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Microsoft Q2 Earnings & Revenues Beat on Surging AI Business
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Microsoft (MSFT - Free Report) reported second-quarter fiscal 2025 earnings of $3.23 per share, which beat the Zacks Consensus Estimate by 3.86% and increased 10.2% on a year-over-year basis.
Find the latest earnings estimates and surprises on Zacks Earnings Calendar.
Revenues of $69.63 billion increased 12.3% year over year and beat the Zacks Consensus Estimate by 1.35%. At constant currency (cc), revenues grew 12% year over year.
However, Microsoft stock fell as much as 6% in extended trading on decelerating growth in its Azure cloud infrastructure unit.
In commercial business, increased demand and growth in long-term commitments to the Microsoft Cloud platform drove results.
Commercial bookings increased 67% (up 75% in cc) and were significantly ahead of expectations, driven by Azure commitments from OpenAI. Execution was strong across core annuity sales motions with growth in the number of 100-million-dollar-plus contracts for both Azure and Microsoft 365.
Commercial remaining performance obligation increased 34% (up 36% in cc) to $298 billion. Roughly 40% will be recognized in revenues in the next 12 months, up 21% year over year. The remaining portion, recognized beyond the next 12 months, increased 45%. In the reported quarter, the annuity mix was 97%.
FX did not have a significant impact on fiscal second-quarter results and was roughly in line with expectations on total company revenues, More Personal Computing revenues, total company COGS, and operating expense. FX decreased revenues more than expected in commercial segments.
Microsoft Cloud revenues were $40.9 billion and grew 21%. Gross margin percentage was 70%, which was in line with expectations and decreased 2 points year over year due to scaling AI infrastructure.
Microsoft Corporation Price, Consensus and EPS Surprise
The Productivity & Business Processes segment, which includes the Office and Dynamics CRM businesses, contributed 42.3% to total revenues. Revenues increased 14% (up 13% at cc) on a year-over-year basis to $29.4 billion, which came ahead of expectations, driven by Microsoft’s 365 commercial.
M365 commercial cloud revenues increased 16% (up 15% in cc), slightly ahead of expectations due to better-than-expected performance in E5 and M365 Copilot. With M365 Copilot, MSFT continues to see growth in adoption, expansion and usage. ARPU growth was again driven by E5 and M365 Copilot. Paid M365 commercial seats grew 7% year over year with installed base expansion across all customer segments, though primarily in small and medium business and frontline worker offerings.
M365 commercial products revenues increased 13%, significantly ahead of expectations, driven by higher-than-expected transactional purchasing with the launch of Office 2024 as well as the Windows Commercial on-premises components from the better-than-expected performance of M365 suites.
M365 consumer cloud revenues rose 8%, slightly ahead of expectations. Microsoft continued to witness momentum in M365 consumer subscriptions, which grew 10% to 86.3 million with a mix shift to M365 Basic.
LinkedIn revenues increased 9% with continued growth across all lines of business. In the Talent Solutions business, results were slightly below expectations due to continued weakness in the hiring market in key verticals.
In subscriptions, LinkedIn Premium surpassed $2 billion in annual revenues for the first time this quarter. Subscriber growth has increased nearly 50% over the past two years, and nearly 40% of subscribers have used the company’s AI features to improve their profiles. LinkedIn Marketing Solutions remains the leader in B2B advertising.
Dynamics 365 revenues jumped 19% (up 18% in cc), slightly ahead of expectations with growth across all workloads.
Segment gross margin dollars increased 13% (up 12% in cc), and gross margin percentage decreased slightly year over year due to scaling the company’s AI infrastructure. Operating expenses rose 6% and operating income grew 16% (up 15% in cc).
The Intelligent Cloud segment, including server and enterprise products and services, contributed 36.7% to total revenues. The segment reported revenues of $25.5 billion and grew 19% with a more unfavorable FX impact than expected. Excluding the unfavorable FX impact, results in Azure non-AI services, on-prem server, and enterprise and partner services were slightly lower than expected, partially offset by better-than-expected results in Azure AI services.
Server products and cloud services revenues climbed 21% as Azure and other cloud services revenues grew 31%. Azure growth included 13 points from AI services, which grew 157% year over year and was ahead of expectations even as demand continued to be higher than our available capacity.
Growth in non-AI services was slightly lower than expected due to go-to-market execution challenges, particularly with customers that we primarily reach through scale motions, as the company balances driving near-term non-AI consumption with AI growth.
