Microsoft delivered a solid QQ3 2025 with pronounced top-line strength and robust profitability. Revenue reached $70.07 billion, up 13.3% year over year (YoY) and 0.6% quarter over quarter (QoQ). The gross margin stood at 68.7%, yielding an operating margin of 45.7% and a net margin of 36.9%. EBITDA was $40.71 billion, underscoring the cash-generative nature of the business and the durable profitability of its software-centric model.
The company generated strong operating cash flow of $37.04 billion and free cash flow of $20.30 billion, supporting a healthy balance sheet with substantial liquidity. Cash and short-term investments totaled approximately $79.6 billion, while gross debt stood at $60.6 billion, leaving a net cash/debt position that reflects ample flexibility for continued capital allocation, including ongoing buybacks and shareholder dividends. The quarterly data also show positive momentum across the core segments, with Azure and productivity tools driving earnings quality, tempered by continued investments in AI, cybersecurity, and platform capabilities.
Looking ahead, investors should monitor Azure/Intelligent Cloud growth trajectories, Microsoft 365 adoption and monetization, and the impact of AI-enabled features across Windows, Office, LinkedIn, and Dynamics. Management commentary (where available) would typically frame the pace of AI-enabled product rollouts, enterprise demand, and competitive dynamics. Given the cash-generative profile and strong balance sheet, the company is well-positioned to sustain margin discipline and fund continued strategic investments, albeit with execution risk tied to cloud competition and enterprise IT budgets.