Microsoft (MSFT) Q1 earnings report 2025

Microsoft reported an earnings and revenue beat for the fiscal first quarter on Wednesday, but the stock slid 4% in extended trading after the company’s forecast called for slower growth than expected.

Here’s how the company performed, compared with analysts’ expectations based on a survey by LSEG: 

• Earnings per share: $3.30 vs. $3.10 expected
• Revenue: $65.59 billion vs. $64.51 billion expected

Revenue increased 16% year over year in the quarter, which ended Sept. 30, according to a statement. Net income rose 11% to $24.67 billion from $22.29 billion in the year-ago quarter.

For the current quarter, Microsoft called for revenue in the range of $68.1 billion to $69.1 billion. That implies 10.6% growth at the middle of the range. Analysts surveyed by LSEG were looking for $69.83 billion in revenue.

Outside suppliers are late in delivering data center infrastructure to Microsoft, meaning the company won’t be able to meet demand in the fiscal second quarter.

“I feel pretty good that going into the second half of even this fiscal year, that some of that supply-demand will match up,” CEO Satya Nadella said on a conference call with analysts.

In August, Microsoft said it would revise the reporting of business segments to reflect its management approach. Mobility and security services, along with some Windows revenue, are now part of the productivity and business processes unit, which includes Office software.

Revenue from productivity and business processes rose 12% to $28.32 billion in the quarter, topping the $27.9 billion consensus among analysts surveyed by StreetAccount. It’s 38% higher than the $20.45 billion midpoint of the forecast that management gave in July, because the actual total accounts for the changes.

Investors received a clearer picture of cloud computing consumption at Microsoft. For the first time, the Azure and other cloud services revenue growth metric excludes mobility and security and Power BI data analytics sales. Azure growth for the quarter came in at 33%, or 34% at constant currency, with 12 points coming from artificial intelligence services. CNBC’s consensus for Azure growth was 32.8%, while StreetAccount’s was 29.4%.

“Demand continues to be higher than our available capacity,” Amy Hood, Microsoft’s finance chief, said on the call.

Hood called for 31% to 32% Azure growth at constant currency for the fiscal second quarter.

The full intelligent cloud segment, including Azure, Windows Server and enterprise services, generated $24.09 billion in revenue. That’s up 20% and slightly more than the $24.04 StreetAccount consensus.

On Tuesday, Google reported 35% annual growth in its rival cloud business to $11.35 billion. Amazon, which leads the cloud infrastructure market, is scheduled to report results Thursday.

Microsoft has shrunken the size of its segment called more personal computing through the reporting changes. In the latest quarter, it contributed $13.18 billion in revenue, up about 17% from a yeaer earlier and above the $12.56 billion StreetAccount consensus.

The company saw 2% growth in sales of devices and sales of Windows operating system licenses to device makers. Industry researcher Gartner estimated that quarterly PC shipments declined 1.3%.

Microsoft’s AI investments continue to be a major focus for investors, as the company builds out its infrastructure and ramps up chip spending to handle heftier workloads. Microsoft is the main investor in ChatGPT creator OpenAI, which was valued at $157 billion in a financing round earlier this month.

As of Sept. 30, Microsoft had racked up more than $108 billion in finance leases that had not started, which UBS analysts have said might include third-party cloud spending to meet AI demand.

At the same time, Microsoft has been spending more cash on property and equipment. In the first quarter, spending grew 50% year over year to $14.92 billion. The consensus among analysts polled by Capital IQ was $14.58 billion.

As of Wednesday’s close, Microsoft was up about 15% for the year, while the Nasdaq gained around 24% during the same period.

Correction: A prior version of this story had an incorrect date for the end of the quarter. It was Sept. 30.