Microsoft's Backlog Surges 51% To $392 Billion: Commercial Bookings 'Significantly Ahead of Expectations,' Says CFO Amy Hood

Tech giant Microsoft Corp. (NASDAQ:MSFT) had a blowout fiscal first-quarter performance, as demand for its cloud and AI services continued to accelerate, with commercial bookings and backlog both hitting record highs.

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Backlog Surges 51%

The company’s commercial remaining performance obligations hit a new record, at $392 billion, up 51% year-over-year, driven by unrelenting demand across core AI and cloud products.

According to CFO Amy Hood, commercial bookings during the quarter were “significantly ahead of expectations” at 111%, which she said was driven by “Azure commitments from OpenAI as well as continued growth in the number of $100 million plus contracts for both Azure and Microsoft 365.”

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She emphasized that the RPO balance has “nearly doubled over the past two years” and that “even with this growth, our weighted average duration has been relatively stable, at approximately two years,” which essentially means that the whole of this backlog is expected to be converted into revenue within just two years.

Hood addressed concerns about customer concentration and speculative commitments, stating, “These are contracts being signed by customers who intend to use it in relatively short order.”

Stock Dips After Hours

The company released its fiscal first-quarter results on Wednesday, reporting $77.7 billion in revenue, up 18% year-over-year, and ahead of consensus estimates of $75.3 billion. It posted a profit of $4.13 per share, which again beat analyst estimates of $3.67.

Hood called this “a strong start to the fiscal year,” showing continued strength in Microsoft’s cloud products and solutions during the quarter.

Microsoft shares were down 0.09% on Wednesday and have since dropped 3.01% pre-market, following its earnings announcement. The stock scores high on Momentum, Growth and Quality in Benzinga’s Edge Stock Rankings, with a favorable price trend in the short, medium and long terms. Click here for deeper insights.

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