Microsoft Corporation · Earnings release · 8-K Exhibit 99

EX-99.1 2 msft-ex99_1.htm EX-99.1 EX-99.1 Exhibit 99.1 Microsoft Cloud and AI Strength Drives Second Quarter Results REDMOND, Wash. — January 29, 2025 — Microsoft Corp. today announced the following results for the quarter ended December 31, 2024, as compared to the corresponding period of last fiscal year: • Revenue was $69.6 billion and increased 12% • Operating income was $31.7 billion and increased 17% (up 16% in constant currency) • Net income was $24.1 billion and increased 10% • Diluted earnings per share was $3.23 and increased 10% “We are innovating across our tech stack and T1helping customers unlock the full ROI of AI to capture the massive opportunity ahead," said Satya Nadella, chairman and chief executive officer of Microsoft. “Already, T2our AI business has surpassed an annual revenue run rate of $13 billion, up 175% year-over-year.” “This quarter Microsoft Cloud revenue was $40.9 billion, up 21% year-over-year,” said Amy Hood, executive vice president and chief financial officer of Microsoft. ”T3We remain committed to balancing operational discipline with continued investments in our cloud and AI infrastructure.” Business Highlights Revenue in Productivity and Business Processes was $29.4 billion and increased 14% (up 13% in constant currency), with the following business highlights: • Microsoft 365 Commercial products and cloud services revenue increased 15% driven by T4Microsoft 365 Commercial cloud revenue growth of 16% (up 15% in constant currency) • Microsoft 365 Consumer products and cloud services revenue increased 8% driven by Microsoft 365 Consumer cloud revenue growth of 8% • LinkedIn revenue increased 9% • Dynamics products and cloud services revenue increased 15% (up 14% in constant currency) driven by T5Dynamics 365 revenue growth of 19% (up 18% in constant currency) Revenue in Intelligent Cloud was $25.5 billion and increased 19%, with the following business highlights: • Server products and cloud services revenue increased 21% driven by T6Azure and other cloud services revenue growth of 31% Revenue in T7More Personal Computing was $14.7 billion and was relatively unchanged, with the following business highlights: • Windows OEM and Devices revenue increased 4% • Xbox content and services revenue increased 2% • T8Search and news advertising revenue excluding traffic acquisition costs increased 21% (up 20% in constant currency) Microsoft returned $9.7 billion to shareholders in the form of dividends and share repurchases in the second quarter of fiscal year 2025.       Business Outlook Microsoft will provide forward-looking guidance in connection with this quarterly earnings announcement on its earnings conference call and webcast.

Quarterly Highlights, Product Releases, and Enhancements Every quarter Microsoft delivers hundreds of products, either as new releases, services, or enhancements to current products and services. These releases are a result of significant research and development investments, made over multiple years, designed to help customers be more productive and secure and to deliver differentiated value across the cloud and the edge. Here are the major product releases and other highlights for the quarter, organized by product categories, to help illustrate how we are accelerating innovation across our businesses while expanding our market opportunities. Environmental, Social, and Governance (ESG) To learn more about Microsoft’s corporate governance and our environmental and social practices, please visit our investor relations Board and ESG website and reporting at Microsoft.com/transparency .

Webcast Details Satya Nadella, chairman and chief executive officer, Amy Hood, executive vice president and chief financial officer, Alice Jolla, chief accounting officer, Keith Dolliver, corporate secretary and deputy general counsel, and Brett Iversen, vice president of investor relations, will host a conference call and webcast at 2:30 p.m. Pacific time (5:30 p.m. Eastern time) today to discuss details of the company’s performance for the quarter and certain forward-looking information. The session may be accessed at http://www.microsoft.com/en-us/investor . The webcast will be available for replay through the close of business on January 29, 2026. Constant Currency Microsoft presents constant currency information to provide a framework for assessing how our underlying businesses performed excluding the effect of foreign currency rate fluctuations.

