Microsoft delivered a solid QQ3 2025 performance characterized by double-digit revenue growth, robust profitability, and strong cash generation, underscoring the resilience of its software and cloud platform model. Reported revenue of $70.07 billion marked YoY growth of 13.3% and QoQ expansion of 0.6%, reflecting ongoing demand for cloud services, productivity software, and AI-enabled solutions. The gross margin of 68.7% and operating margin of 45.7% illustrate a high-margin business mix supported by scale, prudent cost discipline, and a strong mix shift toward higher-margin cloud and AI-enabled offerings. Net income reached $25.82 billion with an EPS of $3.47 (diluted $3.46), setting a foundation for sustained shareholder value through continued buybacks and dividends.
Operating cash flow stood at $37.04 billion for the quarter, with capital expenditures of $16.75 billion and free cash flow of $20.30 billion. The balance sheet remains exceptionally liquid and levered to growth, with cash and short-term investments totaling approximately $79.6 billion against total debt of roughly $60.6 billion and net debt of about $31.7 billion. Notably, Microsoft continues to deploy capital toward transformative AI capabilities and cloud infrastructure, while maintaining a disciplined approach to cost management and R&D to sustain long-term margins.
Overall, the QQ3 2025 results reinforce Microsoft's position as a diversified software and cloud leader with a durable earnings engine. While valuation multiples imply a premium relative to broad markets, the combination of high margins, meaningful free cash flow, and a strategic AI-enabled growth trajectory supports a constructive long-term investment thesis, contingent on continued cloud demand, enterprise software adoption, and prudent capital allocation.