Microsoft just wrapped up its fourth fiscal quarter of 2025, and its Q4 2025 financial report didn’t disappoint. The company posted $76.4 billion in revenue, an 18% increase year over year, and $27.2 billion in net income, up 24% from the same quarter in 2024. While Azure led the charge on the cloud front, Xbox showed surprising strength where it mattered: content and services revenue climbed 13%, even as hardware sales dropped 22%, continuing a multi-quarter skid.
Behind the curtain, however, things weren’t all celebratory. Roughly 9,000 employees were laid off this month across multiple divisions—including Xbox—just weeks before Microsoft shared its record-setting financials. Internal memos from CEO Satya Nadella and CFO Anne Hood didn’t shy away from the contradiction, instead framing the cuts as a painful but necessary move to “streamline operations” and redirect momentum toward strategic priorities like AI and cloud infrastructure.
Meanwhile, Game Pass continues to quietly dominate. Insider estimates place annual Game Pass revenue above $5 billion, signaling that Microsoft’s service-first approach is offsetting declining console demand. It’s a shift that’s been underway for years, but now it’s generating real money—and real pressure.
So while Microsoft’s gaming wing looks strong on paper, the company’s latest earnings reveal a familiar tech tale: booming profits, sweeping layoffs, and a strategic vision that asks fewer people to do more with less.
