Microsoft Cloud and AI Strength Drives Third Quarter Results
REDMOND, Wash. — April 30, 2025 — Microsoft Corp. today announced the following results for the quarter ended March 31, 2025, as compared to the corresponding period of last fiscal year:
•
Revenue was $70.1 billion and increased 13% (up 15% in constant currency)
•
Operating income was $32.0 billion and increased 16% (up 19% in constant currency)
•
Net income was $25.8 billion and increased 18% (up 19% in constant currency)
•
Diluted earnings per share was $3.46 and increased 18% (up 19% in constant currency)
“Cloud and AI are the essential inputs for every business to expand output, reduce costs, and accelerate growth,” said Satya Nadella, chairman and chief executive officer of Microsoft. “From AI infra and platforms to apps, we are innovating across the stack to deliver for our customers.”
“We delivered a strong quarter with Microsoft Cloud revenue of $42.4 billion, up 20% (up 22% in constant currency) year-over-year driven by continued demand for our differentiated offerings,” said Amy Hood, executive vice president and chief financial officer of Microsoft.
Business Highlights
Revenue in Productivity and Business Processes was $29.9 billion and increased 10% (up 13% in constant currency), with the following business highlights:
•
Microsoft 365 Commercial products and cloud services revenue increased 11% (up 14% in constant currency) driven by Microsoft 365 Commercial cloud revenue growth of 12% (up 15% in constant currency)
•
Microsoft 365 Consumer products and cloud services revenue increased 10% (up 12% in constant currency) driven by Microsoft 365 Consumer cloud revenue growth of 10% (up 12% in constant currency)
•
LinkedIn revenue increased 7% (up 8% in constant currency)
•
Dynamics products and cloud services revenue increased 11% (up 13% in constant currency) driven by Dynamics 365 revenue growth of 16% (up 18% in constant currency)
Revenue in Intelligent Cloud was $26.8 billion and increased 21% (up 22% in constant currency), with the following business highlights:
•
Server products and cloud services revenue increased 22% (up 24% in constant currency) driven by Azure and other cloud services revenue growth of 33% (up 35% in constant currency)
Revenue in More Personal Computing was $13.4 billion and increased 6% (up 7% in constant currency), with the following business highlights:
•
Windows OEM and Devices revenue increased 3%
•
Xbox content and services revenue increased 8% (up 9% in constant currency)
•
Search and news advertising revenue excluding traffic acquisition costs increased 21% (up 23% in constant currency)
Microsoft returned $9.7 billion to shareholders in the form of dividends and share repurchases in the third quarter of fiscal year 2025.
Business Outlook
Microsoft will provide forward-looking guidance in connection with this quarterly earnings announcement on its earnings conference call and webcast.
Quarterly Highlights, Product Releases, and Enhancements
Every quarter Microsoft delivers hundreds of products, either as new releases, services, or enhancements to current products and services. These releases are a result of significant research and development investments, made over multiple years, designed to help customers be more productive and secure and to deliver differentiated value across the cloud and the edge.
Here are the major product releases and other highlights for the quarter, organized by product categories, to help illustrate how we are accelerating innovation across our businesses while expanding our market opportunities.
Environmental, Social, and Governance (ESG)
To learn more about Microsoft’s corporate governance and our environmental and social practices, please visit our investor relations Board and ESG website and reporting at Microsoft.com/transparency.
Webcast Details
Satya Nadella, chairman and chief executive officer, Amy Hood, executive vice president and chief financial officer, Alice Jolla, chief accounting officer, Keith Dolliver, corporate secretary and deputy general counsel, and Jonathan Neilson, vice president of investor relations, will host a conference call and webcast at 2:30 p.m. Pacific time (5:30 p.m. Eastern time) today to discuss details of the company’s performance for the quarter and certain forward-looking information. The session may be accessed at http://www.microsoft.com/en-us/investor. The webcast will be available for replay through the close of business on April 30, 2026.
