Microsoft (MSFT) Q3 earnings report 2025

Microsoft shares rose about 9% in prolonged buying and selling on Wednesday after the corporate reported better-than-expected quarterly outcomes, pushed by its Azure cloud enterprise, and issued surprisingly sturdy steerage

Here is how the corporate carried out compared with LSEG consensus:

• Earnings per share: $3.46 vs. $3.22 anticipated
• Income: $70.07 billion vs. $68.42 billion anticipated

Microsoft known as for income within the vary of $73.15 billion to $74.25 billion. The center of the vary was greater than LSEG’s $72.26 billion consensus. The corporate sees 34% to 35% in Azure progress at fixed forex, in contrast with StreetAccount’s 31.5% consensus.

Administration reiterated that capital expenditures will develop within the new fiscal yr, although at a slower fee than the present 2025 fiscal yr. The corporate’s implied working margin of 43.35% was simply shy of StreetAccount’s 43.5% consensus.

Income elevated 13% yr over yr within the fiscal third quarter, which ended on March 31, based on a statement. Internet earnings climbed 18% to $25.8 billion from $21.9 billion, or $2.94 per share, a yr earlier.

Whereas earnings and income topped estimates, these outcomes are backward wanting. President Donald Trump’s sweeping tariffs have been introduced in early April, so the corporate’s optimistic forecast supplied some reduction to traders who’ve been involved about how tech companies will fare the rest of the yr.

CEO Satya Nadella mentioned earlier this yr that Microsoft plans to spend $80 billion in fiscal 2025 on building of information facilities that may deal with synthetic intelligence workloads. That requires hefty imports from abroad, that means prices might rise relying on the place tariffs land.

Microsoft continued to take a position closely in AI infrastructure throughout the quarter. Capital expenditures, excluding finance leases, reached $16.75 billion, up practically 53%. Analysts surveyed by Seen Alpha had anticipated $16.37 billion.

The corporate’s Azure income grew 33%, with 16 factors of the expansion related to AI. Analysts polled by StreetAccount and CNBC had anticipated 30.3% and 29.7% progress, respectively.

In January, Microsoft flagged disappointing non-AI Azure cloud execution with shoppers it engages alongside companions. Microsoft noticed some enchancment in these efforts throughout this quarter, mentioned Amy Hood, Microsoft’s finance chief, on a convention name with analysts. “Things were a little better, and we still have some work to do in our scale motions and we’re encouraged by our progress,” she mentioned.

In the meantime, in AI, Microsoft introduced infrastructure capability on-line quicker than anticipated, Hood mentioned.

“Demand is growing a bit faster,” she mentioned. “Therefore, we now expect to have some AI capacity constraints beyond June.”

The Clever Cloud unit that features Azure produced $26.75 billion in income, up round 21% and greater than StreetAccount’s consensus of $26.16 billion.

Microsoft mentioned greater than 15 million individuals are actually utilizing its GitHub Copilot assistant, 4 instances greater than final yr, Nadella mentioned on Wednesday’s name.

Income within the Productiveness and Enterprise Processes section, which accommodates Workplace software program subscriptions and LinkedIn, rose 10% to $29.94 billion, beating the $29.57 billion StreetAccount consensus. LinkedIn’s Expertise Options providing for recruiters “continues to be impacted by weakness in the hiring market,” Hood mentioned.

Within the Extra Private Computing unit, containing Home windows, search promoting, gadgets and online game consoles, income rose 6% to $13.37 billion, greater than StreetAccount’s $12.66 billion consensus.

Microsoft mentioned gross sales of gadgets and of Home windows working licenses to system makers elevated 3%, as stock ranges remained elevated due to tariff uncertainty. Expertise trade researcher Gartner estimated that PC shipments went up 4.8% within the quarter.

“We continue to see increased commercial traction as we approach end of support for Windows 10,” Nadella mentioned. Assist for the working system launched in 2015 will finish in October. Deployments of the next-generation Home windows 11 amongst business shoppers have been up round 75%, he mentioned.

Through the quarter, which ended on March 31, Microsoft introduced an adjustment to its relationship with key AI companion OpenAI. The corporate mentioned it could have a proper of first refusal when OpenAI needs new computing capability, however will not at all times must ship it. On the identical day, OpenAI introduced the Stargate AI infrastructure undertaking alongside Oracle and SoftBank on the White Home.

Microsoft mentioned it had $623 million in “other expense” throughout the quarter. The sum consists of acknowledged losses on fairness methodology investments, together with OpenAI. The determine was $2.29 billion within the prior quarter.

As of Wednesday’s shut, Microsoft shares have been down 7% for the yr, whereas the S&P 500 index was down about 6%.

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