To present this information, current and comparative prior period results for entities reporting in currencies other than United States dollars are converted into United States dollars using the average exchange rates from the comparative period rather than the actual exchange rates in effect during the respective periods. All growth comparisons relate to the corresponding period in the last fiscal year. Microsoft has provided this non-GAAP financial information to aid investors in better understanding our performance. The non-GAAP financial measures presented in this release should not be considered as a substitute for, or superior to, the measures of financial performance prepared in accordance with GAAP. Financial Performance Constant Currency Reconciliation   Three Months Ended December 31,                                      ($ in millions, except per share amounts)   Revenue   Operating Income   Net Income   Diluted Earnings per Share                                     2023 As Reported (GAAP)   $62,020   $27,032   $21,870   $2.93 2024 As Reported (GAAP)   $69,632   $31,653   $24,108   $3.23 Percentage Change Y/Y (GAAP)   12%   17%   10%   10% Constant Currency Impact   $171   $206   $14   $0.00 Percentage Change Y/Y Constant Currency   12%   16%   10%   10%       Segment Revenue Constant Currency Reconciliation   Three Months Ended December 31,                              ($ in millions)   Productivity and Business Processes   Intelligent Cloud   More Personal Computing                             2023 As Reported (GAAP)   $25,854   $21,525   $14,641 2024 As Reported (GAAP)   $29,437   $25,544   $14,651 Percentage Change Y/Y (GAAP)   14%   19%   0% Constant Currency Impact   $142   $(22)   $51 Percentage Change Y/Y Constant Currency   13%   19%   0% We have recast certain prior period amounts to conform to the way we internally manage and monitor our business.

Selected Product and Service Revenue Constant Currency Reconciliation   Three Months Ended December 31, 2024                               Percentage Change Y/Y (GAAP)   Constant Currency Impact   Percentage Change Y/Y Constant Currency                             Microsoft Cloud   21%   0%   21% Microsoft 365 Commercial products and cloud services   15%   0%   15% Microsoft 365 Commercial cloud   16%   (1)%   15% Microsoft 365 Consumer products and cloud services   8%   0%   8% Microsoft 365 Consumer cloud   8%   0%   8% LinkedIn   9%   0%   9% Dynamics products and cloud services   15%   (1)%   14% Dynamics 365   19%   (1)%   18% Server products and cloud services   21%   0%   21% Azure and other cloud services   31%   0%   31% Windows OEM and Devices   4%   0%   4% Xbox content and services   2%   0%   2% Search and news advertising excluding traffic acquisition costs   21%   (1)%   20%   About Microsoft Microsoft (Nasdaq “MSFT” @microsoft) creates platforms and tools powered by AI to deliver innovative solutions that meet the evolving needs of our customers.

The technology company is committed to making AI available broadly and doing so responsibly, with a mission to empower every person and every organization on the planet to achieve more. Forward-Looking Statements Statements in this release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors such as: • intense competition in all of our markets that may adversely affect our results of operations; • focus on cloud-based and AI services presenting execution and competitive risks; • significant investments in products and services that may not achieve expected returns; • acquisitions, joint ventures, and strategic alliances that may have an adverse effect on our business; • impairment of goodwill or amortizable intangible assets causing a significant charge to earnings;     • cyberattacks and security vulnerabilities that could lead to reduced revenue, increased costs, liability claims, or harm to our reputation or competitive position; • disclosure and misuse of personal data that could cause liability and harm to our reputation; • the possibility that we may not be able to protect information stored in our products and services from use by others; • abuse of our advertising, professional, marketplace, or gaming platforms that may harm our reputation or user engagement; • products and services, how they are used by customers, and how third-party products and services interact with them, presenting security, privacy, and execution risks; • issues about the use of AI in our offerings that may result in reputational or competitive harm, or legal liability; • excessive outages, data losses, and disruptions of our online services if we fail to maintain an adequate operations infrastructure; • supply or quality problems; • government enforcement under competition laws and new market regulation may limit how we design and market our products; • potential consequences of trade and anti-corruption laws; • potential consequences of existing and increasing legal and regulatory requirements; • laws and regulations relating to the handling of personal data that may impede the adoption of our services or result in increased costs, legal claims, fines, or reputational damage; • claims against us that may result in adverse outcomes in legal disputes; • uncertainties relating to our business with government customers; • additional tax liabilities; • sustainability regulations and expectations that may expose us to increased costs and legal and reputational risk; • an inability to protect and utilize our intellectual property may harm our business and operating results; • claims that Microsoft has infringed the intellectual property rights of others; • damage to our reputation or our brands that may harm our business and results of operations; • adverse economic or market conditions that may harm our business; • catastrophic events or geo-political conditions, such as the COVID-19 pandemic, that may disrupt our business; • exposure to increased economic and operational uncertainties from operating a global business, including the effects of foreign currency exchange; and • the dependence of our business on our ability to attract and retain talented employees.

