How did Microsoft perform in its fiscal Q2 2025 quarter?

Microsoft reported revenue of $69.6 billion (up 12%), operating income of $31.7 billion (up 17%), net income of $24.1 billion (up 10%), and diluted EPS of $3.23 (up 10%). Growth was led by Intelligent Cloud, where revenue rose 19% to $25.5 billion.

What drove the growth in Microsoft's cloud and AI businesses?

Microsoft Cloud revenue reached $40.9 billion, up 21%. Azure and other cloud services grew 31%, and the AI business surpassed a $13 billion annual revenue run rate, up 175% year over year, according to management.

Is Microsoft spending heavily on infrastructure, and what does that mean for investors?

Yes. Additions to property and equipment were $15.8 billion in the quarter versus $9.7 billion a year earlier, and net property and equipment rose to $166.9 billion from $135.6 billion at June 30, 2024. Management said it aims to balance operational discipline with continued cloud and AI investment, so investors should watch how this spending affects future margins and free cash flow.

Which segment was weakest, and why?

More Personal Computing was essentially flat at $14.7 billion. Windows OEM and Devices grew 4% and Xbox content and services grew 2%, while search and news advertising ex-TAC grew 21%, partly offsetting the weakness in devices and gaming.

Did the company return capital to shareholders, and will it provide guidance?

Microsoft returned $9.7 billion to shareholders through dividends and share repurchases in the quarter. The press release did not include specific forward guidance; the company said it would provide forward-looking guidance on its earnings call and webcast.

MSFT 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed January 29, 2025. Cited figures are marked; the original filing is the authoritative source.

Microsoft reported fiscal Q2 2025 results (quarter ended December 31, 2024) that showed robust top- and bottom-line growth, led by its cloud and AI businesses.

Revenue rose 12% to $69.6 billion^a, operating income increased 17% to $31.7 billion (up 16% in constant currency), net income grew 10% to $24.1 billion, and diluted EPS reached $3.23, up 10% year over year. Management highlighted Microsoft Cloud revenue of $40.9 billion (up 21%) and an AI business with an annual revenue run rate above $13 billion, up 175% year over year. Growth was broad across segments.

Intelligent Cloud revenue grew 19% to $25.5 billion^b, with Azure and other cloud services up 31%. Productivity and Business Processes revenue rose 14% to $29.4 billion, with Microsoft 365 Commercial cloud up 16% and Dynamics 365 up 19%. More Personal Computing was essentially flat at $14.7 billion, with Windows OEM and Devices up 4% and search and news advertising ex-TAC up 21%.

Microsoft returned $9.7 billion^c to shareholders through dividends and buybacks in the quarter. For investors, the key watchpoints are capital intensity and margin trajectory. Additions to property and equipment reached $15.8 billion in the quarter (versus $9.7 billion a year earlier), and property and equipment net rose to $166.9 billion from $135.6 billion at June 30, 2024.

Other expense swung to a $2.3 billion^d net expense, and the company stated it will provide forward guidance on its earnings call. This 8-K furnishes the press release under Item 2.02 and is not deemed filed for Exchange Act Section 18 purposes.

02—Key points

Key Highlights

Revenue of $69.6B, up 12% year over year; operating income of $31.7B, up 17% (16% in constant currency).
Microsoft Cloud revenue of $40.9B, up 21%, with Azure and other cloud services growing 31%.
AI business surpassed a $13B annual revenue run rate, up 175% year over year, per CEO Satya Nadella.
Diluted EPS of $3.23, up 10%; net income of $24.1B, up 10%.
Capital expenditures (additions to property and equipment) rose to $15.8B in the quarter from $9.7B a year earlier, signaling heavy AI infrastructure investment.
Other expense, net widened to $2.3B from $0.5B, a meaningful drag on pre-tax income growth relative to operating income.
Shareholder returns of $9.7B in the quarter through dividends and share repurchases; cash and short-term investments totaled $71.6B at December 31, 2024.

03—Questions

Frequently Asked Questions

How did Microsoft perform in its fiscal Q2 2025 quarter?
Microsoft reported revenue of $69.6 billion (up 12%), operating income of $31.7 billion (up 17%), net income of $24.1 billion (up 10%), and diluted EPS of $3.23 (up 10%). Growth was led by Intelligent Cloud, where revenue rose 19% to $25.5 billion.
What drove the growth in Microsoft's cloud and AI businesses?
Microsoft Cloud revenue reached $40.9 billion, up 21%. Azure and other cloud services grew 31%, and the AI business surpassed a $13 billion annual revenue run rate, up 175% year over year, according to management.
Is Microsoft spending heavily on infrastructure, and what does that mean for investors?
Yes. Additions to property and equipment were $15.8 billion in the quarter versus $9.7 billion a year earlier, and net property and equipment rose to $166.9 billion from $135.6 billion at June 30, 2024. Management said it aims to balance operational discipline with continued cloud and AI investment, so investors should watch how this spending affects future margins and free cash flow.
Which segment was weakest, and why?
More Personal Computing was essentially flat at $14.7 billion. Windows OEM and Devices grew 4% and Xbox content and services grew 2%, while search and news advertising ex-TAC grew 21%, partly offsetting the weakness in devices and gaming.
Did the company return capital to shareholders, and will it provide guidance?
Microsoft returned $9.7 billion to shareholders through dividends and share repurchases in the quarter. The press release did not include specific forward guidance; the company said it would provide forward-looking guidance on its earnings call and webcast.

04—Continue

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