After Microsoft reported quarterly results on Wednesday, CFO Amy Hood sent an internal memo to employees highlighting “increased pace” and “tighter, more accountable squads.”
“Thank you for the way you showed up this quarter — with focused execution and increased pace as the opportunity ahead of us grows,” Hood wrote in the email, viewed by Business Insider.
Hood sends these emails every quarter when Microsoft discloses its financials. The latest memo called out Microsoft cloud revenue at $54.5 billion for the quarter and AI revenue, which Hood said surpassed $37 billion in annual run rate, up 123%. Microsoft stock was initially up about 4% in after-hours trading following the earnings report and was down about 1% at publication time.
The email comes after Microsoft workforce changes focused on increasing “intensity and urgency,” as one executive recently told Business Insider.
The company has introduced sweeping organizational shifts including high-profile executive changes and mandates for teams to work faster and leaner — all designed to consolidate power around AI leaders and radically reshape how the company builds and funds its products.
“Over this past period, we’ve continued to make real progress,” she wrote. “That progress is showing up in tangible ways, from how we work in tighter, more accountable squads, to what we’re delivering.”
Earlier in April, Microsoft offered buyouts to long-serving employees as a way to cut costs, affecting as much as 7% of its US workforce of 125,000 people, or about 8,750 people.
Read the full memo
Team,
This afternoon, we announced our third-quarter financial results. We exceeded Wall Street expectations, growing revenue 18% and 15% in constant currency and operating income by 20% and 16% in constant currency.
Our Microsoft Cloud revenue was $54.5 billion, growing 29% and 25% in constant currency, reflecting strong customer demand and execution by our teams. This quarter our AI revenue surpassed $37 billion in annual run rate, up 123%.
Our quarterly results include clear examples of strong customer adoption and the progress we are making:
- Azure and other cloud services revenue grew 40% and 39% in constant currency, ahead of expectations, reflecting our customers scaling complex workloads on Azure and integrating AI into the heart of their businesses. And over 15,000 customers now use both Foundry and Fabric, up 60%.
- Microsoft 365 commercial cloud revenue increased 19% and 15% in constant currency, ahead of expectations. M365 Copilot continues to scale, now exceeding 20 million paid seats with monthly active usage of our first party agents up 6x year-to-date. In addition, Microsoft 365 consumer cloud revenue increased 33% and 29% in constant currency with subscriber growth of 7%.
- Commercial bookings grew 7% when excluding the impact from OpenAI, driven by consistent performance across our core annuity business. Our total commercial remaining performance obligation, a measure of how much business we have already contracted that still needs to be delivered to customers, increased to $627 billion.
- We invested $31.9 billion in capex on GPUs, CPUs, and datacenter infrastructure to support Azure platform demand, growing first-party AI applications and solutions, and R&D by our product teams.
- Search advertising revenue ex-TAC increased 12% and 9% in constant currency. Edge has taken share for 20 consecutive quarters, and Bing monthly active users reached one billion for the first time.
- Windows OEM revenue increased 1% as our OEM and channel partners continued to build inventory in response to higher memory prices.
- Xbox content and services revenue decreased 5% and 7% in constant currency. Last week, we announced price changes to our Game Pass subscriptions as we refocus on delivering more value for fans.
- And, LinkedIn revenue increased 12% and 9% in constant currency with growth across all lines of business.
Investors tune in to our earnings call for the full details on this quarter and a look ahead to Q4. It’s a helpful way to stay aligned as we deliver on our commitments. Join live today at 2:30 PM Pacific, listen on-demand, or check the transcript on the Investor Relations website.
Thank you for the way you showed up this quarter — with focused execution and increased pace as the opportunity ahead of us grows. Over this past period, we’ve continued to make real progress. That progress is showing up in tangible ways, from how we work in tighter, more accountable squads, to what we’re delivering — like last week’s announcement of agentic Copilot capabilities now available across Word, Excel, and PowerPoint. Our customers are counting on us to deliver these amazing things and to make sure we do it all with quality and security. As we move into Q4, our biggest quarter of the year, let’s finish the year strong!
With appreciation and gratitude,
Amy
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