Microsoft just posted the third quarter of its 2025 fiscal monetary outcomes. The software program maker made $70.1 billion in income and a internet revenue of $25.8 billion throughout Q3. Income is up 13 %, and internet revenue has elevated by 18 %. Microsoft was anticipated to report $68.42 billion in income, so the outcomes have crushed Wall Road expectations.
Cloud progress seems to be the principle driver of improved revenues, with total Microsoft Cloud income reaching $42.4 billion, up 20 %. Microsoft hasn’t break up out its AI revenues, so it’s nonetheless unclear precisely how a lot that a part of its enterprise is rising, although.
With all eyes on the affect of the Trump tariffs and shopper spending, Microsoft additionally reported Home windows OEM and gadgets income progress of three % year-over-year. Companies and customers are upgrading PCs and laptops forward of the Home windows 10 finish of life in October, however there hasn’t been an enormous upswing in Home windows OEM income but. Microsoft does say that Home windows OEM progress was partly all the way down to “stock ranges remaining elevated resulting from tariff uncertainty.”
Microsoft now combines Floor income with Home windows OEM income, so it’s now not clear precisely how its Floor line is doing. Microsoft hasn’t launched any new shopper Floor gadgets within the latest quarter, however the firm did begin promoting Intel-powered versions of the Floor Professional 11 and Floor Laptop computer 7 in February for companies. Microsoft can also be rumored to be launching smaller variations of the Floor Professional and Floor Laptop computer quickly.
On the gaming aspect, Microsoft warned final quarter that Xbox {hardware} income would decline and it has once more. Xbox {hardware} is down 6 % this quarter, in a interval when Microsoft has been launching a wide range of video games into Sport Go. Total gaming income at Microsoft is up 5 %.
Xbox content material and companies, which incorporates Sport Go, is up 8 %, although. Microsoft isn’t revealing any new Sport Go subscriber numbers although, and the final time we acquired an replace was in February 2024 when Microsoft revealed there have been 34 million subscribers, together with the Xbox Sport Go Core (beforehand Xbox Dwell Gold) members.
Over the previous 12 months Microsoft has been pushing forward with its technique to deliver extra beforehand Xbox-exclusive video games to PlayStation and Nintendo Swap. The transfer has confirmed to be a profitable one, with preorders for Indiana Jones and the Nice Circle and Forza Horizon 5 topping Sony’s own PlayStation Store final month.
”We ended the quarter as the highest writer by preorders and preinstalls on each Xbox and PlayStation Retailer,” mentioned Microsoft CEO Satya Nadella on the corporate’s earnings name. PC Sport Go income additionally elevated 45 % year-over-year, and “cloud gaming set a brand new document, surpassing 150 million hours performed for the primary time this quarter,” revealed Nadella.
Microsoft’s Xbox everywhere strategy — which I’ve been protecting carefully in my Notepad newsletter over the previous 12 months — can even embody titles for the Nintendo Swap 2. Microsoft is getting ready the same listing of video games to port over to the Swap 2 this 12 months.
As is at all times the case for Microsoft’s earnings, the corporate’s Workplace and cloud companies are as soon as once more the celebs of the present. Microsoft 365 industrial merchandise and cloud companies income elevated 11 % 12 months over 12 months, and even workplace shopper is up 10 % in income. Microsoft 365 shopper subscribers are as much as 87.7 million now.
Microsoft bundled its Office AI features into Microsoft 365 Private and Household subscriptions earlier this 12 months and raised costs. Beforehand, Microsoft 365 subscribers needed to pay an additional $20 per thirty days to get Copilot inside Workplace apps like Phrase, Excel, and PowerPoint as part of a Copilot Pro subscription, however Microsoft now presents these AI options inside Microsoft 365 apps for an additional $3 per thirty days.
Present subscribers have been capable of choose out of the AI options and never undergo the worth improve, but it surely’s not clear what number of have truly determined to try this. Microsoft does be aware that it has seen “progress in income per consumer” from the January worth improve, which has been partially offset by a “continued combine shift” to the $1.99 month-to-month Microsoft 365 Basic subscription.
Microsoft’s revenues in what it calls clever cloud have elevated by 21 % year-over-year to $26.8 billion, which is precisely double the income generated by Home windows, Xbox, and search and information promoting (extra private computing). Server merchandise and cloud companies income elevated 22 %, with Azure progress of 33 %.
Replace, April thirtieth: Article up to date with feedback from Microsoft CEO Satya Nadella.