Microsoft FY25 Q2 earnings report

01 Business performance

Segment revenue is rounded as in the release. Microsoft Cloud spans segments and is not identical to Intelligent Cloud. Comparisons must distinguish fiscal and calendar years, segment reclassification and acquisition effects.

02 Earnings quality

Consolidated operating income of 31.653 B$ on revenue of 69.632 B$ implies a 45.5% operating margin. Net income was 24.108 B$; the -7.545 B$ difference from operating income combines nonoperating and tax effects. The entire difference is not classified as cash earnings or a one-off item.

03 Cash flow, investment and financial position

On the common quarterly comparison basis, OCF of 22.291 B$ less cash CapEx of 15.804 B$ produced FCF of 6.487 B$. CapEx/revenue was 22.7% and FCF margin was 9.3%. Cash remained after capital investment, but this is before dividends, repurchases, acquisitions and debt repayment.

Quarter-end cash and current investments were 71.555 B$, interest-bearing borrowings at carrying amount were 44.970 B$, and net cash was 26.585 B$. Borrowings include current and noncurrent debt and exclude separately disclosed lease liabilities. Negative net cash means net debt. Total liabilities, which also include trade payables and leases, are a different measure.

04 Management commentary and contemporaneous outlook

Nadella said the AI business exceeded a 13 B$ annual revenue run rate, up 175% year over year. This is neither completed annual revenue nor current-quarter revenue.

The release directs readers to the earnings call for quantitative forward guidance. This report is release-based and does not insert unreviewed call-guidance figures.

05 Interpretation and follow-up checks

Separate Azure and Microsoft 365 demand from PCs and gaming. Even with rising AI demand, data-center investment, leases and revenue recognition occur at different times; bookings alone do not establish cash profitability.

On the same dataset basis, year-over-year revenue changed by +7.612 B$, operating margin by +1.9 percentage points and FCF by -2.631 B$. First test whether sales, earnings and cash move together. Use this absolute FCF change rather than a growth rate when the comparison period had negative FCF.

Quarterly results · CY-aligned view

CY denotes the calendar quarter with the greatest overlap with the fiscal period. If the first period has no start date, 89 days before its end is used only for calendar mapping. Financial values are not recalculated into calendar quarters. Incomplete years show totals of included quarters; cash, liabilities, borrowings and net cash use the last period-end balance. QoQ and YoY show absolute changes; margin changes are percentage points. Dashes indicate missing evidence or incomparable periods or definitions. Total liabilities never substitute for borrowings.

Definitions and evidence coverage

A dash means unavailable or undisclosed, not zero. Company-defined FCF may differ from total operating cash flow less common-basis CapEx. Total liabilities are accounting liabilities, not interest-bearing debt.

Management commentary paraphrases the earnings release. A full earnings-call and Q&A review has not been completed.

Financial tables use existing InveDeck normalized data and may reflect subsequent comparative filings. Segment tables and outlook use the original release basis.