In the on-premises server business, revenues decreased 3%, slightly below expectations because of slower-than-expected purchasing around the Windows Server 2025 launch.
Enterprise and partner services revenues declined 1%, which came below expectations with lower-than-expected performance across Enterprise Support Services and Industry Solutions.
Segment gross margin dollars increased 12% (up 13% in cc) and gross margin percentage decreased 4 points year over year, primarily due to scaling the company’s AI infrastructure. Operating expenses increased 10% and operating income grew 14%.
More Personal Computing segment, which primarily comprises Windows, Gaming, Devices and Search businesses, contributed 21% to total revenues. Revenues were $14.7 billion, relatively unchanged year over year with better-than-expected results, driven primarily by Windows OEM pre-builds, usage from a third-party partnership in Search, as well as Call of Duty launch performance in Gaming.
Windows OEM and Devices revenues increased 4% year over year, which came ahead of expectations, driven by commercial inventory builds in advance of Windows 10 end of support as well as uncertainty around tariffs.
Search and news advertising revenue ex-TAC increased 21% (up 20% in cc), which came ahead of expectations, driven by usage from a third-party partnership. Growth continues to be driven by rate expansion and healthy volume growth in both Edge and Bing. Edge surpassed 30% market share in the United States on Windows and has taken share for 15 consecutive quarters.
In Gaming, revenues decreased 7% (down 8% in cc) as content and services growth continued to be offset by hardware declines. Xbox content and services revenues rose 2%, which came ahead of expectations, driven by stronger-than-expected performance in Blizzard and Activision content, including Call of Duty.
Microsoft continues to see strong momentum for Xbox Cloud Gaming, with a record 140 million hours streamed in the reported quarter. Black Ops 6 was the top-selling game on Xbox and PlayStation in the fiscal second quarter.
Game Pass set a new quarterly record for revenues and grew its PC subscriber base by more than 30%, as Microsoft continues to focus on driving fully paid subscribers across endpoints.
Segment gross margin dollars increased 13% (up 12% in cc). Gross margin percentage increased 6 points year over year, driven by sales mix shift to higher margin businesses as well as strong execution on margin improvement in Gaming and Search.
Operating expenses decreased 1%. Operating income increased 32% (up 30% in cc), driven by continued prioritization of higher margin opportunities.
Azure Boosts Microsoft's Fiscal Q2 Financials
When it comes to cloud migrations, Microsoft continues to see customers like UBS move workloads to Azure. UBS alone migrated mainframe workloads encompassing nearly 400 billion records and two petabytes of data.
Microsoft remains the cloud of choice for customers’ mission-critical Oracle (ORCL - Free Report) , SAP and VMWare apps.
At the data layer, Microsoft Fabric has been gaining steady adoption. Microsoft now has more than 19,000 paid customers, from Hitachi to Johnson Controls, to Schaeffler. Fabric is now the fastest-growing analytics product in Microsoft’s history.
Power BI is also deeply integrated with Fabric, with more than 30 million monthly active users, up 40% since last year.
Beyond Fabric, Microsoft has been witnessing new AI-driven data patterns emerge. ChatGPT, Copilot and Enterprise AI apps have boosted the growth of raw storage, database services and App platform services as these workloads scale.
In the fiscal second quarter, the number of Azure OpenAI apps running on Azure databases and Azure app services more than doubled year over year, driving significant growth in adoption across SQL Hyperscale and Cosmos DB.
Azure AI Foundry features best-in-class tooling, runtimes to build agents and multi-agent apps, AI ops, and API access to thousands of models. Two months in, Microsoft already has more than 200,000 monthly active users.
Microsoft noted that DeepSeek’s R1 launched recently via the model catalog on Foundry and GitHub, with automated red teaming, content safety integration, and security scanning.
MSFT’s Phi family of SLMs has now been downloaded more than 20 million times. The company also has more than 30 models from partners like Bayer, Paige.AI, Rockwell Automation, Siemens to address industry-specific use cases.
Microsoft's AI Copilot Adoption Surges in Q2
GitHub Copilot is increasingly the tool of choice for both digital natives like ASOS and Spotify (SPOT - Free Report) , as well as the world’s largest enterprises like HP, HSBC and KPMG.
The company has received an impressive early response to GitHub Copilot in VS Code, with more than a million signups in just the first week post-launch.
All-up, GitHub is now home to 150 million developers, up 50% over the past two years.
Customers who purchased Microsoft 365 Copilot during its first quarter of availability, have expanded their seats collectively by more than 10X over the past 18 months. Novartis has added thousands of seats each quarter over the past year and now has 40,000 seats. Barclays, Carrier Group, Pearson and the University of Miami all purchased 10,000 or more seats this quarter.
