Analyst(s): Keith Kirkpatrick, Daniel Newman
Publication Date: July 31, 2025
Momentum in Azure, Microsoft 365, and Dynamics 365 drove broad-based strength in Microsoft’s latest quarter. Growth across key cloud and software platforms reflects expanding adoption of AI-integrated enterprise solutions.
What is Covered in this Article:
- Microsoft’s Q4 FY 2025 financial results
- Acceleration in Azure and cloud infrastructure momentum
- Expansion of Microsoft 365 Copilot and Foundry-based agentic AI services
- Developer traction and product updates across GitHub Copilot and agent tools
- Strength across Dynamics 365, security, gaming, and healthcare use cases
- FY 2026 outlook on revenue growth, capex, Azure demand, and platform scaling
The News: Microsoft Corp. (NASDAQ: MSFT) reported its Q4 FY 2025 results with revenue of $76.4 billion, up 18% year-on-year (YoY) and 17% in constant currency (cc), beating consensus estimates by 3.6%. Microsoft Cloud revenue reached $46.7 billion, up 27% YoY, while Intelligent Cloud revenue rose 26% YoY to $29.9 billion, driven by 39% growth in Azure and other cloud services.
Meanwhile, Productivity and Business Processes revenue grew 16% YoY to $33.1 billion, supported by strong performance in Microsoft 365 Commercial and Dynamics 365. More Personal Computing revenue increased 9% YoY to $13.5 billion, led by strength in Search and Gaming. Operating income rose 23% YoY to $34.3 billion (+6.8% above consensus), and the corresponding margin increased by 176 basis points (bps) YoY to 44.9%. Diluted earnings per share (EPS) came in at $3.65, up 24% YoY, exceeding street estimates by 8.3%.
“Cloud and AI is the driving force of business transformation across every industry and sector,” said Satya Nadella, chairman and CEO of Microsoft. “We’re innovating across the tech stack to help customers adapt and grow in this new era, and this year, Azure surpassed $75 billion in revenue, up 34 percent, driven by growth across all workloads.”
Microsoft Q4 FY 2025 Earnings Beat Driven by 39% Azure Growth
Analyst Take: Microsoft closed FY 2025 with broad-based strength across cloud, productivity, and platform services, as Azure’s acceleration reinforced the company’s ability to monetize demand for AI infrastructure and applications. The quarterly results exceeded high investor expectations across revenue, operating income, and EPS, with Azure’s 39% YoY growth coming in nearly 500 bps above consensus. Strong enterprise momentum across Microsoft 365 Copilot, GitHub Copilot, and Dynamics 365, combined with expanding cloud capacity and agent-based services, highlights Microsoft’s deepening platform stickiness and scaling architecture.
Azure Momentum Underscores Platform Advantage and Capacity Leverage
Azure’s 39% YoY revenue growth in cc outpaced the top end of expectations and highlighted Microsoft’s leadership in hyperscale AI infrastructure. The company brought online more than two gigawatts of new data center capacity in the last 12 months, with every Azure region now AI-first and liquid cooling-enabled, giving Microsoft a hardware advantage over its peers.
Azure processed over 500 trillion tokens this year through Foundry APIs – up 7x YoY – indicating rapid platform-level expansion beyond flagship applications. Microsoft CEO Satya Nadella confirmed that large-scale enterprise migrations, such as Nestle’s shift of more than 200 SAP instances and 10,000+ servers, accelerate Azure’s momentum. Notably, the strong Azure growth seen this quarter may ease investor concerns around capital intensity by demonstrating clear returns.
Copilot Ecosystem Expands Across Commercial and Consumer Markets
Microsoft 365 Copilot adoption continued to scale, with the largest quarter of seat additions since launch. The company now supports more than 100 million monthly active users (MAUs) across commercial and consumer Copilot apps, with broader AI engagement across Microsoft platforms surpassing 800 million MAUs. New agent-based features such as Researcher, Analyst, Facilitator, and Interpreter are gaining traction across Teams and M365, while Copilot Studio is enabling more than 3 million agents tailored to enterprise-specific workflows.
Major rollouts include Barclays expanding to 100,000 seats and UBS extending its deployment company-wide. The integration of third-party agents from Adobe, SAP, and ServiceNow further strengthens the platform’s extensibility. Microsoft’s Copilot Tuning and group-level agents highlight a shift toward workflow-embedded AI, moving from productivity features to role-based automation at scale.
