Microsoft is no longer primarily a Windows-and-Office licensing company. It combines recurring Microsoft 365 subscriptions, usage-based Azure cloud services, server software, advertising, gaming content, professional-network services, business applications, and hardware. For the fiscal year ended June 30, 2025 (FY2025), Microsoft reported $281.724 billion in revenue. Azure is important, but Microsoft does not disclose a standalone Azure dollar figure in its FY2025 product-and-service table; it reports Azure together with other cloud services and separately publishes a broader Microsoft Cloud measure.
Microsoft’s FY2025 business in one view
Microsoft reports its operations in three segments. These segments combine multiple products, so a segment figure is not interchangeable with a product figure such as Microsoft 365 Commercial or Gaming. The following amounts are Microsoft Corporation’s FY2025 results for the year ended June 30, 2025.
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| Reportable segment | Revenue | Operating income | Main businesses included |
|---|---|---|---|
| Productivity and Business Processes | $120.810 billion | $69.773 billion | Microsoft 365, LinkedIn, and Dynamics |
| Intelligent Cloud | $106.265 billion | $44.589 billion | Azure and other cloud services, server products, and enterprise and partner services |
| More Personal Computing | $54.649 billion | $14.166 billion | Windows and Devices, gaming, and search and news advertising |
| Total Microsoft | $281.724 billion | $128.528 billion | All segments |
Revenue measures sales generated during the year. Operating income is what remains after costs assigned to a segment, before interest and taxes and other items outside segment reporting. Productivity and Business Processes was the largest segment by revenue in FY2025, with Intelligent Cloud close behind.
How Microsoft’s business model works
Microsoft uses several revenue mechanisms rather than relying on one product cycle:
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- Subscriptions: Microsoft 365, Game Pass, LinkedIn Premium, and other services charge customers repeatedly, usually monthly or annually.
- Cloud consumption: Azure infrastructure and platform services are billed according to computing, storage, networking, database, analytics, and other usage, often with committed contracts and variable consumption.
- Software licenses and support: Microsoft sells licenses for server software, Windows through computer manufacturers, and on-premises business applications, along with support arrangements.
- Advertising: Search and news properties sell advertising, while LinkedIn sells marketing placements and recruiting-related solutions.
- Digital content and services: Xbox games, downloadable content, in-game purchases, subscriptions, and cloud gaming generate sales from a large installed user base.
- Devices: Surface computers and accessories add hardware revenue, while Windows licenses are sold mainly through original equipment manufacturers (OEMs).
Microsoft describes this combination as offering cloud-based solutions, content and services, software licensing and support, online advertising, and devices to people and businesses. The mix matters because subscription and consumption revenue can recur, while hardware, advertising, and game launches respond more directly to product demand and economic conditions.
Microsoft’s FY2025 product and service revenue
The annual report also breaks company revenue into product and service categories. These categories cut across the three reportable segments and should not be added to segment totals a second time.
| Product or service category | FY2025 revenue | What it covers |
|---|---|---|
| Server products and cloud services | $98.435 billion | Azure and other cloud services, plus server products such as Windows Server and SQL Server |
| Microsoft 365 Commercial products and cloud services | $87.767 billion | Commercial Microsoft 365 cloud subscriptions and related on-premises products |
| Gaming | $23.455 billion | Xbox hardware, first- and third-party games, content, subscriptions, and related services |
| $17.812 billion | Talent Solutions, Marketing Solutions, Premium Subscriptions, and Sales Solutions | |
| Windows and Devices | $17.314 billion | Windows OEM licenses, Surface, and PC accessories |
| Search and news advertising | $13.878 billion | Advertising revenue, reported excluding traffic acquisition costs paid to network publishers and news partners |
| Dynamics products and cloud services | $7.827 billion | Cloud and on-premises enterprise resource planning and customer relationship management products |
| Enterprise and partner services | $7.760 billion | Enterprise support, consulting, and partner-related services |
| Microsoft 365 Consumer products and cloud services | $7.404 billion | Consumer subscriptions and other consumer services |
| Other | $72 million | Other reported revenue |
| Total revenue | $281.724 billion |
“Server products and cloud services” is the closest product-category line to Azure, but it is not an Azure-only number. It includes Azure, other cloud services, and server software, so treating the entire $98.435 billion as Azure would overstate Azure revenue.
