Microsoft reported fiscal Q4 revenue of $90.01 billion, beating estimates, as Azure cloud growth accelerated to 43% and full-year Azure revenue topped $100 billion for the first time.
Microsoft reported fiscal fourth-quarter revenue of $90.01 billion on Wednesday, topping analyst expectations and capping a year in which its Azure cloud platform surpassed $100 billion in annual revenue for the first time.
The result beat the $87.62 billion consensus estimate from LSEG, while adjusted earnings per share of $4.74 cleared the $4.24 consensus. Net income for the quarter, which ended June 30, came in at $35.77 billion, or $4.81 per share, compared with $27.23 billion, or $3.65 per share, in the same period a year earlier. Revenue grew approximately 18% year over year.
Net income was lifted in part by a $3.2 billion gain from Microsoft's investment in AI laboratory Anthropic, as well as lower-than-expected costs tied to its first-ever voluntary retirement program. Xbox took an offsetting impairment charge during the period.
Microsoft's Intelligent Cloud segment, which houses Azure, posted $39.31 billion in revenue — up 31.6% year over year and ahead of the $38.16 billion StreetAccount consensus. Azure growth accelerated to 43%, or 43% at constant currency, compared with 40% in the prior quarter. Analysts had been looking for growth of 40% to 40.2% at constant currency.
At more than $100 billion in annual revenue, Azure remains larger than Alphabet's Google Cloud but trails Amazon Web Services in scale.
Commercial remaining performance obligations — a measure of unearned and unrecognized revenue — rose 8% sequentially to $678 billion, the company said. Microsoft attributed that growth to commitments from clients outside the AI model-development sector, signaling broader enterprise adoption rather than a concentration among a handful of large model builders.
Microsoft disclosed in January that roughly 45% of its then-$625 billion commercial backlog was tied to OpenAI. Deutsche Bank analysts, who carry a buy rating on the stock, noted last week that the relationship creates "some concentration risk," particularly as open-source models gain traction.
Capital expenditures and finance leases for the quarter reached $41 billion, a 69% jump, while free cash flow fell 23% to $19.64 billion, reflecting the heavy infrastructure spending required to support AI workloads.
The Productivity and Business Processes segment — covering Office, Dynamics, and LinkedIn — generated $37.85 billion in revenue, up 14.3% and above the $37.19 billion consensus. Microsoft said its Microsoft 365 Copilot workplace assistant now has more than 30 million paid seats; as recently as July the figure stood above 20 million.
The More Personal Computing segment, which includes Bing, Surface, Windows, and Xbox, contributed $12.85 billion — down 4.4% year over year but above StreetAccount's $12.17 billion estimate. Device and Windows license sales to device makers declined 7%, in line with a Gartner estimate that PC shipments fell 4.2% during the period. Xbox content and services revenue dropped 10%.
Microsoft shares edged up 3% in extended trading after the results were released, even as the stock has given up 19% year to date through Wednesday's close, a period during which the S&P 500 gained roughly 7%. Investors have pressured longstanding software names on concerns that generative AI models could erode incumbents' competitive positions.
CEO Satya Nadella has been working to balance chip allocation across Azure's cloud infrastructure, AI research demands, and applications such as Microsoft 365 Copilot — a tension that is expected to persist as capital spending continues to climb.
Executives are scheduled to discuss the results and issue forward guidance on a conference call beginning at 5:30 p.m. ET. Analysts will be watching whether Azure growth can sustain its recent acceleration and how Microsoft plans to manage the interplay between its OpenAI partnership and its expanding roster of enterprise cloud customers.
TechEchelon Staff bylines are produced collectively by the newsroom for short, breaking, and wire-style coverage. Longer-form reporting is published under the responsible reporter's name.
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