MSFT · 10-K · 2025A · Full report
Operating Expense Trends
MICROSOFT CORP · 2025-07-30 · Importance 50 · Surprise 58
Total operating expenses increased $3,790 million or 6% to $65,365 million in fiscal 2025, driven by investments in cloud and AI engineering and Gaming, including the impact of the Activision Blizzard acquisition. Research and development expense rose $2,978 million or 10% to $32,488 million, reflecting AI training and engineering investments. Sales and marketing increased $1,198 million or 5% to $25,654 million driven by commercial sales investments and Gaming, while General and administrative decreased $386 million or 5% to $7,223 million. Operating expenses as a percent of revenue declined modestly given revenue growth and targeted cost increases in prioritized areas.
Key facts
- Research and development expense for fiscal year 2025 was $32,488 million, an increase of 10% from fiscal year 2024.
- Consolidated operating expenses increased $3.8 billion or 6% year over year in fiscal year 2025, driven by investments in cloud and AI engineering and Gaming, including the Activision Blizzard acquisition.
- Operating expenses in More Personal Computing increased $1,258 million or 9% year over year in fiscal year 2025 driven by Gaming, including the impact of the Activision Blizzard acquisition.
- Sales and marketing expense for fiscal year 2025 was $25,654 million, an increase of 5% from fiscal year 2024.
- Research and development expense represented 12% of revenue in both fiscal years 2025 and 2024.
- General and administrative expense for fiscal year 2025 was $7,223 million, a decrease of 5% from fiscal year 2024.
Impact estimates
| metric | direction | stage | expected | basis |
|---|---|---|---|---|
| operating_income | negative | realized | -1.4% | Consolidated operating expenses increased $3.8 billion or 6% year over year in fiscal year 2025, driven by investments in cloud and AI… |
| operating_income | negative | realized | -1.1% | Research and development expense for fiscal year 2025 was $32,488 million, an increase of 10% from fiscal year 2024. |
| operating_income | negative | realized | -0.5% | Operating expenses in More Personal Computing increased $1,258 million or 9% year over year in fiscal year 2025 driven by Gaming,… |
| operating_income | negative | realized | -0.4% | Sales and marketing expense for fiscal year 2025 was $25,654 million, an increase of 5% from fiscal year 2024. |
| operating_income | positive | realized | +0.1% | General and administrative expense for fiscal year 2025 was $7,223 million, a decrease of 5% from fiscal year 2024. |