Azure and the broader Microsoft Cloud
Why there is no standalone Azure dollar figure
Microsoft’s FY2025 annual-report table does not state Azure revenue in dollars by itself. Instead, it reports that Azure and other cloud services revenue grew 34% in FY2025. Microsoft also reported that the combined Server products and cloud services category grew 23%. The two percentages use different groupings: the first is an Azure-and-other-cloud growth measure, while the second includes server products as well.
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What Microsoft Cloud includes
Microsoft Cloud is a company-wide management measure, not a fourth reportable segment. In FY2025 it generated $168.9 billion, compared with $137.7 billion in FY2024 and $111.6 billion in FY2023. Microsoft defines the measure as including Microsoft 365 Commercial cloud, Azure and other cloud services, the commercial portion of LinkedIn, and Dynamics 365.
Because those components sit in different reporting segments, Microsoft Cloud revenue cannot be used as an Azure substitute. It is useful for tracking the scale of Microsoft’s cloud-centered businesses, but it includes productivity software, business applications, and LinkedIn as well as Azure.
How Azure earns money
Azure combines infrastructure-as-a-service and platform-as-a-service. A business can rent virtual machines, storage, networking, databases, security, analytics, developer tools, and other services instead of buying and operating all of the underlying hardware. Bills rise with usage, capacity commitments, premium service levels, and the mix of workloads. This consumption model differs from a traditional perpetual software license: revenue is tied to ongoing service delivery and customer activity.
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Commercial customers
Microsoft 365 Commercial products and cloud services produced $87.767 billion in FY2025 revenue and grew 14%. The category includes cloud subscriptions and on-premises products. Commercial customers typically pay per user or per seat for applications such as Office, collaboration capabilities, identity and security features, and related cloud services, while some customers still license software installed in their own environments.
Microsoft reported 6% commercial seat growth in FY2025. It also said revenue per user increased and that customers continued shifting from perpetual on-premises Office licenses to subscriptions. Consequently, commercial Microsoft 365 growth can come from three distinct sources: more seats, higher revenue per user, and migration from older license arrangements to recurring cloud plans.
Consumers
Microsoft 365 Consumer products and cloud services generated $7.404 billion in FY2025. Consumer cloud revenue grew 11%, and subscribers increased 8% to 89.0 million. Microsoft attributed the result to subscriber growth and higher revenue per user. Consumer plans therefore combine a recurring subscription base with changes in plan selection, pricing, and add-on services.
Windows and Devices: licensing plus hardware
Windows and Devices generated $17.314 billion in FY2025. Windows revenue primarily comes from licenses sold through OEMs that preinstall Windows on new computers. Microsoft also sells first-party Surface devices and PC accessories. The category is therefore different from Microsoft 365: it combines a software license attached to hardware shipments with direct hardware sales.
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1Scan for outdated or missing drivers - takes under a minute2Clear out junk files and repair common Windows errors3Fix the driver behind crashes, sound loss and screen glitchesWindows and Devices is reported inside More Personal Computing alongside gaming and search advertising. Its revenue should not be confused with all Windows-related commercial activity, because Windows Server is included in Server products and cloud services within Intelligent Cloud.
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Gaming, advertising, LinkedIn, and Dynamics
Gaming
Gaming revenue was $23.455 billion in FY2025. Microsoft earns from Xbox consoles, first- and third-party game sales, downloadable and in-game content, Game Pass and other subscriptions, Xbox Cloud Gaming, advertising, and related cloud services. Xbox content and services revenue grew 16% in FY2025. This stream is broader than console hardware because recurring subscriptions and digital purchases can continue after a player buys a device or game.
