Microsoft Corporation stock research
FY2025 Q2
Microsoft (MSFT) Gross Margin — Quarter Ended Dec 31, 2024
Revenue and gross profit both increased compared to the prior quarter and the same quarter last year, while cost of revenue also rose. Gross margin weakened slightly from the prior quarter but improved relative to the same quarter one year earlier.
Gross margin takeaway
Quarter ended Dec 31, 2024 · FY2025 Q2
Revenue and gross profit both increased compared to the prior quarter and the same quarter last year, while cost of revenue also rose. Gross margin weakened slightly from the prior quarter but improved relative to the same quarter one year earlier.
- The strongest observable margin driver is the relationship between revenue and cost of revenue, where revenue growth outpaced cost growth compared to the same quarter last year, supporting margin improvement. Compared to the prior quarter, cost of revenue grew faster than revenue, leading to a slight margin decline.
- Compared to the immediately preceding quarter, gross margin was lower, driven by a higher proportion of cost of revenue relative to revenue. Compared to the same quarter one year earlier, gross margin was higher, as revenue increased more than cost of revenue.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
68.7%
Gross profit
$47.8B
Revenue
$69.6B
Cost of revenue
$21.8B
Quarter-over-quarter change
-0.7 pts
Year-over-year change
+0.3 pts
Quarterly gross margin trend
A four-quarter view of the revenue and direct-cost bridge behind gross margin.
| Period | Revenue | Gross profit | Cost of revenue | Gross margin |
|---|---|---|---|---|
| Mar 31, 2024 | $61.9B | $43.4B | $18.5B | 70.1% |
| Jun 30, 2024 | $64.7B | $45.0B | $19.7B | 69.6% |
| Sep 30, 2024 | $65.6B | $45.5B | $20.1B | 69.4% |
| Dec 31, 2024 | $69.6B | $47.8B | $21.8B | 68.7% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Sep 30, 2024
-0.7 pts
Year-over-year change
Dec 31, 2023
+0.3 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The strongest observable margin driver is the relationship between revenue and cost of revenue, where revenue growth outpaced cost growth compared to the same quarter last year, supporting margin improvement. Compared to the prior quarter, cost of revenue grew faster than revenue, leading to a slight margin decline.
Compared to the immediately preceding quarter, gross margin was lower, driven by a higher proportion of cost of revenue relative to revenue. Compared to the same quarter one year earlier, gross margin was higher, as revenue increased more than cost of revenue.
Monitor the trend in cost of revenue growth relative to revenue growth, as a faster cost increase could pressure gross margin in future quarters.