Overall, the number of people who use Copilot daily again more than doubled quarter over quarter. Employees are also engaging with Copilot more than ever. Usage intensity increased more than 60% quarter over quarter.
Copilot Chat, along with Copilot Studio, is now available to every employee to start using agents right in the flow of work. More than 160,000 organizations have already used Copilot Studio, and they collectively created more than 400,000 custom agents in the last three months alone, up more than 2X quarter over quarter.
Microsoft has also introduced its own first-party agents to facilitate meetings, manage projects, resolve common HR and IT queries, and access SharePoint data.
The company continues to see partners like Adobe (ADBE - Free Report) , SAP, ServiceNow, and Workday, which build third-party agents and integrate with Copilot.
In healthcare, DAX Copilot surpassed 2 million monthly physician-patient encounters, up 54% quarter over quarter.
Customers are choosing the latest Windows 11 devices for their enhanced security and advanced AI capabilities.
More than 15% of premium-priced laptops in the United States this holiday were Copilot+ PCs, and Microsoft expects the majority of the PCs sold in the next several years to be Copilot+ PCs.
With Security Copilot, organizations across the private and public sectors, like the City of Johannesburg, Eastman, Intesa Sanpaolo, National Australia Bank and NTT, can resolve incidents 30% faster.
Operating Results
Gross profit increased 12.8% year over year to $47.83 billion. The gross margin expanded 30 basis points (bps) to 68.7% on a year-over-year basis, primarily driven by sales mix shift to higher margin businesses as well as improvement in Gaming and Search, partially offset by the impact of scaling our AI infrastructure.
Operating expenses rose 5.3% year over year to $16.81 billion, lower than expected, and operating margins increased 2 points year-over-year to 45%. The better-than expected margin expansion was driven by delivering efficiencies across our businesses as we invest to scale AI infrastructure and build AI applications.
At a total company level, headcount at the end of December was 2% higher than a year ago and was relatively unchanged from last quarter.
Operating income increased 17% (up 16% in cc) to $31.65 billion. The operating margin expanded 190 bps to 45.5% on a year-over-year basis.
Productivity & Business Process operating income rose 16.3% to $16.88 billion. Intelligent Cloud operating income increased 13.6% to $10.85 billion. More Personal Computing’s operating income increased 32.2% to $3.91 billion.
Balance Sheet & Cash Flow
As of Dec. 31, 2024, Microsoft had total cash, cash equivalents and short-term investments balance of $71.55 billion compared with $78.42 billion as of Sept. 30, 2024.
As of Dec. 31, 2024, long-term debt (including the current portion) was $44.66 billion compared with $42.86 billion as of Sept. 30, 2024.
Cash flow from operations was $22.3 billion, up 18%, driven by strong cloud billings and collections, partially offset by higher supplier, employee and tax payments. Free cash flow was $6.5 billion, down 29% year over year, reflecting higher capital expenditures to support cloud and AI offerings.
Microsoft returned $9.7 billion to shareholders in the form of dividends and share repurchases in the second quarter of fiscal 2025.
Guidance
For the fiscal third quarter, Microsoft expects the cost of revenues between $21.65 billion and $21.85 billion and operating expenses to grow in the $16.4-$16.5 billion range. Other income and expenses are expected to be roughly $(1) billion.
The company expects revenue growth in the productivity and business processes segment between $29.4 billion and $29.7 billion.
MSFT expects Office 365 Commercial revenue growth to be roughly between 14% and 15% at cc. Office Commercial products revenues are expected to remain relatively flat year over year.
In Office Consumer products and cloud services, Microsoft expects revenue growth in mid-to-high single digits. For LinkedIn, the company expects revenue growth in low-to-mid single digits. In Dynamics, MSFT expects revenue growth in the mid-teens.
For Intelligent Cloud, Microsoft anticipates revenues between $25.9 billion and $26.2 billion.
In Azure, MSFT expects revenue growth at cc between 31% and 32%. In Enterprise Services, revenues are expected to grow in low-to-mid single digits. The company expects Server product revenues to decline in mid-single digits.
For More Personal Computing, the company projects revenues between $12.4 billion and $12.8 billion. It expects Windows OEM revenues to decline in low-to-mid single digits.
