Microsoft (MSFT) 30 Oct 242025 Q1 Earnings call transcript

Greetings, and welcome to the Microsoft Fiscal Year 2025 First 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.

Corporate me Hood, Nadella, Jolla, Chief Officer; Keith with Executive and Chief call General and Amy Deputy Officer; Financial Dolliver, the are Chairman Satya Chief Accounting Counsel. On and Secretary Officer; Alice

differences On non-GAAP today's our press the the call deck, is and release find our financial supplement of slide earnings intended summary provides Microsoft to website, between financial prepared can Relations which Investor measures. GAAP you and and remarks reconciliation during

reflect to in amounts FY period prior certain recast of announced have to changes segments composition August the the We 'XX our XXXX.

substitute be investors to They detailed are or 'XX a company's Additional GAAP. statements details, financial can including segment additional FY items clarifying FY level found product considered be superior and filed as further and with of aid understanding to the financial on operating prepared first impact addition and the accordance included on revenue outlook service revenue, as More financial income the the recast for in Investor in 'XX website. make measures performance Relations Investor we Microsoft be events otherwise unless All also in should and performance to will the will Relations the today's this the we financial today on quarter outlook these on of growth have provide comparisons relate certain call year, last call, in available results. the to non-GAAP provided when discuss the period The items corresponding noted. measures call. On we on commentary not items. website non-GAAP slides

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this other events. we'll and statements and current statements, in making are the are because During about of future could on are differ projections, expectations Actual materially based uncertainties. today's which risks press to results or subject be And These forward-looking of assumptions release, factors call, predictions, this earnings discussed during turn XX-K, that statements update made Forms and the undertake Satya. to comments and call, I'll and call Commission. not do statement. duty with the our Exchange other XX-Q, section that, in the Securities Factors any Risk with conference over filings and to reports We forward-looking any Form in

Thank you, Brett.

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afternoon, and everyone. you, Thank Satya, good

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company to Now guidance. back

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we reminder, on method not do a As or equity mark-to-market losses gains investments. recognize

$XX continues strategic billion annual been and pivotal AI to X.X the leader as our platform business excited on And opportunities scaling in our wave. partnership of heard we in, QX closing, our Monetization effective long-term is strategically from approximately to these us in surpass focused will to we're AI only history milestone. in tax that in and has our investment revenue business rate this investing track we fastest As QX. the building AI expect run drive grow, believe lastly, from be reach value. shareholder and remain the on in to years we OpenAI This in the investments that our business and you rate positioning be Satya, XX%. In

on this Brett. go management across entire committed cost across our our to Q&A, focus are position every and growing Cloud disciplined while We Microsoft maintaining that, leadership to With let's prioritization team.

move over We'll you now instructions? Instructions] Amy. [Operator please your Q&A. to can Operator, Thanks, repeat

Stanley. Keith with first question [Operator Morgan Our Instructions] line the of comes Weiss from

Congratulations on a really solid quarter.

So even are models, I'd funding to meet capture the to centers environmentally tags where other in my building were Microsoft space. the Satya, like and makes excitement. in of talking in internal related price your AI based do billions it XX years investor particularly demand the capacity what sees like guardrails generations innovation, these first sustainable new feeds you and [indiscernible] spectrum, on these the exciting to of questions. side the it external particularly that covering fashion? of relation in share in expansion this seen the magnitude opportunity, comes both seems $XXX constraints generative of speed innovations, questions, built my both of I've the out about to Microsoft also powered or an the the being most future get period for the And conversation, investing perspective capabilities, this data foundational or in of upon for tens with love are of that this and is the constraints power Microsoft excitement of they all constraints the people the that those opportunities behind software the call, billion-plus? And this on constraints. And that has when to But have out to X ability what ahead the then