Constant Currency
Microsoft presents constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations. To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars using the average exchange rates from the comparative period rather than the actual exchange rates in effect during the respective periods. All growth comparisons relate to the corresponding period in the last fiscal year. Microsoft has provided this non-GAAP financial information to aid investors in better understanding our performance. The non-GAAP financial measures presented in this release should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP.
We have recast certain prior period amounts to conform to the way we internally manage and monitor our business.
Selected Product and Service Revenue Constant Currency Reconciliation
Three Months Ended March 31, 2025
Percentage Change Y/Y (GAAP)
Constant Currency Impact
Percentage Change Y/Y Constant Currency
Microsoft Cloud
20%
2%
22%
Microsoft 365 Commercial products and cloud services
11%
3%
14%
Microsoft 365 Commercial cloud
12%
3%
15%
Microsoft 365 Consumer products and cloud services
10%
2%
12%
Microsoft 365 Consumer cloud
10%
2%
12%
LinkedIn
7%
1%
8%
Dynamics products and cloud services
11%
2%
13%
Dynamics 365
16%
2%
18%
Server products and cloud services
22%
2%
24%
Azure and other cloud services
33%
2%
35%
Windows OEM and Devices
3%
0%
3%
Xbox content and services
8%
1%
9%
Search and news advertising excluding traffic acquisition costs
21%
2%
23%
About Microsoft
Microsoft (Nasdaq “MSFT” @microsoft) creates platforms and tools powered by AI to deliver innovative solutions that meet the evolving needs of our customers. The technology company is committed to making AI available broadly and doing so responsibly, with a mission to empower every person and every organization on the planet to achieve more.
Forward-Looking Statements
Statements in this release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors such as:
•
intense competition in all of our markets that may adversely affect our results of operations;
•
focus on cloud-based and AI services presenting execution and competitive risks;
•
significant investments in products and services that may not achieve expected returns;
•
acquisitions, joint ventures, and strategic alliances that may have an adverse effect on our business;
•
impairment of goodwill or amortizable intangible assets causing a significant charge to earnings;
•
cyberattacks and security vulnerabilities that could lead to reduced revenue, increased costs, liability claims, or harm to our reputation or competitive position;
•
disclosure and misuse of personal data that could cause liability and harm to our reputation;
•
the possibility that we may not be able to protect information stored in our products and services from use by others;
•
abuse of our advertising, professional, marketplace, or gaming platforms that may harm our reputation or user engagement;
•
products and services, how they are used by customers, and how third-party products and services interact with them, presenting security, privacy, and execution risks;
•
issues about the use of AI in our offerings that may result in reputational or competitive harm, or legal liability;
•
excessive outages, data losses, and disruptions of our online services if we fail to maintain an adequate operations infrastructure;
•
supply or quality problems;
•
government enforcement under competition laws and new market regulation may limit how we design and market our products;
•
potential consequences of trade and anti-corruption laws;
•
potential consequences of existing and increasing legal and regulatory requirements;
•
laws and regulations relating to the handling of personal data that may impede the adoption of our services or result in increased costs, legal claims, fines, or reputational damage;
•
claims against us that may result in adverse outcomes in legal disputes;
•
uncertainties relating to our business with government customers;
•
additional tax liabilities;
•
sustainability regulations and expectations that may expose us to increased costs and legal and reputational risk;
•
an inability to protect and utilize our intellectual property may harm our business and operating results;
•
claims that Microsoft has infringed the intellectual property rights of others;
•
damage to our reputation or our brands that may harm our business and results of operations;
•
adverse economic or market conditions that may harm our business;
•
catastrophic events or geo-political conditions, such as the COVID-19 pandemic, that may disrupt our business;
•
exposure to increased economic and operational uncertainties from operating a global business, including the effects of foreign currency exchange; and
•
the dependence of our business on our ability to attract and retain talented employees.
For more information about risks and uncertainties associated with Microsoft’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of Microsoft’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Microsoft’s Investor Relations department at (800) 285-7772 or at Microsoft’s Investor Relations website at http://www.microsoft.com/en-us/investor.
