Q2 2025 Microsoft Corp Earnings Call Transcript
Key Points
- Microsoft Cloud revenue surpassed $40 billion for the first time, growing 21% year-over-year.
- AI business annual revenue run rate exceeded $13 billion, marking a 175% increase year-over-year.
- Strong commercial bookings growth of 67% and 75% in constant currency, driven by Azure commitments from OpenAI.
- Microsoft 365 Copilot saw significant adoption, with customers expanding their seats by more than 10x over the past 18 months.
- LinkedIn Premium surpassed $2 billion in annual revenue, with subscriber growth increasing nearly 50% over the past two years.
- Azure non-AI services growth was slightly lower than expected due to go-to-market execution challenges.
- On-premises server business revenue decreased 3%, slightly below expectations.
- Enterprise and partner services revenue decreased 1%, below expectations.
- Gaming revenue decreased 7% and 8% in constant currency, with hardware declines offsetting content and services growth.
- Free cash flow was down 29% year-over-year, reflecting higher capital expenditures.
Hey, greetings and welcome to the Microsoft fiscal year 2025 second-quarter earnings conference call. (Operator Instructions) As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host Brett Iversen, 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 the 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.
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