Microsoft reported on October 28 revenue of $92.3 billion (+19%), Azure up 48% and a commercial RPO of $677 billion (+73%). Unlike Alphabet and Meta, it kept free cash flow positive ($18.6 billion), but it guided to about $170 billion of capex in 2026 and said demand still outruns supply.
The Quarter's Numbers
According to the call transcript (Motley Fool) and 24/7 Wall St. summaries, Microsoft closed its first fiscal quarter of 2027 with revenue of $92.3 billion, non-GAAP EPS of $4.89 (against $4.72 expected) and Microsoft Cloud at $63.9 billion (+30%). Azure grew 48%, above expectations, despite third-party capacity delays.
What's Growing and What Isn't
The call showed an uneven quarter. On the strong side: Foundry revenue more than tripled, with over 120,000 customers, and daily Copilot users rose nearly 50% from the prior quarter. On the weak side: Windows OEM revenue fell 27%, paid commercial M365 seats grew only 5%, and commercial bookings fell 12% against large Azure commitments in the year-ago quarter. The release also clarifies that EPS excludes the effect of the OpenAI investments.
How This Works: RPO vs. Revenue
RPO (remaining performance obligation) is the value of signed contracts not yet billed. With an average duration of 2.3 years, a $677 billion RPO implies very visible future revenue, but it depends on delivering capacity: Microsoft acknowledged that part of the spending and supply shifted to the second half because of third-party delays. Compared with Alphabet (a $561 billion backlog and negative free cash flow), Microsoft pairs a larger RPO with positive free cash flow, though it said it may use external financing when convenient.
Sources: Motley Fool (FY27 Q1 call transcript), 24/7 Wall St., BigGo Finance, Phemex.