lower than the previously expected $175 billion. The company expects Azure revenue to grow between 49% and 50% in constant currency for the upcoming period.