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    Home » Microsoft reports strong cloud growth in Q3 earnings
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    Microsoft reports strong cloud growth in Q3 earnings

    News RoomBy News RoomApril 30, 20254 Mins Read
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    Microsoft just posted the third quarter of its 2025 fiscal financial results. The software maker made $70.1 billion in revenue and a net income of $25.8 billion during Q3. Revenue is up 13 percent, and net income has increased by 18 percent. Microsoft was expected to report $68.42 billion in revenue, so the results have beaten Wall Street expectations.

    Cloud growth appears to be the main driver of improved revenues, with overall Microsoft Cloud revenue reaching $42.4 billion, up 20 percent. Microsoft hasn’t split out its AI revenues, so it’s still unclear exactly how much that part of its business is growing, though.

    With all eyes on the impact of the Trump tariffs and consumer spending, Microsoft also reported Windows OEM and devices revenue growth of 3 percent year-over-year. Businesses and consumers are upgrading PCs and laptops ahead of the Windows 10 end of life in October, but there hasn’t been a big upswing in Windows OEM revenue yet. Microsoft does say that Windows OEM growth was partly down to “inventory levels remaining elevated due to tariff uncertainty.”

    Microsoft now combines Surface revenue with Windows OEM revenue, so it’s no longer clear exactly how its Surface line is doing. Microsoft hasn’t launched any new consumer Surface devices in the recent quarter, but the company did start selling Intel-powered versions of the Surface Pro 11 and Surface Laptop 7 in February for businesses. Microsoft is also rumored to be launching smaller versions of the Surface Pro and Surface Laptop soon.

    The Surface Pro 11 and Surface Laptop 7.
    Photo by Chris Welch / The Verge

    On the gaming side, Microsoft warned last quarter that Xbox hardware revenue would decline and it has again. Xbox hardware is down 6 percent this quarter, in a period when Microsoft has been launching a variety of games into Game Pass. Overall gaming revenue at Microsoft is up 5 percent.

    Xbox content and services, which includes Game Pass, is up 8 percent, though. Microsoft isn’t revealing any new Game Pass subscriber numbers though, and the last time we got an update was in February 2024 when Microsoft revealed there were 34 million subscribers, including the Xbox Game Pass Core (previously Xbox Live Gold) members.

    Over the past year Microsoft has been pushing ahead with its strategy to bring more previously Xbox-exclusive games to PlayStation and Nintendo Switch. The move has proven to be a successful one, with preorders for Indiana Jones and the Great Circle and Forza Horizon 5 topping Sony’s own PlayStation Store last month.

    Microsoft’s Xbox everywhere strategy — which I’ve been covering closely in my Notepad newsletter over the past year — will also include titles for the Nintendo Switch 2. Microsoft is preparing a similar list of games to port over to the Switch 2 this year.

    Xbox Elite controller

    Xbox hardware revenue is down once again this quarter.
    Photo by Antonio G. Di Benedetto / The Verge

    As is always the case for Microsoft’s earnings, the company’s Office and cloud businesses are once again the stars of the show. Microsoft 365 commercial products and cloud services revenue increased 11 percent year over year, and even office consumer is up 10 percent in revenue. Microsoft 365 consumer subscribers are up to 87.7 million now.

    Microsoft bundled its Office AI features into Microsoft 365 Personal and Family subscriptions earlier this year and raised prices. Previously, Microsoft 365 subscribers had to pay an extra $20 per month to get Copilot inside Office apps like Word, Excel, and PowerPoint as part of a Copilot Pro subscription, but Microsoft now offers these AI features inside Microsoft 365 apps for an extra $3 per month. Existing subscribers have been able to opt out of the AI features and not suffer the price increase, but it’s not clear how many have actually decided to do that.

    Microsoft’s revenues in what it calls intelligent cloud have increased by 21 percent year-over-year to $26.8 billion, which is exactly double the revenue generated by Windows, Xbox, and search and news advertising (more personal computing). Server products and cloud services revenue increased 22 percent, with Azure growth of 33 percent.

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