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Microsoft 2025 Q2 performance details: Channel scaling (not AI) is an Azure pain point

by Jason Gumpert
Editor, MSDynamicsWorld.com

Surpassing earnings estimates in fiscal 2025 Q2 didn’t save Microsoft from a six percent selloff after reporting its performance this week. 

In a call with analysts after the announcement of earnings per share of $3.23 on revenue of $69.6 billion, Microsoft CFO Amy Hood and CEO Satya Nadella provided more details on the company’s product and sales execution, including Azure, Copilot offerings, and what it means to welcome DeepSeek to their AI portfolio.

One of the most closely watched metrics, Azure revenue growth, showed a bifurcation, the company stated. Azure revenue grew 31% overall, meeting the lower end of analyst estimates. Microsoft attributed 13 points to AI services, which grew 157%. But the company is working to “balance driving near-term non-AI consumption with AI growth,” Hood said during the call. The lag in channel-driven growth, which accounts for the SMB and SMC (corporate) segments, falls on Microsoft’s partners that expects to drive more cloud consumption. 

Both Hood and Nadella weighed in on the impact of this Azure challenge. Hood noted the complexity of setting channel priorities and then allowing those changes to filter through the company’s vast channel landscape over time:

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About Jason Gumpert

As the editor of MSDynamicsWorld.com, Jason oversees all editorial content on the site and at our events, as well as providing site management and strategy. He can be reached at jgumpert@msdynamicsworld.com.

Prior to co-founding MSDynamicsWorld.com, Jason was a Principal Software Consultant at Parametric Technology Corporation (PTC), where he implemented solutions, trained customers, managed software development, and spent some time in the pre-sales engineering organization. He has also held consulting positions at CSC Consulting and Monitor Group.

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