Microsoft Earnings: Profit Surges 24% on Strong Cloud and AI Growth

Rhea-AI Summary

Microsoft (NASDAQ:MSFT) reported outstanding Q4 FY2025 results, with revenue surging 18% to $76.4 billion and net income climbing 24% to $27.2 billion. The company's diluted EPS reached $3.65, up 24% year-over-year.

The Intelligent Cloud segment led growth with revenue of $29.9 billion (+26%), driven by Azure's remarkable 39% revenue growth. Microsoft Cloud revenue reached $46.7 billion, up 27%. The Productivity segment grew 16% to $33.1 billion, while Personal Computing increased 9% to $13.5 billion.

For full FY2025, Microsoft achieved total revenue of $281.7 billion (+15%) and net income of $101.8 billion (+16%). The company returned $9.4 billion to shareholders through dividends and share repurchases in Q4.

Positive

• Revenue grew 18% to $76.4 billion in Q4, with net income up 24% to $27.2 billion
• Azure revenue surged 39%, contributing to Microsoft Cloud's $46.7 billion revenue (+27%)
• Strong performance across all segments with Intelligent Cloud growing 26%, Productivity up 16%, and Personal Computing rising 9%
• Full-year revenue reached $281.7 billion (+15%) with net income of $101.8 billion (+16%)
• Returned $9.4 billion to shareholders through dividends and share repurchases

Negative

• Windows OEM and Devices revenue showed modest 3% growth, underperforming other segments
• LinkedIn revenue growth slowed to 9%, showing weaker performance compared to other products

Insights

Financial Analyst

Microsoft delivers outstanding Q4 FY25 results with Cloud and AI driving 18% revenue growth and 24% profit increase.

Microsoft's Q4 FY25 results showcase exceptional financial performance across all business segments. Total revenue reached $76.4 billion, an 18% year-over-year increase, while net income grew even faster at 24% to $27.2 billion. This translated to diluted EPS of $3.65, also up 24%.

The standout performer was the Intelligent Cloud segment, which grew revenue by 26% to $29.9 billion. Within this segment, Azure and other cloud services exhibited remarkable 39% growth, demonstrating Microsoft's continued dominance in the enterprise cloud market. The milestone of Azure surpassing $75 billion in annual revenue (up 34%) reflects the company's successful execution of its cloud-first strategy.

Productivity and Business Processes maintained solid momentum with 16% revenue growth to $33.1 billion. Microsoft 365 Commercial and Consumer offerings grew 16% and 21% respectively, while Dynamics 365 revenue increased by 23%, indicating strong enterprise adoption of Microsoft's software suite. LinkedIn's more modest 9% growth suggests some maturation in its business model.

Even the More Personal Computing segment, historically the slowest-growing division, posted respectable 9% growth to $13.5 billion, driven by 21% growth in Search and news advertising and 13% growth in Xbox content and services.

Microsoft's ability to maintain double-digit growth rates at its massive scale is remarkable. The 15% full-year revenue growth to $281.7 billion and 16% increase in net income to $101.8 billion demonstrates effective execution across diverse business lines. The $9.4 billion returned to shareholders through dividends and share repurchases in Q4 alone underscores the company's strong cash generation capabilities and commitment to shareholder returns.

The results validate Microsoft's strategic focus on cloud and AI as engines for sustainable growth. With Cloud revenue now at $46.7 billion for the quarter (up 27%), Microsoft has positioned itself at the center of the enterprise digital transformation journey, leveraging AI capabilities to drive adoption across its product portfolio.

Microsoft Corp. (Nasdaq: MSFT) on July 30, 2025, announced robust financial results for its fourth quarter and full fiscal year ending June 30, 2025, with significant double-digit growth in both revenue and profit. The technology giant attributed the strong performance primarily to the continued momentum in its Cloud and Artificial Intelligence (AI) offerings.

For the fourth quarter, Microsoft reported total revenue of $76.4 billion, an 18% increase compared to the same period last year. The company's profitability saw even stronger growth, with net income rising 24% year-over-year to $27.2 billion. This resulted in diluted earnings per share (EPS) of $3.65, also up 24%. Diluted EPS is a key profitability metric that calculates profit per share of common stock, factoring in all potential shares from options and convertible securities.

