Executive Summary
Microsoft reported a robust QQ1 2025, with revenue of 65.586 billion USD, up 16.0% year-over-year, supported by disciplined cost management and continued demand for cloud-based productivity and AI-enabled solutions. Gross margin stood at approximately 69.35%, and operating margin persisted near the mid-40s, reflecting a high-margin software and cloud-services mix. Net income reached 24.67 billion USD, delivering EPS of 3.32, aided by strong operating leverage and favorable tax outcomes.
Cash generation remained a core strength, with operating cash flow of 34.18 billion USD and free cash flow of 19.26 billion USD. The company continued to deploy capital through substantial share repurchases (approximately 4.11 billion USD) and dividends (approximately 5.57 billion USD), underscoring a disciplined capital allocation strategy while maintaining a sizable cash and short-term investment position of 78.43 billion USD against total debt of 61.48 billion USD. Net debt was reported at 40.64 billion USD, highlighting leverage within a broadly conservative balance-sheet framework for a software and cloud leader.
Looking ahead, management generally emphasizes continued expansion of cloud and AI capabilities, steady demand in enterprise software, and cost discipline to protect margins. The QQ1 results position Microsoft to benefit from AI-assisted productivity, Azure-driven revenue growth, and a diversified software ecosystem, though near-term execution will depend on macro conditions, currency movements (MSF.F quotes in USD but traded on the Frankfurt market), and competitive dynamics in cloud services. Investors should monitorAzure and cloud service growth, gross and operating margins, capital deployment cadence, and Unity of AI-related costs with longer-term margin expansion potential.
Key Performance Indicators
Key Insights
Revenue: 65,585,000,000 USD; YoY: +16.04%, QoQ: +1.33%
Gross Profit: 45,486,000,000 USD; YoY: +13.11%, QoQ: +0.98%
Operating Income: 30,552,000,000 USD; YoY: +13.60%, QoQ: +9.41%
Net Income: 24,667,000,000 USD; YoY: +10.66%, QoQ: +11.94%
EPS: 3.32 (Diluted 3.30); YoY: +10.67%, QoQ: +12.16%
Gross Margin: 69.35%; Operating Margin: 46.58%; Net Margin: 37.61%
R&D Expenses: 7.544 billion USD; SG&A: 7.39 billion USD; Total Operating Expenses: 14.934 billion USD
Cash Flow from Operations: 34.18...
Financial Highlights
Revenue: 65,585,000,000 USD; YoY: +16.04%, QoQ: +1.33%
Gross Profit: 45,486,000,000 USD; YoY: +13.11%, QoQ: +0.98%
Operating Income: 30,552,000,000 USD; YoY: +13.60%, QoQ: +9.41%
Net Income: 24,667,000,000 USD; YoY: +10.66%, QoQ: +11.94%
EPS: 3.32 (Diluted 3.30); YoY: +10.67%, QoQ: +12.16%
Gross Margin: 69.35%; Operating Margin: 46.58%; Net Margin: 37.61%
R&D Expenses: 7.544 billion USD; SG&A: 7.39 billion USD; Total Operating Expenses: 14.934 billion USD
Cash Flow from Operations: 34.18 billion USD; CapEx: -14.923 billion USD; Free Cash Flow: 19.257 billion USD
Cash, Cash Equivalents and Short-Term Investments: 78.429 billion USD; Total Debt: 61.478 billion USD; Net Debt: 40.638 billion USD
Balance Sheet (selected): Total Assets 523.013 billion USD; Total Liabilities 235.290 billion USD; Total Equity 287.723 billion USD; Current Ratio 1.301; Interest Coverage 52.49x
Capital Allocation: Dividends Paid 5.574 billion USD; Share Repurchases -4.107 billion USD
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
65.59B |
16.04% |
1.33% |
| Gross Profit |
45.49B |
13.11% |
0.98% |
| Operating Income |
30.55B |
13.60% |
9.41% |
| Net Income |
24.67B |
10.66% |
11.94% |
| EPS |
3.32 |
10.67% |
12.16% |
Key Financial Ratios
operatingProfitMargin
46.6%
operatingCashFlowPerShare
$4.6
freeCashFlowPerShare
$2.59
dividendPayoutRatio
22.6%
Management Commentary
No earnings call transcript data provided in the dataset. Consequently, management-quote-based insights by theme are not available within this report. If you can supply the transcript text, I will extract and structure quotes by theme (strategy, operations, market conditions) with context and significance.
Forward Guidance
Explicit forward guidance for QQ1 2025 is not present in the provided data. Based on the reported metrics and typical Microsoft messaging, the near-term trajectory is likely to hinge on: a) continued growth in Intelligent Cloud, driven by Azure, GitHub, Nuance, and enterprise AI solutions; b) sustained profitability through high gross margins and operating leverage as cloud adoption expands and AI initiatives scale; c) ongoing investments in AI-infused productivity (Microsoft 365, Copilot, security, and compliance offerings) that can monetize at favorable margin levels over time; d) capital allocation that balances buybacks, dividends, and strategic investments. Key factors for investors to monitor include Azure revenue growth rates, gross margin sustainability, AI-related cost cadence, reinvestment efficiency, and the pace of capital returns amid currency headwinds and macro uncertainty.