Earnings Release FY25 Q2

Performance

Revenue increased $7.6 billion or 12% driven by growth in Intelligent Cloud and Productivity and Business Processes. Intelligent Cloud revenue increased driven by Azure. Productivity and Business Processes revenue increased driven by Microsoft 365 Commercial cloud. More Personal Computing revenue was relatively unchanged.

Cost of revenue increased $2.2 billion or 11% driven by growth in Microsoft Cloud, offset in part by Gaming.

Gross margin increased $5.4 billion or 13% driven by growth across each of our segments.

• Gross margin percentage increased slightly driven by More Personal Computing and sales mix shift to higher margin businesses within More Personal Computing, offset in part by Intelligent Cloud.

• Microsoft Cloud gross margin percentage decreased to 70% driven by scaling our AI infrastructure.

Operating expenses increased $815 million or 5% driven by investments in cloud engineering.

Operating income increased $4.6 billion or 17% driven by growth across each of our segments.

IMPORTANT NOTICE TO USERS (summary only, click here for full text of notice) All information is unaudited unless otherwise noted or accompanied by an audit opinion and is subject to the more comprehensive information contained in our SEC reports and filings. We do not endorse third-party information. All information speaks as of the last fiscal quarter or year for which we have filed a Form 10-K or 10-Q, or for historical information the date or period expressly indicated in or with such information. We undertake no duty to update the information. Forward-looking statements are subject to risks and uncertainties described in our Forms 10-Q and 10-K.