Microsoft announced better-than-expected results driven by its cloud business and issued strong guidance that surprised investors. On April 30, local time, Microsoft announced the results of the third fiscal quarter of 2025 ended March 31, 2025. The third fiscal quarter revenue was $70.066 billion, higher than the market expectation of $68.42 billion, an increase of 12% year-on-year; net profit rose 18% year-on-year to $25.824 billion; diluted earnings per share rose 18% year-on-year to $3.46, higher than the market expectation of $3.22. In terms of performance guidance, Microsoft expects the company’s fiscal fourth quarter revenue to reach between $73.15 billion and $74.25 billion, higher than the market expectation of $72.26 billion; Azure cloud business growth is expected to reach 34% to 35%, higher than the market expectation of 31.5%. Satya Nadella, chairperson and CEO of Microsoft, said: “To expand output, reduce costs and accelerate growth, cloud and AI are important inputs that every enterprise needs. From AI infrastructure and platforms to applications, we are innovating across the board to serve our customers.” Summary of Microsoft’s fiscal third quarter results. Source: Microsoft’s financial report Summary of Microsoft’s fiscal third quarter results. Source: On the 30th day of Microsoft’s earnings report, Microsoft (Nasdaq: MSFT) shares rose 0.31% to close at $395.26 per share, with a total market value of $2.94 trillion. After the earnings report was released, Microsoft’s stock price rose more than 9% after hours. At present, the market is closely watching the impact of US tariffs on major companies. Compared with tech giants such as Apple and Amazon, the impact of tariffs on Microsoft is relatively small, because its products and services are less dependent on trade. However, Microsoft’s enterprise customers may also be more cautious about Cloud as a Service, software and AI spending. Asked on a post-earnings call about how to deal with a potential recession, Mr. Nadella said the company would focus on helping customers: “Because of the efficiency of Cloud as a Service, the reach of the company’s business landscape and the unique technology stack-level advantages from SaaS (software-as-a-service) applications to infrastructure, we feel Microsoft can play a big role [in helping customers]… When we face any inflationary pressure or growth pressure to do more with less, software is the most malleable resource.” In a post-earnings call, Microsoft noted that its capital expenditures reached $21.40 billion in the quarter, including equipment purchased through financial leases. Previously, Microsoft said it expected capital expenditures to exceed $80 billion in fiscal 2025. In “other items”, Microsoft’s spending reached $623 million, including part of its investment in OpenAI. The figure was $2.29 billion in the previous quarter. By business, Microsoft’s most closely watched intelligent cloud unit reported revenue of $26.751 billion in the fiscal quarter, up 21% from the same period last year and up from 19% in the previous fiscal quarter. Azure cloud revenue grew 33% year-over-year, up from 31% in the previous fiscal quarter, and Microsoft said 16% of growth was driven by demand for AI, compared with 13% in the previous fiscal quarter. Amy Hood, Microsoft’s chief financial officer, said on the call that the tight supply and demand situation in Microsoft’s non-AI cloud business improved in the quarter: “It’s slightly better, we still have some work to do in terms of scaling, and we’re encouraged by the progress we’ve made.” She also noted that in the AI space, Microsoft’s infrastructure capacity has come online faster than expected. Nadella announced on the call that more than 15 million people now use GitHub Copilot, Microsoft’s developer AI assistant, a figure that is four times higher than in the same period last year. Microsoft’s productivity and business processes division saw revenue increase 10% year-on-year to $29.944 billion in the last quarter, beating market expectations of $29.57 billion. Microsoft 365 Business Products and Cloud as a Service grew 11% year-over-year, with Business Cloud as a Service revenue up 12%; Microsoft 365 Consumer Products and Cloud as a Service grew 10% year-over-year, with Consumer Cloud as a Service revenue up 10%; Business social networking site LinkedIn revenue increased 7% year-over-year; Business Application Dynamics product and Cloud as a Service revenue increased 11% year-over-year. In addition, revenue from the Personal Computing segment, including gaming, reached $13.371 billion, up 6% year-over-year. Among them, Xbox content and services revenue increased by 8% year-on-year; Windows OEM manipulation system licenses and equipment revenue for device manufacturers increased by 3% year-on-year; search and news advertising services revenue excluding traffic acquisition costs increased by 21% year-on-year. Among them, the sales volume of devices and Windows operating system licenses for device manufacturers increased by 3%. Microsoft said that its inventory levels remained high due to the uncertainty of tariffs. Nadella also pointed out that with support for the operating system Windows 10 coming to an end in October this year, the deployment of the next generation of Windows 11 among business customers increased by about 75%.
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