Microsoft expects 3,000 or fewer employees to accept the buyout offered this week to more than a quarter of its workforce, a spokesperson told Business Insider.
That point was reiterated Wednesday by Chief Financial Officer Amy Hood, who wrote in an internal memo that employees questioned the rationale for the buyout.
“I know there have been questions about the justification for the voluntary exit offer we announced this week,” Hood wrote. “Our intention is to offer employees some freedom of action if they choose to leave the company on their own terms. We expect very few people to choose this offer due to the growth opportunities here at Microsoft.”
The memo was part of a quarterly earnings email that Hood typically sends internally to employees each quarter when Microsoft releases its financial data.
These memos mostly repeat what the company reports publicly, but this time Hood went out of his way to address the buyout offer, which has caused quite a stir in the tech industry this week.
Earlier this year, Microsoft offered another retirement buyout. In this situation, about a third of eligible employees accepted the offer, which helped Microsoft reduce the number of employees during subsequent layoffs.
This week’s buyout is generating much less traction, according to the company.
Read the full CFO memo
Team,
This afternoon we announced our first quarter financial results. We exceeded Wall Street expectations, with revenue growth of 19% and operating income of 21%.
With the start of FY27, we also made a significant change to how we report our business. We announced that we have changed our reporting structure for the first time in 12 years, moving from three segments to two: Agents and Infra, and Devices and Consumer. This change better reflects how we run the business today: from how we build products and allocate resources to how we create value for customers across the connected layers of our platform. To give you an idea of the two segments, looking back at last financial year, agents and infra would have accounted for around 81% of our revenue, while devices and consumers would have accounted for 19%.
Some highlights of the quarter in our two new segments:
- Agents and Infra grew revenue 23% this quarter
- Microsoft Cloud revenue was $63.9 billion and accelerated 30%.
Azure revenue increased 48%, reflecting accelerating demand for Foundry. - Microsoft 365 commercial cloud revenue increased 18% in constant currency, driven by growth in our premium seating offerings like Copilot and E7 as well as usage-based services in M365 Copilot and GitHub Copilot.
- Microsoft 365 commercial seats grew 5% and the number of customers with more than 50,000 Copilot M365 seats increased 8x year over year.
- Microsoft 365 consumer cloud revenue grew 17% with subscriber growth of 7%.
- Industry solutions cloud revenue increased 10% driven by growth in Dynamics 365 and LinkedIn Talent Solutions.
- Consumer devices and products declined 3% this quarter
- Search and advertising revenue excluding TAC increased 12%, with growth across LinkedIn, Bing and Edge.
- Windows OEM and device revenue decreased 22%, reflecting prior year profit from the end of Windows 10 support, inventory reduction by OEM partners and weaker demand from the PC market.
XBOX content and services revenue decreased 2%. Last week we launched Call of Duty: Modern Warfare 4, as we continue to bring great games to more players on more devices.
Thank you for everything you have done to provide a great start to the year. I would particularly like to thank our engineering and capacity delivery teams who are working to help us deliver more capacity faster and with high reliability. These teams are also using the capacity we have more efficiently to enable us to better meet customer demand for the Azure platform, which continues to exceed our offering.
I know questions have been asked about the rationale for the voluntary redundancy offer we announced this week. Our intention is to provide employees with some freedom of action if they choose to leave the company on their own terms. We expect very few people to choose this offering due to the growth opportunities present at Microsoft. We will continue to offer a wide range of options for employees to learn, acquire new skills and advance their careers here.
We have a tremendous opportunity in front of us. To meet the present moment, we strive to provide excellent products and solutions that help our customers achieve their many goals: security, innovation, growth, to name a few. Thank you for keeping positive, value-creating outcomes for our customers top of mind.
To learn more about the quarter and our outlook for the second quarter, you can join us live today at 2:30 p.m. PT, listen on demand, or read the transcript on the Investor Relations website. Finally, mark your calendars for Microsoft Ignite, November 17-20, where we’ll show how our innovation in AI, cloud, data, security, and Copilot come together to help customers transform their businesses.
With appreciation and gratitude,
Amy
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