Microsoft Revenues Up 12 Percent to $69.6 Billion

Microsoft reported that it earned a net income of $24.1 billion on revenues of $69.6 billion in the quarter ending December 31, the second quarter of its fiscal 2025. Those figures represent gains of 10 percent and 12 percent year-over-year (YOY), respectively.

“We are innovating across our tech stack and helping customers unlock the full [return on investment] of AI to capture the massive opportunity ahead,” Microsoft CEO Satya Nadella said. “Already, our AI business has surpassed an annual revenue run rate of $13 billion, up 175 percent year-over-year.” (That’s just $3.25 billion per quarter.) By comparison, Microsoft Cloud revenue was $40.9 billion in the quarter, a gain of 21 percent YOY.

Productivity and Business Processes was once again Microsoft’s biggest business unit, with $29.4 billion in revenues, up 14 percent YOY. Microsoft 365 Commercial products and cloud services revenue was up 15 percent YOY, driven in part by the addition of revenues from the Windows commercial business. Microsoft 365 Consumer products and cloud services revenue increased 8 percent YOY, and there are now 86.3 million Microsoft 365 consumer subscribers, up 10 percent YOY.

Intelligent Cloud delivered another $25.5 billion in revenues, up 19 percent YOY. Azure revenues were up 31 percent YOY, while Server products and cloud services revenue increased 21 percent YOY.

More Personal Computing has been bringing up the rear for years, but this quarter was particularly bad, with just $14.7 billion, unchanged from the year-ago quarter. There was little in the way of good news. Windows revenues from PC makers were up 4 percent, and Xbox content and services revenues were up 2 percent. But Gaming revenue declined 7 percent YOY and Xbox hardware revenue was down a brutal 29 percent.

I’ll have a longer write-up tomorrow, but capital expenditures in the quarter were $22.3 billion, and it’s safe to assume that’s all AI infrastructure costs. So that figure keeps going up.

More soon.