For Microsoft FY27 Q1, the 32% GAAP and 18% non-GAAP net income growth rates use different treatments of OpenAI investment gains and losses. Keep the reported result and the company’s reconciled adjustment labeled separately.
Start with the reported comparison
Microsoft’s October 28, 2026 FY27 Q1 earnings release covers the three months ended September 30, 2026. It reports net income of $36.629 billion, up 32% year over year on a GAAP basis. The release’s non-GAAP comparison is $36.422 billion, up 18%. Those are separate reported and adjusted growth rates, not competing estimates of the same labeled measure.
Follow the OpenAI adjustment across both periods
Microsoft says the adjustment removes the impact from investments in OpenAI. In FY27 Q1, net gains from those investments increased net income by $207 million. In the prior-year quarter, net losses decreased net income by $3.1 billion. Removing a gain from the current comparison and a loss from the prior comparison changes the year-over-year growth calculation in both periods.
Use the adjusted figure with its boundary
The release presents the non-GAAP measure to provide additional insight into operations, but says it should not replace or be treated as superior to GAAP results. A reader comparing the periods can keep both figures visible: GAAP net income growth was 32%; the company-adjusted rate was 18%, with the OpenAI investment swing identified as the adjustment.
Sources & scope
An AI-assisted explainer checked against the linked primary sources. Source review dates are not necessarily announcement dates.