Microsoft Cloud and AI Strength Fuels Fourth Quarter Results
REDMOND, Wash. — July 30, 2025 — Microsoft Corp. today announced the following results for the quarter ended June 30, 2025, as compared to the corresponding period of last fiscal year:
•
Revenue was $76.4 billion and increased 18% (up 17% in constant currency)
•
Operating income was $34.3 billion and increased 23% (up 22% in constant currency)
•
Net income was $27.2 billion and increased 24% (up 22% in constant currency)
•
Diluted earnings per share was $3.65 and increased 24% (up 22% in constant currency)
“Cloud and AI is the driving force of business transformation across every industry and sector,” said Satya Nadella, chairman and chief executive officer of Microsoft. “We’re innovating across the tech stack to help customers adapt and grow in this new era, and this year, Azure surpassed $75 billion in revenue, up 34 percent, driven by growth across all workloads.”
“We closed out the fiscal year with a strong quarter, highlighted by Microsoft Cloud revenue reaching $46.7 billion, up 27% (up 25% in constant currency) year-over-year,” said Amy Hood, executive vice president and chief financial officer of Microsoft.
Business Highlights
Revenue in Productivity and Business Processes was $33.1 billion and increased 16% (up 14% in constant currency), with the following business highlights:
•
Microsoft 365 Commercial products and cloud services revenue increased 16% (up 15% in constant currency) driven by Microsoft 365 Commercial cloud revenue growth of 18% (up 16% in constant currency)
•
Microsoft 365 Consumer products and cloud services revenue increased 21% driven by Microsoft 365 Consumer cloud revenue growth of 20%
•
LinkedIn revenue increased 9% (up 8% in constant currency)
•
Dynamics products and cloud services revenue increased 18% (up 17% in constant currency) driven by Dynamics 365 revenue growth of 23% (up 21% in constant currency)
Revenue in Intelligent Cloud was $29.9 billion and increased 26% (up 25% in constant currency), with the following business highlights:
•
Server products and cloud services revenue increased 27% driven by Azure and other cloud services revenue growth of 39%
Revenue in More Personal Computing was $13.5 billion and increased 9%, with the following business highlights:
•
Windows OEM and Devices revenue increased 3%
•
Xbox content and services revenue increased 13% (up 12% in constant currency)
•
Search and news advertising revenue excluding traffic acquisition costs increased 21% (up 20% in constant currency)
Microsoft returned $9.4 billion to shareholders in the form of dividends and share repurchases in the fourth quarter of fiscal year 2025.
Fiscal Year 2025 Results
Microsoft Corp. today announced the following results for the fiscal year ended June 30, 2025, as compared to the corresponding period of last fiscal year:
•
Revenue was $281.7 billion and increased 15%
•
Operating income was $128.5 billion and increased 17% (up 18% in constant currency)
•
Net income was $101.8 billion and increased 16% (up 15% in constant currency)
•
Diluted earnings per share was $13.64 and increased 16%
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.
