Executive Summary
Microsoft reported solid QQ1 2025 results with a revenue level of $65.585 billion, marking 16.0% year-over-year growth and 1.33% quarter-over-quarter growth. The robust top-line performance was complemented by high profitability, with gross margin of 69.35% and operating margin of 46.58%, driving net income to $24.667 billion and diluted EPS of $3.30-$3.32. Cash generation remained exceptionally strong, evidenced by $34.18 billion of cash flow from operations and free cash flow of $19.26 billion. The balance sheet remains highly intact, featuring substantial liquidity (cash and short-term investments of about $78.43 billion combined) and conservative leverage metrics (debt to capital around 0.176 and interest coverage ~52x). Management commentary focused on sustaining momentum in cloud and productivity platforms, supported by AI-enabled offerings, although explicit forward guidance was not provided in the supplied materials.
Key Performance Indicators
Key Insights
Revenue: $65.585B; YoY growth 16.04%, QoQ growth 1.33%; Gross Profit: $45.486B, Gross Margin 69.35%; Operating Income: $30.552B, Operating Margin 46.58%; Net Income: $24.667B, Net Margin 37.61%; EPS (GAAP-ish): $3.32 basic, $3.30 diluted; D&A: $7.383B; R&D: $7.544B; SG&A: $7.39B; Cash from Ops: $34.18B; Capex: $(14.923)B; Free Cash Flow: $19.257B; Cash and Equivalents: $20.84B; Short-term Investments: $57.59B; Total Cash & ST Investments: $78.43B; Total Assets: $523.01B; Total Li...
Financial Highlights
Revenue: $65.585B; YoY growth 16.04%, QoQ growth 1.33%; Gross Profit: $45.486B, Gross Margin 69.35%; Operating Income: $30.552B, Operating Margin 46.58%; Net Income: $24.667B, Net Margin 37.61%; EPS (GAAP-ish): $3.32 basic, $3.30 diluted; D&A: $7.383B; R&D: $7.544B; SG&A: $7.39B; Cash from Ops: $34.18B; Capex: $(14.923)B; Free Cash Flow: $19.257B; Cash and Equivalents: $20.84B; Short-term Investments: $57.59B; Total Cash & ST Investments: $78.43B; Total Assets: $523.01B; Total Liabilities: $235.29B; Total Equity: $287.72B; Net Debt: $40.64B; Current Ratio: 1.301; Quick Ratio: 1.287; Cash Conversion Cycle: negative 34 days.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
65.59B |
16.04% |
1.33% |
| Gross Profit |
45.49B |
13.11% |
0.98% |
| Operating Income |
30.55B |
13.60% |
9.41% |
| Net Income |
24.67B |
10.66% |
11.94% |
| EPS |
3.32 |
10.67% |
12.16% |
Key Financial Ratios
operatingProfitMargin
46.6%
operatingCashFlowPerShare
$4.6
freeCashFlowPerShare
$2.59
dividendPayoutRatio
22.6%
Management Commentary
No earnings call transcript highlights were provided in the input data. As a result, there are no management quotes or thematically grouped insights available to quote directly. The narrative below draws on the reported financials and the typical strategic focus areas Microsoft emphasizes during cloud, productivity, and AI iterations. Expect continued emphasis on Azure and AI-enabled productivity tools, GitHub, LinkedIn ecosystem, and Nuance AI solutions as growth engines, with ongoing cost discipline supporting margin resilience.
Transcript data not provided in the input; no management quote available.
— Management
Transcript data not provided in the input; no management quote available.
— Management
Forward Guidance
No explicit forward guidance was included in the provided materials. Based on the QQ1 2025 performance, investors should monitor: (1) Azure’s growth trajectory and mix optimization between AI-enabled offerings and core infrastructure services, (2) acceleration of AI integrations across Microsoft 365, LinkedIn, and GitHub to sustain operating leverage, (3) cadence of capital allocation (share repurchases, dividends) given elevated free cash flow, and (4) competitive dynamics in enterprise cloud (AWS, GOOG Cloud) and regulatory developments. Given Microsoft’s historically strong cash flow generation and high profitability, the long-term outlook remains favorable if cloud trajectory and AI monetization stay material, though valuation remains pronounced versus some peers; ongoing execution and cost discipline will be key.