Search and news advertising
Search and news advertising produced $13.878 billion. Microsoft reports this revenue excluding traffic acquisition costs paid to network publishers and news partners. The category grew 20% on that basis in FY2025. Advertising revenue depends on searches, audience reach, advertiser demand, and the prices paid for impressions or clicks rather than on subscriptions or software seats.
LinkedIn generated $17.812 billion and grew 9%. Its revenue sources are Talent Solutions for recruiting, Marketing Solutions, Premium Subscriptions, and Sales Solutions. The commercial portion of LinkedIn is also included in Microsoft Cloud’s cross-segment measure, which is why LinkedIn revenue should not be added to Microsoft Cloud as a separate extra amount.
Dynamics
Dynamics products and cloud services generated $7.827 billion and grew 15%. The portfolio includes cloud applications and on-premises enterprise resource planning and customer relationship management products. Dynamics illustrates Microsoft’s hybrid model: customers can consume business software as a cloud service or deploy licensed systems in their own environments.
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Why Microsoft’s revenue mix is changing
The largest structural shift is from one-time or periodic licenses toward cloud subscriptions and consumption. Microsoft 365 commercial customers are moving from perpetual Office licenses to subscriptions, while Azure revenue grows as customers run more workloads in Microsoft data centers. Dynamics and LinkedIn also expand Microsoft’s recurring business-software and professional-services exposure.
Growth does not mean every cloud dollar has the same margin. Microsoft reported that Microsoft Cloud’s gross-margin percentage declined to 69% in FY2025. The company attributed the decline to scaling artificial-intelligence infrastructure, partly offset by efficiency gains in Azure. Building and operating data centers requires substantial spending on servers, networking, energy, facilities, and support, while AI workloads can require especially expensive computing capacity.
Microsoft’s significant expense categories include employee compensation, cloud-service support and data-center operations, product design and sales, and taxes. A fast-growing cloud business can therefore increase revenue while also requiring heavy upfront and ongoing investment.
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How to compare Microsoft’s numbers without being misled
- Check the unit of analysis. A reportable segment, such as Intelligent Cloud, contains several product categories. A product line, such as Microsoft 365 Commercial, is narrower.
- Separate revenue from profit. Revenue shows sales scale; operating income shows the profit attributed after segment costs. A larger revenue line is not automatically the more profitable one.
- Separate totals from growth rates. Microsoft Cloud’s $168.9 billion is a revenue amount. Azure and other cloud services’ 34% is a growth rate, not a dollar total.
- Keep fiscal periods straight. FY2025 ended June 30, 2025. These figures are not FY2026 results or current-quarter data.
- Do not equate cloud with Azure. Microsoft Cloud includes Microsoft 365 Commercial cloud, Azure and other cloud services, commercial LinkedIn, and Dynamics 365. Server products and cloud services also include server software.
- Read advertising qualifications. Search and news advertising growth and revenue are reported excluding traffic acquisition costs paid to network publishers and news partners.
What the FY2025 numbers say about Microsoft
Microsoft is a diversified software, cloud, advertising, gaming, and device company. Productivity and Business Processes supplied the largest segment revenue, while Intelligent Cloud was nearly as large and contains the Azure engine. Microsoft 365 supplies a substantial recurring commercial and consumer base; Azure adds consumption-driven infrastructure and platform revenue; Windows still contributes OEM licensing and hardware sales; and gaming, LinkedIn, Dynamics, and advertising provide additional, differently timed revenue streams.
The most important limitation is measurement: Microsoft does not publish a standalone Azure revenue dollar amount in the FY2025 table. The defensible figures are the 34% growth rate for Azure and other cloud services, the $98.435 billion combined Server products and cloud services category, and the $168.9 billion cross-segment Microsoft Cloud total. Keeping those definitions intact is essential to understanding how Microsoft actually makes money.
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