Microsoft Corp. (Nasdaq: MSFT) today announced financial results for the quarter ended September 30, 2025, marking a strong start to the company’s fiscal year with double-digit growth across key business segments, driven by AI-powered innovation and cloud demand.
- Revenue: $77.7 billion, up 18% year-over-year (17% in constant currency)
- Operating income: $38.0 billion, up 24% (22% in constant currency)
- GAAP net income: $27.7 billion, up 12%
- Non-GAAP net income: $30.8 billion, up 22% (21% in constant currency)
- GAAP diluted EPS: $3.72, up 13%
- Non-GAAP diluted EPS: $4.13, up 23% (21% in constant currency)
Non-GAAP results exclude the impact of investments in OpenAI, which reduced net income by $3.1 billion and EPS by $0.41 in the quarter.
Leadership Commentary
“Our planet-scale cloud and AI factory, together with Copilots across high-value domains, is driving broad diffusion and real-world impact,” said Satya Nadella, chairman and chief executive officer of Microsoft. “It’s why we continue to increase our investments in AI across both capital and talent to meet the massive opportunity ahead.”
“We delivered a strong start to the fiscal year, exceeding expectations across revenue, operating income, and earnings per share,” said Amy Hood, executive vice president and chief financial officer. “Continued strength in the Microsoft Cloud reflects growing customer demand for our differentiated platform.”
Segment and Product Highlights
Microsoft Cloud revenue grew 26% (25% in constant currency) to $49.1 billion, underscoring the continued expansion of enterprise cloud adoption and AI-driven workloads. Commercial remaining performance obligation surged 51% to $392 billion.
Productivity and Business Processes
Revenue reached $33.0 billion, up 17% (14% in constant currency), driven by strong performance across:
- Microsoft 365 Commercial: +17%
- Microsoft 365 Consumer: +26%
- LinkedIn: +10%
- Dynamics 365: +18%
Intelligent Cloud
Revenue totaled $30.9 billion, increasing 28% (27% in constant currency), with:
- Azure and other cloud services up 40% (39% in constant currency), reflecting robust demand for AI infrastructure and Copilot integrations.
More Personal Computing
Revenue was $13.8 billion, growing 4%, with:
- Windows OEM and Devices up 6%
- Xbox content and services up 1% (flat in constant currency)
- Search and news advertising (ex-TAC) up 16% (15% in constant currency)
Microsoft returned $10.7 billion to shareholders through dividends and share repurchases during the quarter.
Business Outlook
Microsoft will discuss its financial outlook for Q2 FY2026 during its earnings webcast and conference call today at 2:30 p.m. PT / 5:30 p.m. ET. Investors can access the webcast at Microsoft Investor Relations. A replay will remain available through September 30, 2026.
Non-GAAP and Constant Currency Measures
Microsoft provided non-GAAP financial measures to isolate the impact of investments in OpenAI, allowing investors to better assess operational performance. In Q1 FY2026, OpenAI-related investment losses reduced net income by $3.1 billion and diluted EPS by $0.41.
Constant currency results were presented to remove foreign exchange fluctuations, giving a clearer view of underlying growth across markets.
AI and Cloud Continue to Drive Microsoft’s Strategic Growth
Microsoft’s results underscore the accelerating adoption of its AI-driven Copilot ecosystem, Azure AI infrastructure, and Microsoft 365 integrations, which are fueling growth across industries. The company’s “AI factory” strategy—embedding AI in every layer of the tech stack—continues to position it as a leader in enterprise digital transformation.
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