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 July 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 June 30, 2025
Percentage Change Y/Y (GAAP)
Constant Currency Impact
Percentage Change Y/Y Constant Currency
Microsoft Cloud
27%
(2)%
25%
Microsoft 365 Commercial products and cloud services
16%
(1)%
15%
Microsoft 365 Commercial cloud
18%
(2)%
16%
Microsoft 365 Consumer products and cloud services
21%
0%
21%
Microsoft 365 Consumer cloud
20%
0%
20%
LinkedIn
9%
(1)%
8%
Dynamics products and cloud services
18%
(1)%
17%
Dynamics 365
23%
(2)%
21%
Server products and cloud services
27%
0%
27%
Azure and other cloud services
39%
0%
39%
Windows OEM and Devices
3%
0%
3%
Xbox content and services
13%
(1)%
12%
Search and news advertising excluding traffic acquisition costs
21%
(1)%
20%
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 could 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 could have an adverse effect on our business;
•
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 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 liability;
•
excessive outages, data losses, and disruptions of our online services if we fail to maintain an adequate operations infrastructure;
•
supply or quality problems;
•
potential consequences of new, existing, and evolving legal and regulatory requirements;
•
claims against us that could result in adverse outcomes in legal disputes;
•
uncertainties relating to our business with government customers;
•
additional tax liabilities;
•
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 could harm our business;
•
catastrophic events or geopolitical conditions, such as the COVID-19 pandemic, that could 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 June 30, 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 June 30,
Twelve Months Ended June 30,
2025
2024
2025
2024
Revenue:
Product
$17,136
$13,217
$63,946
$64,773
Service and other
59,305
51,510
217,778
180,349
Total revenue
76,441
64,727
281,724
245,122
Cost of revenue:
Product
3,314
1,438
13,501
15,272
Service and other
20,700
18,246
74,330
58,842
Total cost of revenue
24,014
19,684
87,831
74,114
Gross margin
52,427
45,043
193,893
171,008
Research and development
8,829
8,056
32,488
29,510
Sales and marketing
7,285
6,816
25,654
24,456
General and administrative
1,990
2,246
7,223
7,609
Operating income
34,323
27,925
128,528
109,433
Other expense, net
(1,707)
(675)
(4,901)
(1,646)
Income before income taxes
32,616
27,250
123,627
107,787
Provision for income taxes
5,383
5,214
21,795
19,651
Net income
$27,233
$22,036
$101,832
$88,136
Earnings per share:
Basic
$3.66
$2.96
$13.70
$11.86
Diluted
$3.65
$2.95
$13.64
$11.80
Weighted average shares outstanding:
Basic
7,432
7,433
7,433
7,431
Diluted
7,461
7,472
7,465
7,469
COMPREHENSIVE INCOME STATEMENTS
(In millions) (Unaudited)
Three Months Ended
Twelve Months Ended
June 30,
June 30,
2025
2024
2025
2024
Net income
$27,233
$22,036
$101,832
$88,136
Other comprehensive income (loss), net of tax:
Net change related to derivatives
(9)
(4)
(5)
24
Net change related to investments
444
88
1,574
957
Translation adjustments and other
1,051
(239)
674
(228)
Other comprehensive income (loss)
1,486
(155)
2,243
753
Comprehensive income
$28,719
$21,881
$104,075
$88,889
BALANCE SHEETS
(In millions) (Unaudited)
June 30, 2025
June 30, 2024
Assets
Current assets:
Cash and cash equivalents
$30,242
$18,315
Short-term investments
64,323
57,228
Total cash, cash equivalents, and short-term investments
94,565
75,543
Accounts receivable, net of allowance for doubtful accounts of $944 and $830
69,905
56,924
Inventories
938
1,246
Other current assets
25,723
26,021
Total current assets
191,131
159,734
Property and equipment, net of accumulated depreciation of $93,653 and $76,421
204,966
135,591
Operating lease right-of-use assets
24,823
18,961
Equity and other investments
15,405
14,600
Goodwill
119,509
119,220
Intangible assets, net
22,604
27,597
Other long-term assets
