Microsoft Corporation stock research
FY2025 Q3
Microsoft (MSFT) Gross Margin — Quarter Ended Mar 31, 2025
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 remained stable versus the prior quarter but was lower than the same quarter one year earlier.
Gross margin takeaway
Quarter ended Mar 31, 2025 · FY2025 Q3
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 remained stable versus the prior quarter but was lower than the same quarter one year earlier.
- The strongest observable margin driver is the relationship between revenue growth and cost of revenue growth. Revenue increased more than cost of revenue compared to the prior quarter, supporting stable gross margin, but cost of revenue grew faster than revenue compared to the same quarter last year, weakening gross margin.
- Compared to the immediately preceding quarter, gross margin was stable. Compared to the same quarter one year earlier, gross margin was lower.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
68.7%
Gross profit
$48.1B
Revenue
$70.1B
Cost of revenue
$21.9B
Quarter-over-quarter change
+0.0 pts
Year-over-year change
-1.4 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 |
|---|---|---|---|---|
| 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% |
| Mar 31, 2025 | $70.1B | $48.1B | $21.9B | 68.7% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Dec 31, 2024
+0.0 pts
Year-over-year change
Mar 31, 2024
-1.4 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 growth and cost of revenue growth. Revenue increased more than cost of revenue compared to the prior quarter, supporting stable gross margin, but cost of revenue grew faster than revenue compared to the same quarter last year, weakening gross margin.
Compared to the immediately preceding quarter, gross margin was stable. Compared to the same quarter one year earlier, gross margin was lower.
Monitor the trend in cost of revenue relative to revenue, as its faster growth compared to the year-ago quarter contributed to the gross margin decline.