All information in this release is as of March 31, 2025. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.
For more information, press only:
Microsoft Media Relations, WE Communications for Microsoft, (425) 638-7777, rrt@we-worldwide.com
For more information, financial analysts and investors only:
Jonathan Neilson, Vice President, Investor Relations, (425) 706-4400
Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://www.microsoft.com/news. Web links, telephone numbers, and titles were correct at time of publication, but may since have changed. Shareholder and financial information, as well as today’s 2:30 p.m. Pacific time conference call with investors and analysts, is available at http://www.microsoft.com/en-us/investor.
MICROSOFT CORPORATION
INCOME STATEMENTS
(In millions, except per share amounts) (Unaudited)
Three Months Ended March 31,
Nine Months Ended March 31,
2025
2024
2025
2024
Revenue:
Product
$15,319
$17,080
$46,810
$51,556
Service and other
54,747
44,778
158,473
128,839
Total revenue
70,066
61,858
205,283
180,395
Cost of revenue:
Product
3,037
4,339
10,187
13,834
Service and other
18,882
14,166
53,630
40,596
Total cost of revenue
21,919
18,505
63,817
54,430
Gross margin
48,147
43,353
141,466
125,965
Research and development
8,198
7,653
23,659
21,454
Sales and marketing
6,212
6,207
18,369
17,640
General and administrative
1,737
1,912
5,233
5,363
Operating income
32,000
27,581
94,205
81,508
Other expense, net
(623)
(854)
(3,194)
(971)
Income before income taxes
31,377
26,727
91,011
80,537
Provision for income taxes
5,553
4,788
16,412
14,437
Net income
$25,824
$21,939
$74,599
$66,100
Earnings per share:
Basic
$3.47
$2.95
$10.03
$8.90
Diluted
$3.46
$2.94
$9.99
$8.85
Weighted average shares outstanding:
Basic
7,434
7,431
7,434
7,431
Diluted
7,461
7,472
7,466
7,467
COMPREHENSIVE INCOME STATEMENTS
(In millions) (Unaudited)
Three Months Ended
Nine Months Ended
March 31,
March 31,
2025
2024
2025
2024
Net income
$25,824
$21,939
$74,599
$66,100
Other comprehensive income (loss), net of tax:
Net change related to derivatives
(20)
10
4
28
Net change related to investments
450
(202)
1,130
869
Translation adjustments and other
353
(294)
(377)
11
Other comprehensive income (loss)
783
(486)
757
908
Comprehensive income
$26,607
$21,453
$75,356
$67,008
BALANCE SHEETS
(In millions) (Unaudited)
March 31, 2025
June 30, 2024
Assets
Current assets:
Cash and cash equivalents
$28,828
$18,315
Short-term investments
50,790
57,228
Total cash, cash equivalents, and short-term investments
79,618
75,543
Accounts receivable, net of allowance for doubtful accounts of $695 and $830
51,700
56,924
Inventories
848
1,246
Other current assets
24,478
26,021
Total current assets
156,644
159,734
Property and equipment, net of accumulated depreciation of $87,074 and $76,421
183,939
135,591
Operating lease right-of-use assets
24,475
18,961
Equity and other investments
16,035
14,600
Goodwill
119,329
119,220
Intangible assets, net
23,968
27,597
Other long-term assets
38,234
36,460
Total assets
$562,624
$512,163
Liabilities and stockholders' equity
Current liabilities:
Accounts payable
$26,250
$21,996
Short-term debt
0
6,693
Current portion of long-term debt
2,999
2,249
Accrued compensation
10,579
12,564
Short-term income taxes
6,805
5,017
Short-term unearned revenue
44,636
57,582
Other current liabilities
22,937
19,185
Total current liabilities
114,206
125,286
Long-term debt
39,882
42,688
Long-term income taxes
25,061
27,931
