Microsoft announced its financial results for the fourth quarter of the fiscal year, pocketing $76.4 billion in revenue, an 18% rise from the corresponding period in the prior year (it amounted to $281.7 billion for the entire fiscal year). Net income for the quarter reached $27.2 billion, indicating a 24% increase. These outcomes exceeded analyst projections, with diluted earnings per share at $3.65 compared to a $3.37 consensus, and total revenue surpassing the $73.81 billion LSEG estimate. Following the earnings announcement, Microsoft’s shares ascended over 9% in after-hours trading on Wednesday, propelling the companyâs market capitalization beyond the $4 trillion mark.
The companyâs cloud computing operations remained a primary contributor to its earnings – Azure experienced a 39% year-over-year revenue increase. Satya Nadella, Microsoft CEO, noted that Azureâs annual revenue for the entire fiscal year 2025 surpassed $75 billion, marking a 34% growth rate. The Intelligent Cloud business segment, which includes Azure and other server products, brought in $29.88 billion in revenue, blowing past analyst estimates of $28.92 billion.
Nadella further stated that all Azure regions are now optimized for AI workloads and incorporate liquid cooling technology. Amy Hood, Microsoftâs Chief Financial Officer, projected that Azure revenue would grow by 37% at constant currency in the upcoming fiscal first quarter, exceeding the 33.7 percent analyst consensus.
âCloud and AI is the driving force of business transformation across every industry and sector,” Nadella said. âWeâre innovating across the tech stack to help customers adapt and grow in this new era, and this year, Azure surpassed $75 billion in revenue, up 34 percent, driven by growth across all workloads.â It seems that the integration of AI into its core product offerings, particularly within Microsoft 365 Copilot, has begun to translate into a higher average revenue per user for productivity tools.
This is unsurprising, given that the insatiable demand for AI model training and deployment has fueled a major increase in consumption of cloud services in general, making cloud computing a major revenue contributor for most companies . Additionally, Microsoftâs investments in AI infrastructure, including purpose-built data centers and the development of its own AI accelerator hardware (such as Maia and Cobalt chips), have enabled more efficient service delivery at scale.
The cloud performance occurred alongside recent adjustments to Microsoft’s global workforce. Earlier in July, the company confirmed layoffs affecting approximately 9,000 employees, constituting around 4% of its total personnel. A majority of these reductions impacted the gaming division, reportedly influenced by modifications in Xbox console distribution strategies across Europe. As of June 30, Microsoft’s full-time employee count remained at 228,000, consistent with the figure reported in 2024 prior to the most recent job reductions.
Revenue from Windows OEM and Devices increased by 3% year-over-year, primarily driven by growth in Windows OEM revenue. This occurred as the personal computer market continued to contend with the economic impacts of global tariffs and evolving consumer purchasing patterns. Microsoft’s revenue from Windows largely stems from licensing fees paid by computer manufacturers to integrate the operating system into new laptops and desktops. During this fiscal year, Microsoft began combining Windows and Devices revenue, making the specific performance of Surface devices less discernible. However, Amy Hood indicated that devices revenue is expected to decrease next quarter, alongside a projected mid-to-high single-digit decline in Windows OEM revenue. Microsoft launched two new Surface devicesâthe 12-inch Surface Pro and the 13-inch Surface Laptopâmidway through the quarter, meaning their full sales contribution will be reflected in the subsequent quarter’s financial report.
The Productivity and Business Process division, which encompasses the Office software suite and LinkedIn, generated $33.11 billion in sales, exceeding Street estimates of $32.12 billion. Microsoft 365 commercial cloud revenue increased by 18% year-over-year, driven by a higher revenue per user and the licensing of Microsoft 365 Copilot (which has surpassed 100 million monthly active users and continues integrating new features across Edge and enterprise tools). Microsoft 365 Consumer cloud revenue grew by 20%, partially influenced by a January price adjustment for consumer plans, with subscriber numbers reaching 89 million, an 8% increase year-over-year. Revenue from its gaming division rose by 10% on an annual basis.
