Microsoft Corporation stock research
FY2025 Q4
Microsoft (MSFT) Gross Margin — Quarter Ended Jun 30, 2025
Revenue grew while gross profit expanded at a slightly slower pace, leading to a marginal weakening in gross margin compared with the prior quarter. The year-ago quarter shows a higher gross margin, indicating a gradual narrowing of profitability on revenue over the trailing twelve months.
Gross margin takeaway
Quarter ended Jun 30, 2025 · FY2025 Q4
Revenue grew while gross profit expanded at a slightly slower pace, leading to a marginal weakening in gross margin compared with the prior quarter. The year-ago quarter shows a higher gross margin, indicating a gradual narrowing of profitability on revenue over the trailing twelve months.
- The relationship between revenue and cost of revenue shifted: cost of revenue grew more proportionally than revenue on a sequential basis, while both revenue and cost of revenue rose versus the prior year, but the margin compression relative to the year-ago quarter was more pronounced.
- Compared with the immediately preceding quarter, gross margin was slightly lower, as revenue and gross profit increased but cost of revenue grew faster. Versus the same quarter one year earlier, gross margin weakened further, reflecting a longer-term trend of cost of revenue rising more than revenue.
Gross margin snapshot
The selected quarter's reported revenue, gross profit, direct costs, and margin comparisons.
Gross margin
68.6%
Gross profit
$52.4B
Revenue
$76.4B
Cost of revenue
$24.0B
Quarter-over-quarter change
-0.1 pts
Year-over-year change
-1.0 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 |
|---|---|---|---|---|
| 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% |
| Jun 30, 2025 | $76.4B | $52.4B | $24.0B | 68.6% |
Quarterly comparisons
Compare the selected margin with the preceding quarter and the same fiscal quarter one year earlier.
Previous-quarter change
Mar 31, 2025
-0.1 pts
Year-over-year change
Jun 30, 2024
-1.0 pts
What the margin says
Filing-constrained interpretation of margin direction, comparisons, and what to monitor next.
The relationship between revenue and cost of revenue shifted: cost of revenue grew more proportionally than revenue on a sequential basis, while both revenue and cost of revenue rose versus the prior year, but the margin compression relative to the year-ago quarter was more pronounced.
Compared with the immediately preceding quarter, gross margin was slightly lower, as revenue and gross profit increased but cost of revenue grew faster. Versus the same quarter one year earlier, gross margin weakened further, reflecting a longer-term trend of cost of revenue rising more than revenue.
Monitor whether the proportion of cost of revenue to revenue continues to increase in future quarters.