40,565
36,460
Total assets
$619,003
$512,163
Liabilities and stockholders' equity
Current liabilities:
Accounts payable
$27,724
$21,996
Short-term debt
0
6,693
Current portion of long-term debt
2,999
2,249
Accrued compensation
13,709
12,564
Short-term income taxes
7,211
5,017
Short-term unearned revenue
64,555
57,582
Other current liabilities
25,020
19,185
Total current liabilities
141,218
125,286
Long-term debt
40,152
42,688
Long-term income taxes
25,986
27,931
Long-term unearned revenue
2,710
2,602
Deferred income taxes
2,835
2,618
Operating lease liabilities
17,437
15,497
Other long-term liabilities
45,186
27,064
Total liabilities
275,524
243,686
Commitments and contingencies
Stockholders' equity:
Common stock and paid-in capital - shares authorized 24,000; outstanding 7,434 and 7,434
109,095
100,923
Retained earnings
237,731
173,144
Accumulated other comprehensive loss
(3,347)
(5,590)
Total stockholders' equity
343,479
268,477
Total liabilities and stockholders' equity
$619,003
$512,163
CASH FLOWS STATEMENTS
(In millions) (Unaudited)
Three Months Ended
Twelve Months Ended
June 30,
June 30,
2025
2024
2025
2024
Operations
Net income
$27,233
$22,036
$101,832
$88,136
Adjustments to reconcile net income to net cash from operations:
Depreciation, amortization, and other
11,203
6,380
34,153
22,287
Stock-based compensation expense
3,073
2,696
11,974
10,734
Net recognized losses on investments and derivatives
56
44
609
305
Deferred income taxes
(2,221)
(1,145)
(7,056)
(4,738)
Changes in operating assets and liabilities:
Accounts receivable
(16,179)
(13,246)
(10,581)
(7,191)
Inventories
(81)
55
309
1,284
Other current assets
(3,686)
(2,528)
(3,044)
(1,648)
Other long-term assets
418
(1,240)
(2,950)
(6,817)
Accounts payable
(652)
4,204
569
3,545
Unearned revenue
18,361
15,657
5,438
5,348
Income taxes
1,043
(806)
(38)
1,687
Other current liabilities
5,346
4,652
5,922
4,867
Other long-term liabilities
(1,267)
436
(975)
749
Net cash from operations
42,647
37,195
136,162
118,548
Financing
Proceeds from issuance (repayments) of debt, maturities of 90 days or less, net
0
(1,142)
(5,746)
5,250
Proceeds from issuance of debt
0
197
0
24,395
Repayments of debt
0
(13,065)
(3,216)
(29,070)
Common stock issued
548
534
2,056
2,002
Common stock repurchased
(4,546)
(4,210)
(18,420)
(17,254)
Common stock cash dividends paid
(6,169)
(5,574)
(24,082)
(21,771)
Other, net
(677)
(303)
(2,291)
(1,309)
Net cash used in financing
(10,844)
(23,563)
(51,699)
(37,757)
Investing
Additions to property and equipment
(17,079)
(13,873)
(64,551)
(44,477)
Acquisition of companies, net of cash acquired and divestitures, and purchases of intangible and other assets
(1,743)
(1,342)
(5,978)
(69,132)
Purchases of investments
(21,631)
(2,831)
(29,775)
(17,732)
Maturities of investments
4,618
1,557
16,079
24,775
Sales of investments
2,621
2,023
9,309
10,894
Other, net
2,642
(382)
2,317
(1,298)
Net cash used in investing
(30,572)
(14,848)
(72,599)
(96,970)
Effect of foreign exchange rates on cash and cash equivalents
183
(103)
63
(210)
Net change in cash and cash equivalents
1,414
(1,319)
11,927
(16,389)
Cash and cash equivalents, beginning of period
28,828
19,634
18,315
34,704
Cash and cash equivalents, end of period
$30,242
$18,315
$30,242
$18,315
SEGMENT REVENUE AND OPERATING INCOME
(In millions) (Unaudited)
Three Months Ended
Twelve Months Ended
June 30,
June 30,
2025
2024
2025
2024
Revenue
Productivity and Business Processes
$33,112
$28,627
$120,810
$106,820
Intelligent Cloud
29,878
23,785
106,265
87,464
More Personal Computing
13,451
12,315
54,649
50,838
Total
$76,441
$64,727
$281,724
$245,122
Operating Income
Productivity and Business Processes
$18,993
$15,706
$69,773
$59,661
Intelligent Cloud
12,140
9,835
44,589
37,813
More Personal Computing
3,190
2,384
14,166
11,959
Total
$34,323
$27,925
$128,528
$109,433
We have recast certain prior period amounts to conform to the way we internally manage and monitor our business.