Microsoft delivered a solid QQ2 2025 result with durable profitability and strong cash generation. Revenue reached $69.632 billion, up 12.27% year over year and 6.17% quarter over quarter, supported by continued demand for cloud services, productivity software, and AI-enabled offerings. Gross margin remained robust at 68.69%, driving an operating margin of 45.46% and net margin of 34.62%, underscoring the company's cost discipline and scalable software model. Free cash flow was $6.49 billion for the quarter, supplemented by substantial operating cash flow of $22.29 billion, enabling aggressive capital allocation through dividends and share repurchases while maintaining a healthy balance sheet.
Microsoft’s balance sheet remains exceptionally strong. Total assets stood at $533.90 billion with total stockholders’ equity of $302.70 billion. Liquidity metrics are solid (current ratio 1.351, quick ratio 1.342), and the company carries a modest debt burden (debt to capitalization 17.1%, debt to equity 0.206). Cash and marketable investments totaled $71.55 billion, while net debt stood at $44.74 billion. The capital allocation framework features a combination of ongoing shareholder rewards (dividends and buybacks) and continued investment in high-return initiatives, notably cloud infrastructure and AI-enabled software solutions.
From a valuation perspective, Microsoft trades at premium multiples (P/E around 32.5x, P/S around 45x, EV/EBITDA not disclosed here but implied premium relative to broader software peers), reflecting its entrenched ecosystem, scalable cloud platform, and durable profitability. The QQ2 results reinforce a constructive long-term investment thesis centered on the Microsoft Cloud (Azure) and productivity software, with AI integrations likely to support continued demand and margin resilience over time.