Keith, those you, questions. for Thank

what is So that's generation, build just like based you out ultimately, for. demand, then essentially in on signal the capital we asking, would we we seeing you're then project right? outlay the on the say, were and would would be the given about, it by think for monetization rate when your point, capital think that's inference, because to going of limited first I training let's what build demand and to past, we allocate cloud

of as have you, So will building then model and ultimately, right? to then essentially So training model the you more all with have that can you the pace. I normalize is even which that more that, what think demand, having inference next-generation drives laws right, you a a capable you're ultimately think scaling so

think I demand really is cover sort curve, and want will it's the given depreciate the so your Moore's of year at because it's even just effectively compute, best about the on effectively the you to all well inference subject system as in we life you're day, as is algorithms, that much working way keep of in fact, which training it's Moore's right, efficiencies the want demand. fleet on end how sort In to compute, data Law period to you that refresh with then is cycle think think, the of and size, that's, not it every invest the Law then will ultimately it. And to the over I of of ultimately silicon

top DAX even you X of have about So or external I and pick mean, of right, if piece showed this the are whether Copilot I even mean, in X they're into, this whether our because constraints it's sort whether fast, of of lots Copilot, right? it's ChatGPT, the it's second all all the this or the hit demand generation, in constraints, ecosystem. all cloud, think pretty of Copilot, run external products we product our around obviously, generation GitHub most up

don't which into set everything a are get constraints, therefore, built so ran overnight. And we because of DCs

DCs, there there is is So power.

QX, so third-party in short-term have of to issues we leased of, up. that that's example, or our ability fact, And in some Even is moving constraint. the been fulfill because the demand stuff of we external demand for sort

power the that's effectively we constraints have. we So do DCs. and the need But in run, long we need

more going things of year, that even feel will half second the long this of into pretty fiscal these of match good up. I But some lead. some are And that that supply/demand

The line question with from comes of Brent next Jefferies. the Thill

I in hear Amy, a low of comp I for XX% falling for see tougher back half asking, points harder, guess guide Azure. anything the contemplating other couple deceleration good to is is that that comp? to many QX reacceleration there XXs. growth a the than else in but the to you're in are QX know

I to a we is primarily this the made Maybe had due tie the of benefits. as Brent. XX% versus in points question CC, revenue little I recognition that because can a In talked QX, the great guided some we and that to some about, bit. Thanks, together reiterate XX% sort upside them of was

basis and pure of that X of and that on. you point a majority that or that as QX then X AI about the counted pushouts stable is I consumption And to, so I Satya some being unfortunately, consumption coming is think about AI and terms on QX. online sort a of XX%. And in guided we've think growth supply underlying of mentioned to, we due to reiterated that supply The decel

we'll get matching good certainly ins you take second be side on and some across and And the supply as as so heard, on to of question have your supply-demand year, GPUs and half we The AI of just exercise. in think about we're some GPU the also also influx that to of outs, say, in I'll we some it while ins always acceleration particularly AI is do, importance the a confidence better talking having is to run as outs. I do able to opportunity these see the that to a hence, important. usage the when half. about workloads, able and be workloads you back CPUs intend

in a piece that's the HX So of well. acceleration as

Bernstein. comes of question next Moerdler with The line from the Mark

sense components. the Congratulations of question that longer equivalent a Obviously, any every have that but an than you asks CapEx facility the sometime any return next cetera? the slower that timing? or would color by rest you growth? Can question appreciated. on of is traditional online where how approach, investor et enough Any growth we half be to the think And of the to quarter. CapEx cloud the spend. the year, slightly grow is in of going line The give so, life, it obviously Do facilities if CapEx Does and on other on a is the basically color is revenue? half have

Mark. Thanks,

ago, to pace growth And decade as over point, your spend did it's see a the on that helpful all I in we sequential, go to adoption. of on stages. us goes transition really you'll as time. have see that worked of the what long together the to of think, the over as I the doing continue that the global think entirely ways, to cloud will early depends you on back in and won't basis in COGS. to training same you're the to point, see given get it some closer in you The things, right, next meet so the parallel demand to cloud transition, do the and time growth you we're increase. nature building demand. and opposed see build Unlike grow, is a towards will then infrastructure the it demand. And pace X some in And of slow revenue Satya's we that those CapEx closer And of to in

do that way Some those training. should like to about over balance it cycle on But think of that's it goes OpEx to you're closer when spending as together. healthy the general, a in get and time the last

