Microsoft FY25 Q1 Earnings: Microsoft Customers – Beware of Heavy AI Adoption Push

Insights for IT Negotiations

Microsoft announced their FY25 Q1 earnings last evening. Total revenue was reported as $65.6B, better than the $64.5B that analysts were expecting. The critically important Microsoft Cloud revenue, which includes Azure, O365 Commercial, LinkedIn, Dynamics 365, and other cloud products, came in at $38.B, representing a 22% increase year-over-year.

Microsoft’s go-forward success and revenue growth (including ARPU growth) will continue to be directly tied to Microsoft’s ability to expand their Cloud revenue and AI Business revenue, which is tracking towards becoming a $10B business. Their success will also be tied to getting more customers to adopt and use their AI solutions, like Microsoft 365 Copilot, GitHub Copilot, Copilot Studio and the agents built in Copilot, as well as get more customers to migrate to the costly all-in Microsoft 365 E5 suite.

In this podcast, our Microsoft Practice Leader, Adam Mansfield, discusses how Microsoft customers can take advantage of Microsoft’s needs, clear goals and focus areas to ensure the right deal is struck at the negotiation table. He also covers what Microsoft customers should expect from the vendor as they prepare for their renewal negotiations.

For more innovative IT sourcing and risk mitigation insights, subscribe to the UpperEdge newsletter and follow UpperEdge on LinkedIn and Twitter.