GitHub and Developer Ecosystem Show Robust AI-Driven Engagement
GitHub Copilot continues to show strong developer traction with more than 20 million users, and GitHub Copilot Enterprise customers growing 75% sequentially. The launch of new form factors like Coding Agent and Agent Mode is expanding Copilot’s utility from code completion to autonomous execution. Microsoft reported that 90% of the Fortune 100 now use GitHub Copilot, and AI projects on GitHub more than doubled over the past year.
The Code Review Agent is seeing widespread usage, performing millions of code reviews monthly, highlighting GitHub’s expanding value proposition in developer velocity. As enterprises embed AI into software development workflows, GitHub’s agentic capabilities and enterprise integrations provide Microsoft a durable edge.
Security, Dynamics 365, and Consumer Apps Extend AI Reach
Microsoft now secures nearly 2 million GenAI apps and supports 1.5 million security customers across its platforms, underscoring its role as a core provider of enterprise AI security. Dynamics 365 grew 23% YoY, winning deals across sales, ERP, and contact centers with agentic capabilities and Copilot integration. In healthcare, Dragon Copilot usage grew nearly 7x YoY, documenting more than 13 million physician-patient encounters in the quarter, with Mercy Health alone saving more than 100,000 hours using Copilot.
On the consumer side, Microsoft reported 500 million MAUs across its gaming platforms and devices. With strong engagement from titles like Forza Horizon 5 and Oblivion Remastered, Microsoft became the top publisher on both Xbox and PlayStation this quarter. Game Pass annual revenue approached $5 billion. Together, these updates highlight Microsoft’s ability to scale AI-driven innovation across enterprise, healthcare, and consumer markets through an expanding ecosystem.
Guidance and Final Thoughts
Microsoft expects double-digit revenue and operating income growth in FY 2026, supported by record commercial remaining performance obligations (RPO) of $368 billion (+35% YoY cc) and a 98% annuity mix. Azure is projected to grow approximately 37% YoY at cc in Q1 FY 2026, though the company anticipates remaining capacity constrained in H1 FY 2026.
To ensure this momentum continues, Microsoft will need to monitor and adjust how it delivers and prices AI services across each segment it serves, due to the massive amount of investments the company is making in AI infrastructure and compute. Capital expenditures are set to exceed $30 billion in Q1 FY 2026. Operating margins are expected to remain relatively flat YoY as Microsoft balances AI-driven gross margin pressure with efficiency gains and revenue scale. Any slackening in demand for Microsoft’s core services, due to economic issues, increasing competition, or other external factors, may impact the company’s forward progress.
That said, the strength of this quarter’s results demonstrates that Microsoft’s AI momentum is grounded in tangible enterprise demand – not an artificial bubble. With stronger adoption across enterprise workloads, growing usage, and rapid product innovation, Microsoft enters FY 2026 with solid execution, clear momentum, and an AI engine that continues to gain traction.
See the complete press release on Microsoft’s Q4 FY 2025 financial results on the Microsoft website.
Disclosure: Futurum is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of Futurum as a whole.
Other insights from Futurum:
Microsoft Advances Enterprise AI With New Copilot Agents and Collab Features
Microsoft Now Offers a Security Data Lake. Time To Jump Into the Water?
Microsoft Q3 FY 2025 Earnings Beat on Strong Cloud and AI Services Growth
Author Information
Keith Kirkpatrick is Research Director, Enterprise Software & Digital Workflows for The Futurum Group. Keith has over 25 years of experience in research, marketing, and consulting-based fields.
He has authored in-depth reports and market forecast studies covering artificial intelligence, biometrics, data analytics, robotics, high performance computing, and quantum computing, with a specific focus on the use of these technologies within large enterprise organizations and SMBs. He has also established strong working relationships with the international technology vendor community and is a frequent speaker at industry conferences and events.
In his career as a financial and technology journalist he has written for national and trade publications, including BusinessWeek, CNBC.com, Investment Dealers’ Digest, The Red Herring, The Communications of the ACM, and Mobile Computing & Communications, among others.
He is a member of the Association of Independent Information Professionals (AIIP).
Keith holds dual Bachelor of Arts degrees in Magazine Journalism and Sociology from Syracuse University.
Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.
From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.
A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.
An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.