For more information about risks and uncertainties associated with Microsoft’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of Microsoft’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Microsoft’s Investor Relations department at (800) 285-7772 or at Microsoft’s Investor Relations website at http://www.microsoft.com/en-us/investor . All information in this release is as of December 31, 2024. The company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.     For more information, press only: Microsoft Media Relations, WE Communications for Microsoft, (425) 638-7777, rrt@we-worldwide.com For more information, financial analysts and investors only: Brett Iversen, Vice President, Investor Relations, (425) 706-4400 Note to editors: For more information, news and perspectives from Microsoft, please visit the Microsoft News Center at http://www.microsoft.com/news .

Web links, telephone numbers, and titles were correct at time of publication, but may since have changed. Shareholder and financial information, as well as today’s 2:30 p.m. Pacific time conference call with investors and analysts, is available at http://www.microsoft.com/en-us/investor .     MICROSOFT CORPORATION   INCOME STATEMENTS (In millions, except per share amounts) (Unaudited)     Three Months Ended December 31,   Six Months Ended December 31,   2024   2023   2024   2023                                     Revenue:                 Product   $16,219   $18,941   $31,491   $34,476 Service and other   53,413   43,079   103,726   84,061                                     Total revenue   69,632   62,020   135,217   118,537                                     Cost of revenue:                 Product   3,856   5,964   7,150   9,495 Service and other   17,943   13,659   34,748   26,430                                     Total cost of revenue   21,799   19,623   41,898   35,925                                     Gross margin   47,833   42,397   93,319   82,612 Research and development   7,917   7,142   15,461   13,801 Sales and marketing   6,440   6,246   12,157   11,433 General and administrative   1,823   1,977   3,496   3,451                                     Operating income   31,653   27,032   62,205   53,927 Other expense, net   (2,288)   (506)   (2,571)   (117)                                     Income before income taxes   29,365   26,526   59,634   53,810 Provision for income taxes   5,257   4,656   10,859   9,649                                     Net income   $24,108   $21,870   $48,775   $44,161                                     Earnings per share:                 Basic   $3.24   $2.94   $6.56   $5.94 Diluted   $3.23   $2.93   $6.53   $5.92                   Weighted average shares outstanding:                 Basic   7,435   7,432   7,434   7,431 Diluted   7,468   7,468   7,469   7,465                         COMPREHENSIVE INCOME STATEMENTS (In millions) (Unaudited)     Three Months Ended   Six Months Ended   December 31,   December 31,   2024   2023   2024   2023                                     Net income   $24,108   $21,870   $48,775   $44,161                                     Other comprehensive income (loss), net of tax:                 Net change related to derivatives   34   (3)   24   18 Net change related to investments   (434)   1,331   680   1,071 Translation adjustments and other   (1,034)   660   (730)   305                                     Other comprehensive income (loss)   (1,434)   1,988   (26)   1,394                                     Comprehensive income   $22,674   $23,858   $48,749   $45,555                         BALANCE SHEETS (In millions) (Unaudited)     December 31, 2024   June 30, 2024                     Assets         Current assets:         Cash and cash equivalents   $17,482   $18,315 Short-term investments   54,073   57,228                     Total cash, cash equivalents, and short-term investments   71,555   75,543 Accounts receivable, net of allowance for doubtful accounts of $662  and $830   48,188   56,924 Inventories   909   1,246 Other current assets   26,428   26,021                     Total current assets   147,080   159,734 Property and equipment, net of accumulated depreciation of $82,820 and $76,421   166,902   135,591 Operating lease right-of-use assets   22,816   18,961 Equity and other investments   15,581   14,600 Goodwill   119,191   119,220 Intangible assets, net   25,385   27,597 Other long-term assets   36,943   36,460                     Total assets   $533,898   $512,163                     Liabilities and stockholders' equity         Current liabilities:         Accounts payable   $22,608   $21,996 Short-term debt   0   6,693 Current portion of long-term debt   5,248   2,249 Accrued compensation   9,176   12,564 Short-term income taxes   6,056   5,017 Short-term unearned revenue   45,508   