Q3 2025 Microsoft Corp Earnings Call Transcript
Key Points
- Microsoft Cloud revenue surpassed $42 billion, up 22% in constant currency, showcasing strong demand for cloud and AI offerings.
- Azure and other cloud services revenue grew 33% and 35% in constant currency, driven by strong demand for AI services.
- Microsoft 365 Copilot usage tripled year-over-year, indicating strong adoption of AI-driven productivity tools.
- LinkedIn revenue increased 7% and 8% in constant currency, with significant growth in LinkedIn Premium subscriptions.
- Gaming revenue increased 5% and 6% in constant currency, with Xbox content and services revenue growing 8% and 9% in constant currency.
- On-premises server business revenue decreased 6% and 4% in constant currency, reflecting a continued shift to cloud offerings.
- Microsoft Cloud gross margin percentage decreased by 3 points year-over-year due to the impact of scaling AI infrastructure.
- Operating expenses increased 6% and 7% in constant currency, driven by investments in AI infrastructure.
- There are AI capacity constraints expected beyond June, indicating potential challenges in meeting growing demand.
- The Talent Solutions business within LinkedIn continues to be impacted by weakness in the hiring market.
Greetings, and welcome to the Microsoft fiscal year 2025 third quarter earnings conference call. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce Jonathan Neilson, Vice President of Investor Relations. Please go ahead.
Good afternoon, and thank you for joining us today. On the call with me are Satya Nadella, Chairman and Chief Executive Officer; Amy Hood, Chief Financial Officer; Alice Jolla, Chief Accounting Officer; and Keith Dolliver, Corporate Secretary and Deputy General Counsel.
On the Microsoft Investor Relations website, you can find our earnings press release and financial summary slide deck, which is intended to supplement our prepared remarks during today's call and provides a reconciliation of differences between GAAP and non-GAAP financial measures.
More detailed outlook slides will be available on the Microsoft Investor Relations website when we provide outlook commentary on today's call. On this call, we will
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