Image: Bigstock
Microsoft Q2 Earnings & Revenues Beat on Surging AI Business
Microsoft (MSFT - Free Report) reported second-quarter fiscal 2025 earnings of $3.23 per share, which beat the Zacks Consensus Estimate by 3.86% and increased 10.2% on a year-over-year basis.
Find the latest earnings estimates and surprises on Zacks Earnings Calendar.
Revenues of $69.63 billion increased 12.3% year over year and beat the Zacks Consensus Estimate by 1.35%. At constant currency (cc), revenues grew 12% year over year.
However, Microsoft stock fell as much as 6% in extended trading on decelerating growth in its Azure cloud infrastructure unit.
In commercial business, increased demand and growth in long-term commitments to the Microsoft Cloud platform drove results.
Commercial bookings increased 67% (up 75% in cc) and were significantly ahead of expectations, driven by Azure commitments from OpenAI. Execution was strong across core annuity sales motions with growth in the number of 100-million-dollar-plus contracts for both Azure and Microsoft 365.
Commercial remaining performance obligation increased 34% (up 36% in cc) to $298 billion. Roughly 40% will be recognized in revenues in the next 12 months, up 21% year over year. The remaining portion, recognized beyond the next 12 months, increased 45%. In the reported quarter, the annuity mix was 97%.
FX did not have a significant impact on fiscal second-quarter results and was roughly in line with expectations on total company revenues, More Personal Computing revenues, total company COGS, and operating expense. FX decreased revenues more than expected in commercial segments.
Microsoft Cloud revenues were $40.9 billion and grew 21%. Gross margin percentage was 70%, which was in line with expectations and decreased 2 points year over year due to scaling AI infrastructure.
Microsoft Corporation Price, Consensus and EPS Surprise
Microsoft Corporation price-consensus-eps-surprise-chart | Microsoft Corporation Quote
Segmental Details
The Productivity & Business Processes segment, which includes the Office and Dynamics CRM businesses, contributed 42.3% to total revenues. Revenues increased 14% (up 13% at cc) on a year-over-year basis to $29.4 billion, which came ahead of expectations, driven by Microsoft’s 365 commercial.
M365 commercial cloud revenues increased 16% (up 15% in cc), slightly ahead of expectations due to better-than-expected performance in E5 and M365 Copilot. With M365 Copilot, MSFT continues to see growth in adoption, expansion and usage. ARPU growth was again driven by E5 and M365 Copilot. Paid M365 commercial seats grew 7% year over year with installed base expansion across all customer segments, though primarily in small and medium business and frontline worker offerings.
M365 commercial products revenues increased 13%, significantly ahead of expectations, driven by higher-than-expected transactional purchasing with the launch of Office 2024 as well as the Windows Commercial on-premises components from the better-than-expected performance of M365 suites.
M365 consumer cloud revenues rose 8%, slightly ahead of expectations. Microsoft continued to witness momentum in M365 consumer subscriptions, which grew 10% to 86.3 million with a mix shift to M365 Basic.
LinkedIn revenues increased 9% with continued growth across all lines of business. In the Talent Solutions business, results were slightly below expectations due to continued weakness in the hiring market in key verticals.
In subscriptions, LinkedIn Premium surpassed $2 billion in annual revenues for the first time this quarter. Subscriber growth has increased nearly 50% over the past two years, and nearly 40% of subscribers have used the company’s AI features to improve their profiles. LinkedIn Marketing Solutions remains the leader in B2B advertising.
Dynamics 365 revenues jumped 19% (up 18% in cc), slightly ahead of expectations with growth across all workloads.
Segment gross margin dollars increased 13% (up 12% in cc), and gross margin percentage decreased slightly year over year due to scaling the company’s AI infrastructure. Operating expenses rose 6% and operating income grew 16% (up 15% in cc).
The Intelligent Cloud segment, including server and enterprise products and services, contributed 36.7% to total revenues. The segment reported revenues of $25.5 billion and grew 19% with a more unfavorable FX impact than expected. Excluding the unfavorable FX impact, results in Azure non-AI services, on-prem server, and enterprise and partner services were slightly lower than expected, partially offset by better-than-expected results in Azure AI services.
Server products and cloud services revenues climbed 21% as Azure and other cloud services revenues grew 31%. Azure growth included 13 points from AI services, which grew 157% year over year and was ahead of expectations even as demand continued to be higher than our available capacity.
Growth in non-AI services was slightly lower than expected due to go-to-market execution challenges, particularly with customers that we primarily reach through scale motions, as the company balances driving near-term non-AI consumption with AI growth.
In the on-premises server business, revenues decreased 3%, slightly below expectations because of slower-than-expected purchasing around the Windows Server 2025 launch.
