Microsoft has reported revenue of $70.1 billion (up 13 percent), operating income of $32 billion (up 16 percent) and net income of $25.8 billion (up 18 percent) for the quarter ended March 31, 2025.
“Cloud and AI are the essential inputs for every business to expand output, reduce costs, and accelerate growth,” said Satya Nadella, chairman and chief executive officer of Microsoft in earnings report.
In the third quarter, Microsoft’s capital expenditures jumped 53 percent to $21.4 billion.
Microsoft’s revenue in Productivity and Business Processes reached $29.9 billion, up 10 percent, driven by 11 percent growth in Microsoft 365 Commercial and 10 percent growth in Microsoft 365 Consumer. Dynamics products grew 11 percent, with Dynamics 365 revenue up 16 percent.
LinkedIn revenue rose 7 percent.
The Intelligent Cloud segment generated $26.8 billion in revenue, up 21 percent, fueled by a 22 percent increase in server products and a 33 percent jump in Azure and other cloud services.
More Personal Computing revenue reached $13.4 billion, up 6 percent, with Windows OEM and Devices growing 3 percent, Xbox content and services up 8 percent, and search and news advertising increasing 21 percent excluding traffic acquisition costs.
AI
Microsoft continues to scale its AI capabilities globally, opening data centers in 10 countries across four continents this quarter alone. The company is optimizing every layer of its infrastructure — from data center design and custom silicon to systems software and model efficiency — resulting in a nearly 20 percent reduction in GPU dock-to-lead times and a 30 percent increase in AI performance per unit of power across its fleet. Its AI platform is tightly integrated with its data stack, driving increased adoption of PostgreSQL, now used by nearly 60 percent of the Fortune 500, and Cosmos DB, which continues to grow and serves customers such as CarMax, DocuSign, NTT Data, and OpenAI.
Cloud
Cloud migration momentum accelerated, with major enterprises like Abercrombie & Fitch, Coca-Cola, and ServiceNow expanding on Azure. Microsoft remains the preferred cloud for mission-critical VMware, SAP, and Oracle workloads, boasting the broadest regional availability of any hyperscaler. Analytics consumption surged, with Microsoft Fabric reaching over 21,000 paid customers, up 80 percent year-over-year. Real-time intelligence emerged as Fabric’s fastest-growing workload, already in use by 40 percent of customers within five months of general availability, while over 50 percent of Fabric customers utilize three or more workloads. OneLake, Microsoft’s multi-cloud data lake, grew more than 6X in data volume year-over-year.
In AI platforms, Foundry now supports developers at over 70,000 enterprises, including Epic, Fujitsu, and H&R Block, in creating and managing AI apps and agents. Microsoft processed over 100 trillion tokens this quarter — a 5X year-over-year increase — with 50 trillion tokens processed in a single month.
More than 10,000 organizations have used Microsoft’s new Agent Service in just four months to deploy custom AI agents. The Foundry platform now includes models from OpenAI, Cohere, DeepSeek, Meta, Mistral, and Stability, and Microsoft has expanded its Phi family of small language models, with 38 million downloads to date.
GitHub Copilot reached over 15 million users, up 4X year-over-year, with adoption from companies like Cisco, HPE, and Target. Visual Studio and VS Code continue to lead with over 50 million monthly active users, and the Power Platform grew to 56 million monthly active users, up 27 percent year-over-year, as customers increasingly leverage AI for app development and process automation.
Microsoft 365 Copilot, designed for human-agent collaboration, tripled its user base year-over-year and is now used by hundreds of thousands of customers. Copilot Studio has been used by more than 230,000 organizations, including 90 percent of the Fortune 500, to build over 1 million custom agents in the past quarter, up 130 percent quarter-over-quarter.
In business applications, Dynamics 365 continues to gain market share with new customers such as Avaya and SoftCat, and major wins like Verizon choosing Dynamics 365 Sales. In healthcare, Dragon Copilot is gaining traction, documenting 9.5 million physician-patient encounters in a single quarter, up 50 percent quarter-over-quarter.
Microsoft now serves 1.4 million security customers, with over 900,000 using four or more security workloads — a 21 percent year-over-year increase. Its identity platform, Entra, supports over 900 million monthly active users.
LinkedIn now serves over one billion professionals, with membership growing at double-digit rates year-over-year. Engagement is rising, with a 36 percent increase in video watch time and a 32 percent increase in comments. Usage of AI tools is accelerating, as the number of learners using AI-powered coaching more than doubled quarter-over-quarter.
LinkedIn remains the market leader in hiring, with companies like Equinix and Verizon leveraging Hiring Assistant to recruit faster. Premium Pages for SMBs saw over 75 percent growth in subscribers quarter-over-quarter, and LinkedIn Marketing Solutions achieved two straight quarters of accelerated revenue growth, reinforcing its position as the top platform for reaching B2B decision-makers.
Gaming
Microsoft Gaming is undergoing a transformation focused on margin expansion while reaching over 500 million monthly active users across devices. The company ended the quarter as the top publisher by pre-orders and pre-installs on both Xbox and PlayStation Store. PC Game Pass revenue grew over 45 percent year-over-year, and Xbox Play Anywhere now offers access to more than 1,000 games across console and PC.
Cloud gaming hit a milestone with over 150 million hours played in a quarter and recently expanded to LG TVs. AI integration is advancing with Copilot for Gaming, offering in-game assistance, and the Muse model, which generates gameplay in real-time. Minecraft continues to thrive, with the Minecraft Movie becoming the year’s top-grossing film and weekly active users of the game up over 75 percent year-over-year.
Baburajan Kizhakedath