57,582 Other current liabilities   20,286   19,185                     Total current liabilities   108,882   125,286 Long-term debt   39,722   42,688 Long-term income taxes   24,389   27,931 Long-term unearned revenue   2,537   2,602 Deferred income taxes   2,513   2,618 Operating lease liabilities   17,254   15,497 Other long-term liabilities   35,906   27,064                     Total liabilities   231,203   243,686                     Commitments and contingencies         Stockholders' equity:         Common stock and paid-in capital - shares authorized 24,000; outstanding 7,435  and 7,434   104,829   100,923 Retained earnings   203,482   173,144 Accumulated other comprehensive loss   (5,616)   (5,590)                     Total stockholders' equity   302,695   268,477                     Total liabilities and stockholders' equity   $533,898   $512,163                 CASH FLOWS STATEMENTS (In millions) (Unaudited)     Three Months Ended   Six Months Ended   December 31,   December 31,   2024   2023   2024   2023                                     Operations                 Net income   $24,108   $21,870   $48,775   $44,161 Adjustments to reconcile net income to net cash from operations:                 Depreciation, amortization, and other   6,827   5,959   14,210   9,880 Stock-based compensation expense   3,089   2,828   5,921   5,335 Net recognized losses on investments and derivatives   976   198   851   212 Deferred income taxes   (1,158)   (1,702)   (2,591)   (2,270) Changes in operating assets and liabilities:                 Accounts receivable   (5,978)   (2,951)   8,059   8,083 Inventories   711   1,474   338   969 Other current assets   (353)   725   (435)   (71) Other long-term assets   (1,089)   (1,427)   (2,850)   (3,440) Accounts payable   958   (2,521)   42   (1,307) Unearned revenue   (6,338)   (5,538)   (11,891)   (9,664) Income taxes   (3,395)   (1,554)   (2,379)   (129) Other current liabilities   3,217   1,518   (2,262)   (2,588) Other long-term liabilities   716   (26)   683   265                                     Net cash from operations   22,291   18,853   56,471   49,436                                     Financing                 Proceeds from issuance (repayments) of debt, maturities of 90 days or less, net   0   (8,490)   (5,746)   10,202 Proceeds from issuance of debt   0   10,773   0   17,846 Repayments of debt   0   (2,916)   (966)   (4,416) Common stock issued   256   261   962   946 Common stock repurchased   (4,986)   (4,000)   (9,093)   (8,831) Common stock cash dividends paid   (6,170)   (5,574)   (11,744)   (10,625) Other, net   (343)   (201)   (1,232)   (508)                                     Net cash from (used in) financing   (11,243)   (10,147)   (27,819)   4,614                                     Investing                 Additions to property and equipment   (15,804)   (9,735)   (30,727)   (19,652) Acquisition of companies, net of cash acquired, and purchases of intangible and other assets   (1,405)   (65,029)   (3,254)   (66,215) Purchases of investments   (2,050)   (4,258)   (3,670)   (12,718) Maturities of investments   2,604   4,150   4,740   19,868 Sales of investments   2,559   1,600   4,527   6,930 Other, net   (16)   1,347   (929)   365                                     Net cash used in investing   (14,112)   (71,925)   (29,313)   (71,422)                                     Effect of foreign exchange rates on cash and cash equivalents   (294)   72   (172)   (27)                                     Net change in cash and cash equivalents   (3,358)   (63,147)   (833)   (17,399) Cash and cash equivalents, beginning of period   20,840   80,452   18,315   34,704                                     Cash and cash equivalents, end of period   $17,482   $17,305   $17,482   $17,305                         SEGMENT REVENUE AND OPERATING INCOME (In millions) (Unaudited)     Three Months Ended   Six Months Ended   December 31,   December 31,   2024   2023   2024   2023                                     Revenue                                   Productivity and Business Processes   $29,437   $25,854   $57,754   $51,080 Intelligent Cloud   25,544   21,525   49,636   41,538 More Personal Computing   14,651   14,641   27,827   25,919                                     Total   $69,632   $62,020   $135,217   $118,537                                     Operating Income                                   Productivity and Business Processes   $16,885   $14,515   $33,401   $28,812 Intelligent Cloud   10,851   9,555   21,354   18,463 More Personal Computing   3,917   2,962   7,450   6,652                                     Total   $31,653   $27,032   $62,205   $53,927                   We have recast certain prior period amounts to conform to the way we internally manage and monitor our business.