Microsoft Q4 2025 Earnings Preview: 5 Things To Know

Wall Street expects about $73.9 billion in revenue reported by Microsoft for the latest quarter.

Microsoft’s artificial intelligence and Copilot offers. Potential consolidation in customer security vendor spend. And company efforts to improve the sales motions that involve solution providers.

These are some of the topics that could come up this Wednesday when the Redmond, Wash.-based tech giant reports earnings for its fourth fiscal quarter, which ended June 30.

Wall Street expects about $73.9 billion in revenue by Microsoft for the latest quarter, according to multiple reports by investment firms. That marks a 14 percent increase in growth year over year. Wall Street expects operating income of $32.1 billion.

Microsoft Q4 Earnings Preview

This will be Microsoft’s first quarterly earnings since it unveiled increases to partner funding and incentives across several key areas this fiscal year. It also comes after the revelation of an exploited vulnerability in SharePoint software that has affected organizations this month, giving Microsoft executives plenty to discuss on the call.

Solution providers in Microsoft’s 500,000-plus-member ecosystem will no doubt look forward to the vendor’s guidance for fiscal year 2026 as they navigate a wide variety of sales opportunities ranging from PC sales to replace COVID-19 era machines, upselling opportunities in security and productivity software, and growing adoption of generative AI products.

Read on for what solution providers need to know ahead of Microsoft’s latest quarterly earnings call.

AI, Copilot Updates

Performance in Microsoft’s artificial intelligence portfolio will no doubt dominate the call Wednesday, with analysts looking for measures of growth in the short run and long.

A July report from Morgan Stanley showed that some channel partners have seen greater penetration with Copilot in the last few months while others expect smaller renewals from customers based on perceived return on investment for additional licenses. Some partners provided free Copilot trials and heavy discounts on Copilot seats in the short term for E3 or E5 license upgrades, according to the firm.

Morgan Stanley’s most recent quarterly survey of CIOs showed that Microsoft should see “the highest forward year growth … from an absolute growth expectations perspective” and is a leader “among vendors in gaining incremental share of GenAI spending both in 2025 and over the next 3 years,” according to the firm.

One potentially concerning survey result from the investment firm is expected usage of Microsoft 365 Copilot moderating from 72 percent in the near term to 43 percent over the medium, underscoring an “ongoing need for the company to prove out the ROI of the solution to drive durable adoption and potentially indicating signs of dissatisfaction with M365 Copilot,” according to Morgan Stanley.

Channel partners have struck a more positive tone on Copilot deployments in talks with Wedbush, which led the investment firm to say in a July report that Copilot “could add another ~$25 billion to Redmond's top-line trajectory by FY26.” The firm also predicts that Microsoft will join Nvidia as a $4 trillion market capitalization company “shortly,” hitting $5 trillion over the next 18 months.

“We believe Microsoft is just hitting its next phase of monetization on the AI front and more enterprises are accelerating their AI budgets and strategic footprint with Redmond into FY26,” according to a report by the investment firm.

KeyBanc said in its own report that it has detected lagging adoption of Copilot, with about 60 percent of customers implementing Copilot for about 10 percent of their Microsoft 365 user base—still lifting average revenue per customer by about 6 percent, assuming no discounting.

The investment firm has also seen just 4 percent rollout of Copilot for every 365 E3 or E5 license, according to the report.

Microsoft Security Scrutiny

Microsoft security could be a major topic on Wednesday’s earnings call, both because of the worldwide exploitation of a vulnerability in SharePoint software that has affected organizations this month and because of potential growth in the tech giant’s security product portfolio.

Executives on the call might have more details to share about Microsoft’s response to the cyberattack campaign known as “ToolShell,” where threat actors are exploiting a pair of vulnerabilities that impact on-premises SharePoint Servers. While Microsoft has released all patches for on-premises SharePoint Servers to protect against the wave of “ToolShell” attacks, attackers will be looking to exploit the vulnerabilities for months to come and affected organizations should remain highly vigilant, security researchers have told CRN.

A China-linked threat actor has been observed exploiting SharePoint servers to deliver ransomware, according to Microsoft researchers. More than 400 systems have been compromised in the widespread cyberattacks, including the U.S. National Nuclear Security Administration.