The next Keirstead with UBS. of line the question comes Karl from

Satya critically been, And to ask ago, and perhaps Amy, a love but to love picking stories the the to Since Microsoft. on of investors that an Microsoft up to print relationship. we and to I line we seems to months the with ask I'd about torrent choice. about not model frame question Microsoft customers the going at have and X important. But diversify everyone it's a the It I'd been think, a question layer I'm hit give OpenAI OpenAI. offer me about actually media opportunity signals have numbers, wants somewhat

And terms does to impact manage on more the how love is get bit us how the but maybe some you a OpenAI the little do on I'd of helping income scaling Satya, relationship. demands gave of CapEx this then Microsoft Amy, in other on? And ambitions? with for manage you numbers, framing So the just you, that your its from color

Sure. Karl. Thanks,

that get get After led companies first, both I my been And do super highest-valued built great of things as when and infrastructure Copilot started most were the about of terms and which the took doing OpenAI on well private build has MXXX for Copilot we the came layer we world-class their Microsoft, it, on when which the all, do or or that's that stuff something model of all we then, bet GitHub one innovate of to of they own of built. success product -- we right? on them on sponsored effectively top continue today as what One So we small really of right? That's say to innovation beneficial. I'd seeing models, sides, they sort X, of is conviction the in a were partnership like of the what invested X some both we years we of Microsoft. OpenAI and in DAX success get a the post-training has them some as product innovation, great and Copilot on OpenAI. And build. with with built course, for them their ago. innovation for serve models led to we So And

say, I fantastic would about very we sort innovation in And of So we have feel on OpenAI. our a portfolio investors. We top also, that we are build of good stake that. the same of investment very,

pace means we more, the achieved and what push the to to and in we moment constant mutual that's to this at intend to have plan a building them do, to focus, that on do And kind at keep capture it. so we each achieved other we've like need of our with we're in dialogue and partnership always both sides it, where success which

few we've Azure needs amount us partially Listen, capital our seen to we It's maybe in both X success us and it's what for from broader the for signal the I'm also why their to us. the commitment capital to committing also but and Karl, their and compute our over invest past them. quarters thrilled and serve customers seen is for for to continue together supply that terms need being you've really platform grow from beyond grow other infrastructure and to of meant demand customers. That's for continue not other with your meet And customers questions, to able of to only Azure important

work meet sure working that, today. of is is And to need the do. It's can't that balance to have faster don't we delivering we which do you use as meet team it. really we I And harder real if who value it And committed cases so make how think and do have it. and to that, means to needs we what just and customers

other in think, was reminder, the impact on say would which phone I to is your not to of just but the percentage our those the quarter. of losses course, take accounting-heavy total, which piece And this amount a just the billion. are earnings question, in capped means equity Second income. under about call, get of we did too this every Q $XX investment as losses, method, And make talk being the quarter we we I of on by

constraint And bit so of time, and over a that's entry. just a the it's mechanical

And OpenAI that investment about take making that. managing themselves we so think is don't I and a that. in of That's acceleration really the and percentage

line the The next Sachs. Rangan Goldman of from question comes with Kash

cycle, to likely of inference a will and applications Satya, getting models the kicking these Microsoft products get are look phase as how How were you about of up the the paid. inference are expensive, bigger, on rate Where an investment the pointed the show the like but when inference for also out more does AI in? Microsoft? the P&L that result cycle to you that talked

of mean, One for the think is of that that selling this Thanks, up, people is going right? made may evident you fastest waiting the to that us other is even for If not all $XX good of news we the history, in about sort to it's any billion we're growth that the GPUs right? for our we're show train. inference, be inference Kash. raw to actually things as that not not I to be business point