Enterprise and partner services revenues declined 1%, which came below expectations with lower-than-expected performance across Enterprise Support Services and Industry Solutions.
Segment gross margin dollars increased 12% (up 13% in cc) and gross margin percentage decreased 4 points year over year, primarily due to scaling the company’s AI infrastructure. Operating expenses increased 10% and operating income grew 14%.
More Personal Computing segment, which primarily comprises Windows, Gaming, Devices and Search businesses, contributed 21% to total revenues. Revenues were $14.7 billion, relatively unchanged year over year with better-than-expected results, driven primarily by Windows OEM pre-builds, usage from a third-party partnership in Search, as well as Call of Duty launch performance in Gaming.
Windows OEM and Devices revenues increased 4% year over year, which came ahead of expectations, driven by commercial inventory builds in advance of Windows 10 end of support as well as uncertainty around tariffs.
Search and news advertising revenue ex-TAC increased 21% (up 20% in cc), which came ahead of expectations, driven by usage from a third-party partnership. Growth continues to be driven by rate expansion and healthy volume growth in both Edge and Bing. Edge surpassed 30% market share in the United States on Windows and has taken share for 15 consecutive quarters.
In Gaming, revenues decreased 7% (down 8% in cc) as content and services growth continued to be offset by hardware declines. Xbox content and services revenues rose 2%, which came ahead of expectations, driven by stronger-than-expected performance in Blizzard and Activision content, including Call of Duty.
Microsoft continues to see strong momentum for Xbox Cloud Gaming, with a record 140 million hours streamed in the reported quarter. Black Ops 6 was the top-selling game on Xbox and PlayStation in the fiscal second quarter.
Game Pass set a new quarterly record for revenues and grew its PC subscriber base by more than 30%, as Microsoft continues to focus on driving fully paid subscribers across endpoints.
Segment gross margin dollars increased 13% (up 12% in cc). Gross margin percentage increased 6 points year over year, driven by sales mix shift to higher margin businesses as well as strong execution on margin improvement in Gaming and Search.
Operating expenses decreased 1%. Operating income increased 32% (up 30% in cc), driven by continued prioritization of higher margin opportunities.
Azure Boosts Microsoft's Fiscal Q2 Financials
When it comes to cloud migrations, Microsoft continues to see customers like UBS move workloads to Azure. UBS alone migrated mainframe workloads encompassing nearly 400 billion records and two petabytes of data.
Microsoft remains the cloud of choice for customers’ mission-critical Oracle (ORCL - Free Report) , SAP and VMWare apps.
At the data layer, Microsoft Fabric has been gaining steady adoption. Microsoft now has more than 19,000 paid customers, from Hitachi to Johnson Controls, to Schaeffler. Fabric is now the fastest-growing analytics product in Microsoft’s history.
Power BI is also deeply integrated with Fabric, with more than 30 million monthly active users, up 40% since last year.
Beyond Fabric, Microsoft has been witnessing new AI-driven data patterns emerge. ChatGPT, Copilot and Enterprise AI apps have boosted the growth of raw storage, database services and App platform services as these workloads scale.
In the fiscal second quarter, the number of Azure OpenAI apps running on Azure databases and Azure app services more than doubled year over year, driving significant growth in adoption across SQL Hyperscale and Cosmos DB.
Azure AI Foundry features best-in-class tooling, runtimes to build agents and multi-agent apps, AI ops, and API access to thousands of models. Two months in, Microsoft already has more than 200,000 monthly active users.
Microsoft noted that DeepSeek’s R1 launched recently via the model catalog on Foundry and GitHub, with automated red teaming, content safety integration, and security scanning.
MSFT’s Phi family of SLMs has now been downloaded more than 20 million times. The company also has more than 30 models from partners like Bayer, Paige.AI, Rockwell Automation, Siemens to address industry-specific use cases.
Microsoft's AI Copilot Adoption Surges in Q2
GitHub Copilot is increasingly the tool of choice for both digital natives like ASOS and Spotify (SPOT - Free Report) , as well as the world’s largest enterprises like HP, HSBC and KPMG.
The company has received an impressive early response to GitHub Copilot in VS Code, with more than a million signups in just the first week post-launch.
All-up, GitHub is now home to 150 million developers, up 50% over the past two years.
Customers who purchased Microsoft 365 Copilot during its first quarter of availability, have expanded their seats collectively by more than 10X over the past 18 months. Novartis has added thousands of seats each quarter over the past year and now has 40,000 seats. Barclays, Carrier Group, Pearson and the University of Miami all purchased 10,000 or more seats this quarter.
