Authored by stclarke, this article reviews Microsoft’s Q4 and fiscal year 2025 financials, spotlighting the key role of cloud and AI services in delivering strong company performance.

Summary

Microsoft announced its financial results for the fourth quarter and fiscal year ending June 30, 2025, revealing robust growth driven by its investments in cloud and AI. This update underscores the company’s continued market strength and the strategic importance of Azure, Microsoft 365, and other cloud services.

Key Financial Highlights

  • Q4 Revenue: $76.4 billion, up 18% from last year (17% in constant currency)
  • Q4 Operating Income: $34.3 billion, up 23%
  • Q4 Net Income: $27.2 billion, up 24%
  • Q4 Diluted EPS: $3.65, up 24%

For the entire fiscal year 2025:

  • Annual Revenue: $281.7 billion, up 15%
  • Operating Income: $128.5 billion, up 17%
  • Net Income: $101.8 billion, up 16%
  • Diluted EPS: $13.64, up 16%

Strategic Commentary

Satya Nadella, Microsoft’s CEO, attributed the robust results to the ongoing business transformation powered by cloud and AI, highlighting Azure’s revenue surpassing $75 billion, a 34% growth. Amy Hood, CFO, noted the strong close to the year, with Microsoft Cloud generating $46.7 billion in Q4 revenue (a 27% year-on-year increase).

Business Segment Highlights

Productivity and Business Processes

  • Revenue: $33.1 billion, up 16% (14% in constant currency)
  • Microsoft 365 Commercial cloud revenue grew 18%
  • Microsoft 365 Consumer cloud revenue up 20%
  • LinkedIn revenue rose 9%
  • Dynamics 365 revenue climbed 23%

Intelligent Cloud

  • Revenue: $29.9 billion, up 26% (25% in constant currency)
  • Server products and cloud services revenue grew 27%
  • Azure and other cloud services revenue increased 39%

More Personal Computing

  • Revenue: $13.5 billion, up 9%
  • Windows OEM and Devices revenue rose 3%
  • Xbox revenue increased 13%
  • Search and advertising revenue (excluding traffic acquisition costs) grew 21%

Product Releases and Innovation

Microsoft emphasized consistent investment in R&D, delivering hundreds of new or enhanced products each quarter. These innovations focus on productivity, security, and differentiated value across cloud and edge.

Shareholder Returns

Microsoft returned $9.4 billion to shareholders via dividends and share repurchases in Q4 2025.

Outlook

Microsoft will provide further guidance on performance and outlook in its quarterly earnings call and webcast.

Additional Notes

  • Constant currency information is provided for clearer year-on-year comparisons by eliminating foreign exchange impact.
  • Microsoft’s discussion also covers potential operational and market risks, such as rapid technological change, competition, and compliance challenges, especially relating to cloud and AI adoption.

Conclusion

Microsoft’s latest earnings showcase the critical role of cloud and AI in driving its strong financial performance. Continued growth across Azure, Microsoft 365, Dynamics, and new product releases position the company for ongoing innovation and success in the evolving technology landscape.

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