Long-term unearned revenue
2,840
2,602
Deferred income taxes
2,522
2,618
Operating lease liabilities
17,686
15,497
Other long-term liabilities
38,536
27,064
Total liabilities
240,733
243,686
Commitments and contingencies
Stockholders' equity:
Common stock and paid-in capital - shares authorized 24,000; outstanding 7,434 and 7,434
106,965
100,923
Retained earnings
219,759
173,144
Accumulated other comprehensive loss
(4,833)
(5,590)
Total stockholders' equity
321,891
268,477
Total liabilities and stockholders' equity
$562,624
$512,163
CASH FLOWS STATEMENTS
(In millions) (Unaudited)
Three Months Ended
Nine Months Ended
March 31,
March 31,
2025
2024
2025
2024
Operations
Net income
$25,824
$21,939
$74,599
$66,100
Adjustments to reconcile net income to net cash from operations:
Depreciation, amortization, and other
8,740
6,027
22,950
15,907
Stock-based compensation expense
2,980
2,703
8,901
8,038
Net recognized losses (gains) on investments and derivatives
(298)
49
553
261
Deferred income taxes
(2,244)
(1,323)
(4,835)
(3,593)
Changes in operating assets and liabilities:
Accounts receivable
(2,461)
(2,028)
5,598
6,055
Inventories
52
260
390
1,229
Other current assets
1,076
951
642
880
Other long-term assets
(518)
(2,137)
(3,368)
(5,577)
Accounts payable
1,179
648
1,221
(659)
Unearned revenue
(1,032)
(645)
(12,923)
(10,309)
Income taxes
1,298
2,622
(1,081)
2,493
Other current liabilities
2,839
2,803
576
215
Other long-term liabilities
(391)
48
292
313
Net cash from operations
37,044
31,917
93,515
81,353
Financing
Proceeds from issuance (repayments) of debt, maturities of 90 days or less, net
0
(3,810)
(5,746)
6,392
Proceeds from issuance of debt
0
6,352
0
24,198
Repayments of debt
(2,250)
(11,589)
(3,216)
(16,005)
Common stock issued
546
522
1,508
1,468
Common stock repurchased
(4,781)
(4,213)
(13,874)
(13,044)
Common stock cash dividends paid
(6,169)
(5,572)
(17,913)
(16,197)
Other, net
(382)
(498)
(1,614)
(1,006)
Net cash used in financing
(13,036)
(18,808)
(40,855)
(14,194)
Investing
Additions to property and equipment
(16,745)
(10,952)
(47,472)
(30,604)
Acquisition of companies, net of cash acquired and divestitures, and purchases of intangible and other assets
(981)
(1,575)
(4,235)
(67,790)
Purchases of investments
(4,474)
(2,183)
(8,144)
(14,901)
Maturities of investments
6,721
3,350
11,461
23,218
Sales of investments
2,161
1,941
6,688
8,871
Other, net
604
(1,281)
(325)
(916)
Net cash used in investing
(12,714)
(10,700)
(42,027)
(82,122)
Effect of foreign exchange rates on cash and cash equivalents
52
(80)
(120)
(107)
Net change in cash and cash equivalents
11,346
2,329
10,513
(15,070)
Cash and cash equivalents, beginning of period
17,482
17,305
18,315
34,704
Cash and cash equivalents, end of period
$28,828
$19,634
$28,828
$19,634
SEGMENT REVENUE AND OPERATING INCOME
(In millions) (Unaudited)
Three Months Ended
Nine Months Ended
March 31,
March 31,
2025
2024
2025
2024
Revenue
Productivity and Business Processes
$29,944
$27,113
$87,698
$78,193
Intelligent Cloud
26,751
22,141
76,387
63,679
More Personal Computing
13,371
12,604
41,198
38,523
Total
$70,066
$61,858
$205,283
$180,395
Operating Income
Productivity and Business Processes
$17,379
$15,143
$50,780
$43,955
Intelligent Cloud
11,095
9,515
32,449
27,978
More Personal Computing
3,526
2,923
10,976
9,575
Total
$32,000
$27,581
$94,205
$81,508
We have recast certain prior period amounts to conform to the way we internally manage and monitor our business.