people Copilot a away just bunch -- we -- companies today of business where it's have a in even taking In MXXX that which in we really on to bunch enterprise of is not tech inference GPUs. We adverse fact, are of huge not that's kind I because space going selection or sort or we products problem of using of so are are turn would a still demand demand, most VC GitHub because like own real Copilot. a money there's fact, much participating we what the the that buy our in literally to

revenue previously, models feel and context. And all our superior even if what our also I capital answers a quality us that just of is So Amy's the even of all about training spend was would ultimately that conviction, to news case, that's waiting, bunch portfolio. demand gives large pretty of people about diversified in And was the is this then a real in got, portfolio. across good our is all that demand seeing the actually your someone still have We're is point, to of we which be for to here we real. have sort that

a is saying. little Satya just to what maybe And Kash, to add bit

then that we're circle is talking that seeing as cycle next you're that that inference. that the revenue billion that opposed came growth doing apps we investment this number it's that builds Much this think $XX what and -- and that that training so training, is of and and I now we're of before of the And training X to, our a and fuel is work. right? what his investments answers oh, across the about, already part funded momentum are and what is already progress inference revenue

part. an And important so that's

you you growth to CapEx, you point, get trying and your down that later, to now you're That's, the us? tell invest can slow what if the even right, that's

cycle to the That's understand. that is important

from Mark with of next JPMorgan. question comes the The line Murphy

or of am any that a cooling just nature just constraining QX Azure the wire QX, we you're that? mentioning of ability points supply? overestimating that might the growth I'm infer are the the be couple wondering And the in should GPU than that supply it Is limitations I impact Amy, can or light few where impacting that Is power element shed roughly Azure if by up networks? to some touch in incrementally a is expected? you supply we on there the more of more more

think of and second are both component than very my to pushed Maybe I those delivering logic get that had half it pushout, mainly into general, directly, that Satya answer. year as QX. questions, The was in about said, expected, wouldn't third answer we QX parties the in the Mark, later supply

it's where third-party supply delivery. parties that's tended inclusive of have kits buy So third to we so complete end-to-end

in impact, and only you when X the there of consumption having to QX QX, X was the has supply accounting as pushout. revenue QX we that terms the that In was help, I saying, difference and then impact are got and about think from really QX help flat been things the

of next line The from the Raimo comes Lenschow with question Barclays.

If you we're And AI with the you agents. cetera. market you talk that? that moment evolution first of an to about Satya, you -- you with how how better, we're because of had Can productize about now Copilot, the me, kind et it do Copilots kind and at to looks talking discovering identified like think a lot were

journey what's think do next? Copilots, about and you maybe that between So agents how coming

built is we and have Sure. autonomous Copilot, The Studio, system Copilot agents agents.

this we spectrum with interface to how to is together need all comes that think humans think as should about So ultimately, of the you right? of able things, the You AI. way be

AI the is UI layer for So Copilot.

You use extend then Copilot can Copilot. Studio to

example, system, office your to HR connect system, system. want CRM For to your to you your to it

effectively. by building You do Studio agents that through Copilot

build autonomous You agents. also

use made Studio autonomous to can of use announcement even we build weeks you Copilot So agents. that's ago even couple can you a the is

that's someone working to an again, because notify are where either exception, need that, they not Copilot. independently, UI when from autonomous And need time right? at autonomous it's agents and to they So autonomous need fully something. someone are these do time, layer Now agents input some they need to to have they but or raise a point,

Copilot, taking very good full think of system together, So right? Copilot just you we across in Studio, that that's that Copilot making about then, comes the underlying And raw Copilot that talked it. you Azure, autonomous available services course, system feel I agents are infrastructure the position. it if we want So built-in and stack built we about, entire have the agents very, the Studio, in

