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.