Microsoft Reports 32% Increase in Net Income to $36.6 Billion Following Buyout Offer to 60,000 Employees
Microsoft reported a net income of $36.6 billion for the July-September quarter, marking a 32% year-on-year increase. This announcement comes shortly after the company offered voluntary buyouts to approximately 60,000 employees, which represents more than a quarter of its global workforce. The buyout offer is available in India, the US, Canada, and the UK.
The technology giant began fiscal year 2027 with robust financial results, driven by significant growth in its cloud business. Revenue for the first quarter ending September 30, 2026, rose 19% to $92.3 billion, up from $77.7 billion in the same period last year. Operating income also increased by 21% to $45.9 billion.
Microsoft Cloud revenue rises 30%, Azure grows 48%
Microsoft’s cloud segment was a major contributor to its financial performance, with Microsoft Cloud revenue reaching $63.9 billion, a 30% increase year-on-year. In constant currency, the growth was 31%. Azure revenue surged by 48% during the quarter. CEO Satya Nadella emphasized the strong start to the fiscal year in a post on X, noting that Microsoft Cloud revenue surpassed $63 billion.
Revenue from the Agents and Infra segment rose 25% to $76.8 billion. The company’s commercial remaining performance obligation, which indicates contracted revenue yet to be recognized, increased by 73% to $677 billion. CFO Amy Hood stated 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 by 32% to $4.92. Excluding the impact of investments in OpenAI, adjusted net income rose 18% to $36.4 billion, while adjusted earnings per share also increased by 18% to $4.89. Microsoft anticipates revenue of between $96 billion and $97.1 billion for the December quarter, reflecting growth of 18-19%. Azure revenue growth is projected at 49-50% in constant currency.
Hood noted that customer demand continues to exceed available supply, and improvements in the efficiency of the company’s computing infrastructure are enabling it to meet this demand.
Capital expenditure expected to exceed $50 billion in December quarter
Microsoft’s capital expenditure for the September quarter was $45.2 billion. Hood expects this spending to surpass $50 billion in the December quarter, with total capital expenditure for calendar year 2026 projected at approximately $170 billion. This estimate includes capacity deliveries that were delayed from earlier periods.
However, not all segments experienced growth. Revenue from the Devices and Consumer segment declined by 3% to $15.5 billion. Windows OEM and devices revenue fell by 22%, while Xbox content and services revenue decreased by 2%. In contrast, search and advertising revenue, excluding traffic acquisition costs, grew by 12%.
Microsoft offers voluntary buyouts to around 60,000 employees
The voluntary buyout offer comes as Microsoft reports strong financial results. Chief People Officer Amy Coleman announced the Voluntary Exit Offer (VEO) in a memo to staff, presenting it as an option for employees considering a future outside the company. Eligible employees in the US, Canada, the UK, and India at level 70 and below have until the first week of December to decide on the offer.
The terms of the VEO mirror Microsoft’s standard severance arrangements. Unlike a previous retirement buyout, this offer has no age or tenure requirements, and performance does not determine eligibility. However, participation is subject to the discretion of individual business leaders, based on unit priorities and workforce needs.
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