You model layer independent have it. the of

be AI So in the Azure in server able have Azure block You is also building everything build. service AI, you to right? app for to a

if yourself using can we fact, platform. the want everything build to in build Copilot you have the AI you stack, that it In built

of, So in that's sort together. our it kind simple comes and terms, all how strategy, that's of

time question. Operator, we for last have X

RBC. line Jaluria the Rishi with will the come And question from of last

Copilot. thinking the the or with here go recategorization? than about maybe think in want little we How softer of that and I starting that? on importantly, the walk consumer especially fold? up. versus to about It should strategy you're about now seems numbers us past through quarter Can maybe pick maybe And bit on overall expected how be kind a more AI on maybe to thinking with you enterprise, your was the we with be what this should numbers the seeing like stock

Yes.

we EX it and is back It's in really the in transition even remarks to suite they're talked we coming about, way and a the I of very or saw question, feel what I growth commercial As back the faster, to MXXX. said that we the seats your O momentum the M, have the my compare Fortune I fact On Copilot, for from much EX right? If fastest to penetration Amy the about is first in and the you. right? part, or this of think in numbers new good Rishi, have XXX what this of then very, more

very that context. it's So strong in

and is then is we that skilling right, be I'd put there's controls, they need deploy, to able to thing systemic, to to then the be change other something this because to then people mention need security management. The like there's that want

it's Studio, not So like agents. way Copilot, talk It's just -- when not as about Copilot much a tool like really to a this about you work. I is new

And have side, type rate commercial sometimes penetration. After what Excel, But where Excel PC making And if about on the the you I offense. use with penetration. the and like investment the to we is part of happened change to strength that's e-mail of progress consumer look, same then all, describe that and we the here with overall, and business and you it post as the in we what feel for was forecasting, the e-mail process like it a beyond Copilot. 'XXs be structural the throughout take great us, able see are exciting then the and pre

One is of the things our that and we is news comes ads, to in I when think our I describe faster hope revenue, you all search, as ex earnings what market. catch TAC, than growing it

to So it's see fantastic that.

our it's business, in than feel go how so about growth billion sometimes case, And our large actually we sort use or a consumer good in it of in fantastic will kind $XX-plus that's growing that's market. We faster of LinkedIn. But missing. scope, even which business is AI a Microsoft's business

business consumer fact, you In is LinkedIn know. a as

You some announced recruiting. even both capabilities even for this new consumers their week, saw and, they in case,

you'll So is investment Windows, PCs. apply. place I we So some gaming, see Copilot+ I'm is excited monetized of that where And of the where right? place another think about AI, think same things the gets course, innovation. And these even through LinkedIn's

AI be edge. disconnected hybrid of about of For edge about exciting of going is the AI for where the not of a things sort the as developers. most one having the PC us, it's having to rebirth It's

frankly, the feel same quite investment. positioned, So well with we

-- a is conglomerate that's here. thing. this So not the We're

of once the benefit that's firm sort that all means us. and X That that, from the for and invest have these then are we of company. We categories we theory

And so of coming we together. about feel good all that

driven and we've seen that are. is growth And but a have made the results, just feels why maybe this seat that to frontline it think commercial like, wondering MXXX all and seats the the I'm answer majority if small those we're I not seeing the listening question, by adding, progress add now that because piece Rishi, you're you point. the ARPU lower that number, already of In you've thinking like are Those and through them worker businesses. Copilot, and X I am

impact we're so also already the some from And masks that additional from it this which to ARPU but quarter, of contribute, Copilot. not seeing continues EX, just

to and think we impact -- same be the will TAC is as number. commercial, Satya where engagement, see that MXXX the I see you'll of in able Copilot go being the ARPU you're impact ex going So as said, frankly, forward, across

That today, wraps Q&A call. for the joining Rishi. forward with of earnings you soon. Thanks, speaking again of today's to up us look and all portion Thank we you

conference. This concludes today's

time. this disconnect You your at day. lines Enjoy rest the your of may