"We will see exponentially more demand as AI becomes more efficient and accessible." - Satya Nadella
— Satya Nadella
03Detailed Report
MSFT
Microsoft Corporation
Period
Q2 2025
CurrencyUSD
Report TypeQuarterly Earnings
GeneratedJun 10, 2026
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Executive Summary
Microsoft Corporation reported strong financial results for Q2 2025, with total revenues reaching $69.6 billion, a year-over-year growth of 12%. The firm continues to show resilience in various segments, particularly in its cloud operations, which surpassed $40 billion in revenue for the first time, driven by increasing AI deployments and a significant surge in commercial bookings. CEO Satya Nadella noted that the AI business alone achieved a revenue run rate exceeding $13 billion, reflecting a dramatic 175% increase year-over-year. Overall, Microsoft has successfully maintained double-digit growth metrics, underscoring its robust competitive positioning within the technology sector.
Management comments highlighted the strategic focus on cloud infrastructure expansion, AI capabilities, and a strong demand for Microsoft 365 and Azure services, suggesting sustained momentum moving forward.
Key Performance Indicators
Revenue
Increasing
69.63B
QoQ: 6.17% | YoY: 12.27%
Gross Profit
Increasing
47.83B
68.69% margin
QoQ: 5.16% | YoY: 12.82%
Operating Income
Increasing
31.65B
QoQ: 3.60% | YoY: 17.09%
Net Income
Increasing
24.11B
QoQ: -2.27% | YoY: 10.23%
EPS
Increasing
3.24
QoQ: -2.41% | YoY: 10.20%
Revenue Trend
Margin Analysis
Financial Highlights
### Income Statement Highlights
- Revenue: $69.6 billion, up 12% YoY
- Gross Profit: $47.8 billion, 12.8% increase YoY
- Net Income: $24.1 billion, up 10.2% YoY, with an EPS of $3.23
### Financial Ratios
- Gross Margin: 68.7%
- Operating Margin: 45.5%
- Net Margin: 34.6%
- R&D Expenses: $7.9 billion, indicating continued investment in innovation
### Cash Flow Analysis
- Cash Flow from Operations: $22.3 billion, up 18% YoY
- Free Cash Flow: $6.5 billion, down 29% YoY due to capital expenditures
- Capital Expenditures: $15.8 billion, driven by long-term cloud and AI infrastructure investments.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
69.63B
12.27%
6.17%
Gross Profit
47.83B
12.82%
5.16%
Operating Income
31.65B
17.09%
3.60%
Net Income
24.11B
10.23%
-2.27%
EPS
3.24
10.20%
-2.41%
Key Financial Ratios
Gross Profit Margin
Excellent
68.70%
Gross profit margin is exceptional, indicating strong pricing power and operational efficiency
Operating Profit Margin
Excellent
45.50%
Operating margin is exceptional, indicating strong pricing power and operational efficiency
Net Profit Margin
Excellent
34.60%
Net profit margin is exceptional, indicating strong pricing power and operational efficiency
Return on Assets
Fair
4.52%
Return on assets is acceptable but below top-tier companies
Return on Equity
Fair
7.96%
Return on equity is acceptable but below top-tier companies
Current Ratio
Adequate
1.35
Current ratio meets minimum requirements but limited cushion
Debt to Equity
Conservative
0.21
Debt-to-equity shows conservative leverage and low financial risk
P/E Ratio
Growth
32.50x
Elevated P/E suggests growth expectations or premium valuation
Price to Book
High Premium
10.35x
Very high premium suggests asset-light business model or lofty expectations
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