Overall, the number of people who use Copilot daily again more than doubled quarter over quarter. Employees are also engaging with Copilot more than ever. Usage intensity increased more than 60% quarter over quarter.
Copilot Chat, along with Copilot Studio, is now available to every employee to start using agents right in the flow of work. More than 160,000 organizations have already used Copilot Studio, and they collectively created more than 400,000 custom agents in the last three months alone, up more than 2X quarter over quarter.
Microsoft has also introduced its own first-party agents to facilitate meetings, manage projects, resolve common HR and IT queries, and access SharePoint data.
The company continues to see partners like Adobe (ADBE - Free Report) , SAP, ServiceNow, and Workday, which build third-party agents and integrate with Copilot.
In healthcare, DAX Copilot surpassed 2 million monthly physician-patient encounters, up 54% quarter over quarter.
Customers are choosing the latest Windows 11 devices for their enhanced security and advanced AI capabilities.
More than 15% of premium-priced laptops in the United States this holiday were Copilot+ PCs, and Microsoft expects the majority of the PCs sold in the next several years to be Copilot+ PCs.
With Security Copilot, organizations across the private and public sectors, like the City of Johannesburg, Eastman, Intesa Sanpaolo, National Australia Bank and NTT, can resolve incidents 30% faster.
Operating Results
Gross profit increased 12.8% year over year to $47.83 billion. The gross margin expanded 30 basis points (bps) to 68.7% on a year-over-year basis, primarily driven by sales mix shift to higher margin businesses as well as improvement in Gaming and Search, partially offset by the impact of scaling our AI infrastructure.
Operating expenses rose 5.3% year over year to $16.81 billion, lower than expected, and operating margins increased 2 points year-over-year to 45%. The better-than expected margin expansion was driven by delivering efficiencies across our businesses as we invest to scale AI infrastructure and build AI applications.
At a total company level, headcount at the end of December was 2% higher than a year ago and was relatively unchanged from last quarter.
Operating income increased 17% (up 16% in cc) to $31.65 billion. The operating margin expanded 190 bps to 45.5% on a year-over-year basis.
Productivity & Business Process operating income rose 16.3% to $16.88 billion. Intelligent Cloud operating income increased 13.6% to $10.85 billion. More Personal Computing’s operating income increased 32.2% to $3.91 billion.
Balance Sheet & Cash Flow
As of Dec. 31, 2024, Microsoft had total cash, cash equivalents and short-term investments balance of $71.55 billion compared with $78.42 billion as of Sept. 30, 2024.
As of Dec. 31, 2024, long-term debt (including the current portion) was $44.66 billion compared with $42.86 billion as of Sept. 30, 2024.
Cash flow from operations was $22.3 billion, up 18%, driven by strong cloud billings and collections, partially offset by higher supplier, employee and tax payments. Free cash flow was $6.5 billion, down 29% year over year, reflecting higher capital expenditures to support cloud and AI offerings.
Microsoft returned $9.7 billion to shareholders in the form of dividends and share repurchases in the second quarter of fiscal 2025.
Guidance
For the fiscal third quarter, Microsoft expects the cost of revenues between $21.65 billion and $21.85 billion and operating expenses to grow in the $16.4-$16.5 billion range. Other income and expenses are expected to be roughly $(1) billion.
The company expects revenue growth in the productivity and business processes segment between $29.4 billion and $29.7 billion.
MSFT expects Office 365 Commercial revenue growth to be roughly between 14% and 15% at cc. Office Commercial products revenues are expected to remain relatively flat year over year.
In Office Consumer products and cloud services, Microsoft expects revenue growth in mid-to-high single digits. For LinkedIn, the company expects revenue growth in low-to-mid single digits. In Dynamics, MSFT expects revenue growth in the mid-teens.
For Intelligent Cloud, Microsoft anticipates revenues between $25.9 billion and $26.2 billion.
In Azure, MSFT expects revenue growth at cc between 31% and 32%. In Enterprise Services, revenues are expected to grow in low-to-mid single digits. The company expects Server product revenues to decline in mid-single digits.
For More Personal Computing, the company projects revenues between $12.4 billion and $12.8 billion. It expects Windows OEM revenues to decline in low-to-mid single digits.
In Gaming, this Zacks Rank #3 (Hold) company expects revenues to grow in low-single digits. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Microsoft expects Xbox content and services revenues to grow in low-to-mid single digits.