The company also provided figures adjusted for currency fluctuations. On a constant currency basis, a non-GAAP metric that Microsoft said helps in understanding underlying business performance by removing the effects of foreign exchange rate changes, revenue grew by 17% and both net income and diluted EPS increased by 22%.

Financial Snapshot: Q4 FY2025 Highlights

• Revenue: $76.4 billion, an increase of 18% year-over-year.
• Operating Income: $34.3 billion, up 23% year-over-year.
• Net Income: $27.2 billion, an increase of 24% year-over-year.
• Diluted Earnings Per Share: $3.65, up 24% year-over-year.

Executive Insight

Company leadership emphasized the central role of its cloud and AI strategy in driving the quarter's success. Amy Hood, Microsoft's executive vice president and chief financial officer, noted that Microsoft Cloud revenue reached $46.7 billion for the quarter, a year-over-year increase of 27% (25% 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.”

Segment Performance Highlights

Microsoft's financial results are broken down into three main segments, with its cloud-focused division demonstrating the most significant growth.

Intelligent Cloud Leads the Charge

The Intelligent Cloud segment was the fastest-growing division, reporting revenue of $29.9 billion, an increase of 26% (25% in constant currency). This performance was propelled by Server products and cloud services revenue, which climbed 27%. The primary engine within this segment, Azure and other cloud services, saw its revenue surge by an impressive 39%.

Productivity and Business Processes Shows Solid Growth

Revenue in the Productivity and Business Processes segment rose 16% (14% in constant currency) to $33.1 billion. The growth was broad-based across its portfolio:

• Microsoft 365 Commercial products and cloud services revenue increased by 16%.
• Microsoft 365 Consumer products and cloud services revenue grew by 21%.
• Dynamics products and cloud services revenue climbed 18%, with Dynamics 365 revenue up 23%.
• LinkedIn revenue increased by 9%.

More Personal Computing Sees Modest Gains

The More Personal Computing segment posted revenue of $13.5 billion, a 9% increase. Key drivers included a 21% rise in Search and news advertising revenue and a 13% increase in Xbox content and services revenue. Windows OEM and Devices revenue saw a modest increase of 3%, according to the release.

Full Fiscal Year 2025 Results

For the entire fiscal year ended June 30, 2025, Microsoft reported strong annual growth. Total revenue for the year reached $281.7 billion, a 15% increase over the prior fiscal year. Full-year net income grew 16% to $101.8 billion, and diluted earnings per share increased 16% to $13.64.

Shareholder Returns and Business Outlook

Microsoft stated it returned $9.4 billion to shareholders during the fourth quarter through a combination of dividends and share repurchases. The company did not provide specific forward-looking financial guidance in the press release, noting that it would be discussed during its earnings conference call and webcast later on July 30, 2025.

This article is based solely on information provided in Microsoft Corp.'s press release dated July 30, 2025. The content is for informational purposes only and does not constitute financial, investment, legal, or tax advice. Stock Titan and its writers make no representations as to the accuracy, completeness, or timeliness of the information. Investors should conduct their own due diligence before making any investment decisions.

Source: Microsoft Corp.

FAQ

What were Microsoft's (MSFT) Q4 2025 earnings?

Microsoft reported Q4 2025 revenue of $76.4 billion (+18% YoY), net income of $27.2 billion (+24% YoY), and diluted EPS of $3.65 (+24% YoY).

How much did Microsoft's Azure revenue grow in Q4 2025?

Microsoft's Azure and other cloud services revenue grew by 39% year-over-year, driving the Intelligent Cloud segment's revenue to $29.9 billion.

What was Microsoft's (MSFT) full-year 2025 revenue?

Microsoft's full-year 2025 revenue reached $281.7 billion, a 15% increase over the previous fiscal year, with net income growing 16% to $101.8 billion.

How much did Microsoft return to shareholders in Q4 2025?

Microsoft returned $9.4 billion to shareholders through a combination of dividends and share repurchases during Q4 2025.

What was Microsoft's Cloud revenue in Q4 2025?

Microsoft Cloud revenue reached $46.7 billion for the quarter, representing a 27% year-over-year increase (25% in constant currency).

How did Microsoft's different business segments perform in Q4 2025?

Intelligent Cloud grew 26% to $29.9 billion, Productivity and Business Processes increased 16% to $33.1 billion, and More Personal Computing rose 9% to $13.5 billion.