Microsoft just posted the third quarter of its 2025 fiscal monetary outcomes. The software program maker made $70.1 billion in income and a internet earnings of $25.8 billion throughout Q3. Income is up 13 p.c, and internet earnings has elevated by 18 p.c. Microsoft was anticipated to report $68.42 billion in income, so the outcomes have crushed Wall Road expectations.
Cloud development seems to be the primary driver of improved revenues, with general Microsoft Cloud income reaching $42.4 billion, up 20 p.c. Microsoft hasn’t cut up out its AI revenues, so it’s nonetheless unclear precisely how a lot that a part of its enterprise is rising, although.
With all eyes on the influence of the Trump tariffs and client spending, Microsoft additionally reported Home windows OEM and gadgets income development of three p.c year-over-year. Companies and customers are upgrading PCs and laptops forward of the Home windows 10 finish of life in October, however there hasn’t been an enormous upswing in Home windows OEM income but. Microsoft does say that Home windows OEM development was partly right down to “stock ranges remaining elevated as a consequence of tariff uncertainty.”
Microsoft now combines Floor income with Home windows OEM income, so it’s not clear precisely how its Floor line is doing. Microsoft hasn’t launched any new client Floor gadgets within the current quarter, however the firm did begin promoting Intel-powered variations of the Floor Professional 11 and Floor Laptop computer 7 in February for companies. Microsoft can be rumored to be launching smaller variations of the Floor Professional and Floor Laptop computer quickly.
On the gaming aspect, Microsoft warned final quarter that Xbox {hardware} income would decline and it has once more. Xbox {hardware} is down 6 p.c this quarter, in a interval when Microsoft has been launching a wide range of video games into Recreation Go. General gaming income at Microsoft is up 5 p.c.
Xbox content material and providers, which incorporates Recreation Go, is up 8 p.c, although. Microsoft isn’t revealing any new Recreation Go subscriber numbers although, and the final time we bought an replace was in February 2024 when Microsoft revealed there have been 34 million subscribers, together with the Xbox Recreation Go Core (beforehand Xbox Stay Gold) members.
Over the previous yr Microsoft has been pushing forward with its technique to carry extra beforehand Xbox-exclusive video games to PlayStation and Nintendo Change. The transfer has confirmed to be a profitable one, with preorders for Indiana Jones and the Nice Circle and Forza Horizon 5 topping Sony’s personal PlayStation Retailer final month.
”We ended the quarter as the highest writer by preorders and preinstalls on each Xbox and PlayStation Retailer,” mentioned Microsoft CEO Satya Nadella on the corporate’s earnings name. PC Recreation Go income additionally elevated 45 p.c year-over-year, and “cloud gaming set a brand new file, surpassing 150 million hours performed for the primary time this quarter,” revealed Nadella.
Microsoft’s Xbox in all places technique — which I’ve been overlaying intently in my Notepad publication over the previous yr — will even embody titles for the Nintendo Change 2. Microsoft is getting ready an analogous record of video games to port over to the Change 2 this yr.
As is at all times the case for Microsoft’s earnings, the corporate’s Workplace and cloud companies are as soon as once more the celebs of the present. Microsoft 365 industrial merchandise and cloud providers income elevated 11 p.c yr over yr, and even workplace client is up 10 p.c in income. Microsoft 365 client subscribers are as much as 87.7 million now.
Microsoft bundled its Workplace AI options into Microsoft 365 Private and Household subscriptions earlier this yr and raised costs. Beforehand, Microsoft 365 subscribers needed to pay an additional $20 per 30 days to get Copilot inside Workplace apps like Phrase, Excel, and PowerPoint as a part of a Copilot Professional subscription, however Microsoft now provides these AI options inside Microsoft 365 apps for an additional $3 per 30 days.
Current subscribers have been in a position to choose out of the AI options and never undergo the value enhance, nevertheless it’s not clear what number of have really determined to try this. Microsoft does observe that it has seen “development in income per consumer” from the January worth enhance, which has been partially offset by a “continued combine shift” to the $1.99 month-to-month Microsoft 365 Primary subscription.
Microsoft’s revenues in what it calls clever cloud have elevated by 21 p.c year-over-year to $26.8 billion, which is strictly double the income generated by Home windows, Xbox, and search and information promoting (extra private computing). Server merchandise and cloud providers income elevated 22 p.c, with Azure development of 33 p.c.
Replace, April thirtieth: Article up to date with feedback from Microsoft CEO Satya Nadella.