Microsoft(US:MSFT)2025-04-30 20:08Revenue Growth - Microsoft Cloud revenue increased 20% to $42.4 billion in Q3 FY2025 compared to Q3 FY2024[150] - Revenue for the three months ended March 31, 2025, was $70.066 billion, a 13% increase from $61.858 billion in the same period last year[172] - Total revenue for the three months ended March 31, 2025, increased by $8.2 billion or 13% compared to the same period in 2024, reaching $70.066 billion[1] - Revenue for the nine months ended March 31, 2025, increased by $24.9 billion or 14% compared to the same period last year[177] - Intelligent Cloud revenue rose by $4.6 billion or 21%, totaling $26.751 billion for the three months ended March 31, 2025[7] - Microsoft 365 Commercial products and cloud services revenue increased by $2.2 billion or 11%, with a 12% growth in Microsoft 365 Commercial cloud revenue[10] - Dynamics 365 revenue grew by 16%, driving an 11% increase in Dynamics products and cloud services revenue[150] - Azure and other cloud services revenue grew by 33%, contributing 16 percentage points to the overall growth, while server products revenue decreased by 6%[10] - Gaming revenue increased by $1.4 billion or 9%, driven by growth in Xbox content and services, while Xbox hardware revenue decreased by 26%[10] - Search and news advertising revenue increased by $1.0 billion or 11%, with a 20% increase excluding traffic acquisition costs[10] Income and Expenses - Net income for the three months ended March 31, 2025, was $25.824 billion, an 18% increase from $21.939 billion in Q3 FY2024[172] - Operating income increased 16% to $32 billion for the three months ended March 31, 2025, compared to $27.581 billion in the same period last year[172] - Gross margin for the three months ended March 31, 2025, was $48.147 billion, an 11% increase from $43.353 billion in Q3 FY2024[172] - Operating expenses increased by $375 million or 2%, driven by investments in cloud and AI engineering[176] - Research and development expenses for the three months ended March 31, 2025, increased by $545 million or 7%, primarily due to investments in cloud and AI engineering[10] - General and administrative expenses decreased by $175 million or 9% for the three months ended March 31, 2025, primarily driven by Gaming[10] Cash Flow and Investments - For the nine months ended March 31, 2025, cash from operations increased by $12.2 billion to $93.5 billion, primarily due to an increase in cash received from customers[230] - Cash, cash equivalents, and short-term investments totaled $79.6 billion as of March 31, 2025, compared to $75.5 billion as of June 30, 2024[227] - The company repurchased 23 million shares for $9.8 billion during the nine months ended March 31, 2025, with $549 million remaining of the $60 billion share repurchase program[236] - Dividends declared totaled $18.5 billion for the nine months ended March 31, 2025, compared to $16.7 billion for the same period in 2024[237] - Cash used in investing decreased by $40.1 billion to $42.0 billion for the nine months ended March 31, 2025, primarily due to a decrease in cash used for acquisitions[230] Tax and Regulatory Matters - The effective tax rate was 18% for both the three and nine months ended March 31, 2025, primarily impacted by changes in the mix of earnings and tax expenses between the U.S. and foreign countries[219] - The company remains under audit by the IRS for tax years 2014 to 2017, with proposed adjustments seeking an additional tax payment of $28.9 billion plus penalties and interest[222] Future Outlook - The company expects to continue funding operating activities and cash commitments for at least the next 12 months through existing cash and access to capital markets[226] - The company expects capital expenditures to increase in coming years to support growth in cloud offerings and investments in AI infrastructure and training[239] Accounting and Revenue Recognition - Revenue from Office 365 is recognized ratably over the period in which the cloud services are provided[244] - Significant judgment is required to determine whether products and services are distinct performance obligations[244] - Standalone selling price (SSP) is estimated using a single amount for items not sold separately and a range for those sold separately[245] - In cases where SSP is not directly observable, market conditions and other observable inputs are used to determine SSP[246] - More than one SSP may exist for individual products and services due to stratification by customers and circumstances[246] - The assessment of the pattern of delivery for the SA program requires judgment based on the exercise pattern of benefits across the customer portfolio[247]