The campaign comes at a time when Microsoft Chairman and CEO Satya Nadella publicly emphasizes the vendor’s security priority with new and legacy products, plus recent announcements around improving Windows devices’ security and resilience.

As for the security product portfolio, channel partners have seen security as a key growth area in their Microsoft business, according to a July report by Morgan Stanley. Partners have seen customers seek cost savings and better outcomes through vendor consolidation. The average enterprise deploys more than 50 security tools, according to the firm.

Price increases in stand-alone Microsoft security products have also indirectly made customers more interested in migrating to higher-cost licenses such as E5, which can include those security products as part of a bundle and lower total costs for customers, according to Morgan Stanley.

Microsoft’s Security Copilot has helped drive broader Microsoft security offerings and positioned customers for AI-enabled security automation across endpoints, identity, email and more. Morgan Stanley found strong growth momentum in Microsoft’s Entra ID identity and access management offering and Purview data security offering.

Partner Incentive Boost

Microsoft’s partner ecosystem doesn’t normally receive too much attention on quarterly earnings calls, but CFO Amy Hood has spoken out on recent calls about the workthe vendor has done to improve indirect sales, partner sales motions and license upselling.

She may have more updates on this effort following announced increases to partner funding and incentives across several key areas this fiscal year, and a variety of investment firm reports showing positive business trends by channel partners during the fourth fiscal quarter.

Among the key incentive news for partners Microsoft dropped shortly after the start of its new fiscal year is boosting enterprise customer investment funds by roughly 20 percent, increasing funding for Copilot offerings under the new “AI business solutions” banner by 50 percent. The security solution area is getting a 15 percent funding boost, Microsoft 365 incentives are going up by a double-digit percentage and Azure outcome-based incentives are going up by 70 percent. It is making a roughly 20 percent funding increase for incentives in its Cloud Solution Provider program.

Azure, Cloud Growth

Continued growth in Microsoft’s cloud sales from AI workloads and non-AI workloads is an important measure analysts will likely look for on Wednesday’s call.

A report by Morgan Stanley leading up to Wednesday’s earnings said that channel partners reported strong growth in Azure during the quarter.

Partner comments on Azure gave the firm confidence in growth year over year in the mid-30s for the cloud computing offer in the fourth fiscal quarter. Partners said they saw “solid performance” in AI and non-AI Azure business “with robust willingness from end-users to invest in cloud deployments/migrations across upper mid-market/enterprise organizations.”

“Partner incentive changes put into effect over the last few quarters supported improving cloud migration momentum and Azure AI penetration, supporting pull-through benefits across the product portfolio,” according to the report. “Based on our conversations, these incentive structure changes may have driven better go-to-market execution on Azure more broadly, including on non-AI Azure components, which should support some durability in the 'Scale Motion' business momentum, which contributed partly to strong F3Q results.”

Ninety-two percent of VARs surveyed by KeyBanc said they met or beat their Microsoft sales goals in the quarter, according to a July report by the investment firm. Some had to offer “more heavy discounts” and contact large customers to see if they’d renew earlier so that the revenue came in before the end of the fiscal year, according to the firm.

KeyBanc said it expects 34 percent growth in Azure in the first quarter of fiscal year 2026 followed by 35 percent the following quarter. The firm is below Wall Street consensus of Azure AI growth in fiscal year 2026 of about 89 percent—KeyBanc instead expects about 81 percent.

The firm is more optimistic about non-AI Azure sales, expecting revenue to grow about 20 percent year over year compared with Wall Street’s 21 percent expectation.

PC Sales, Windows 10’s End

Microsoft executives might have an update for analysts about how AI PCs are selling as solution providers prepare customers to either migrate to Windows 11 with Windows 10 end of support coming Oct. 14 or pay for extended security updates.

PC solution providers have told CRN about how this operating system refresh cycle is an opportunity to talk to customers about replacing PCs purchased during the height of the COVID-19 pandemic and selling customers on more modern device management offers such as Microsoft Intune.

IDC reported in July that PC shipments during the second quarter of 2025 grew 6.5 percent year over year, with global volumes reaching 68.4 million shipments. The U.S. market showed a cooldown due to global tariffs, with flat growth year over year. But 9 percent sales growth year over year internationally helped to fuel the market.