The consensus long delivered.
Microsoft (MSFT) reported Azure revenue growth of 48% in constant currency for the September quarter, crushing its own 44-45% guide, the Street's ~45% and even the ~47% buyside whisper that, as we laid out this morning in "These Really Matter", was the real hurdle. In its first-ever standalone disclosure, Azure brought in $33.2 billion, a full billion above the $32.2 billion consensus. Revenue of $92.3 billion blew past the top end of guidance, adjusted EPS of $4.89 beat the $4.72–4.73 consensus, and operating margin hit 49.8%. The stock is up strongly after hours from a weak day where Mag7 stocks lagged...
And yet, buried in the investor metrics, two numbers that won't make the headlines: commercial bookings fell 12% and the $677 billion backlog didn't grow at all.
Recall what Goldman's Rich Privorotsky wrote this morning (available to pro subs):
"These really matter. Eye watering expectations… buyside probably closer to Azure growth around high 40s%... Azure probably needs a guidance raise to be properly supportive."
The quarter cleared the bar. The guide is next: Amy Hood will give December-quarter Azure guidance on the 5:30pm ET call, against a Street at ~45% and a buyside at 46-47%.
