Microsoft beats forecasts for Q3 2025 thanks to cloud growth

Microsoft released its financial results for the third quarter of fiscal 2025 and beat Wall Street’s expectations. The main contributor to revenue growth was once again cloud services, a segment that has steadily become a driver of the company’s growth.

Microsoft reported its third quarter fiscal 2025 financial results and beat Wall Street’s expectations.

Financial results: cloud is key to growth

For the third quarter, Microsoft generated $70.1 billion in revenue and $25.8 billion in net income, up 13% and 18%, respectively, from the same period last year. Analysts’ forecast was $68.42 billion, so the result was better than market expectations.

The cloud business was the main source of growth: Microsoft Cloud brought in $42.4 billion, up 20% from last year. The company still doesn’t disclose individual revenues from AI services.

The Intelligent Cloud segment, which includes Azure and server products, grew 21% to $26.8 billion. Separately, Azure added 33%, confirming strong demand for the company’s cloud infrastructure solutions.

Windows, Surface and the impact of tariffs

Revenues from Windows OEM licenses grew 3% year-over-year – moderate but steady. With the imminent end of support for Windows 10 (in October), both business and residential users have been actively upgrading their devices.

With the end of Windows 10 support imminent, both business and residential users have been actively upgrading their devices.

At the same time, Microsoft notes that demand is being held back by uncertainty over import duties — amid the Trump administration’s trade tariffs, distributors are holding high levels of inventory.

Surface revenue is no longer separately identified, as Microsoft is lumping it with Windows OEM. All that is known is that February saw the release of Intel versions of the Surface Pro 11 and Surface Laptop 7 for enterprise customers. There are also rumors of smaller versions of the Surface in the pipeline.

Xbox: games rise, hardware falls

• Hardware revenue for Xbox declined 6% as expected.
• Total gaming revenue was up 5%, mainly driven by content and services.
• Xbox Game Pass and other digital services brought in +8%, though the company did not update the number of subscribers (last reported at 34 million in February 2024).

Microsoft continues to push its “Xbox everywhere” strategy, bringing previously exclusive games to PlayStation and Nintendo Switch. The success of pre-orders of Indiana Jones and the Great Circle and Forza Horizon 5 on the PS Store confirms the effectiveness of this approach. Microsoft is also preparing a list of games for the upcoming Nintendo Switch 2.

Microsoft 365: subscription growth and AI monetization

Microsoft 365 enterprise products grew 11% and consumer products grew 10%. The number of consumer subscribers reached 87.7 million.

The company has begun integrating Copilot features into standard Microsoft 365 Personal and Family plans, replacing the previous $20-per-month Copilot Pro subscription. AI features are now available for just $3 extra, though subscribers can opt out of the upgrade.

Microsoft is seeing increased revenue per user, though some customers are switching to the cheaper Basic subscription for $1.99 a month.

The article Microsoft beats forecasts in Q3 2025 thanks to cloud growth was first published on ITZine.ru.