Microsoft: revenue lower than forecast but a growing cloud

Picture: Microsoft.

Microsoft hasn’t released any new usage figures for its Teams collaboration platform in a while.

On July 26, when the company released its FY22 fourth quarter results, it provided a host of numbers on the collaboration platform, without disclosing its number of users.

The software giant nevertheless touts its continued growth, and the desire to help its users “do more with less”.

More than 450 new features on Teams

In January 2022, Microsoft announced that Teams had surpassed 270 million monthly active users, up from 250 million in July 2021. The company changed the way it reports usage figures for the platform in 2021, moving from the number of active users to the number of monthly active users…perhaps to mask the slowdown in its growth?

During the conference call held yesterday, Microsoft recalled the following information:

  • Last year, more than 450 features were added to Teams.
  • The platform is gaining shares in all categories: chat, meetings, calls.
  • Teams Phone now has more than 12 million PSTN (public switched telephone network) users, nearly twice as many as a year ago.
  • More than 60% of Fortune 500 companies have chosen Teams Rooms as part of a hybrid way of working.
  • 25% of Fortune 500 companies use the Viva employee experience platform, which is powered by Teams.

However, Microsoft has not quantified the current number of monthly active users of Teams.

Microsoft Cloud accounts for more than half of revenue

Microsoft CFO Amy Hood also clarified on the conference call that Microsoft 365/Office 365’s most expensive and comprehensive SKU E5 now represents 12% of the base. installed commercial. The latest figure released by the company on this, in 2021, was that E5 represented 8% of the commercial installed base.

Teams is one of the key components of the product line named Microsoft Cloud – formerly Microsoft Commercial Cloud. This range includes Microsoft 365/Office 365, Azure, Dynamics 365, parts of LinkedIn and other enterprise cloud services. Microsoft 365/Office 365 – of which Teams is a central part – is considered the biggest part of Microsoft Cloud.


Picture: Microsoft.


Picture: Microsoft.

Microsoft Cloud, as a whole, generated $25 billion in revenue in the fourth quarter — more than half of the $51.9 billion total for the quarter. The forecasts counted on a turnover of 52.4 billion dollars.

40% growth on Azure

Regarding Azure, Microsoft reports a growth of 40% compared to the previous quarter, according to figures which have not yet been made public. For the company, the issues currently affecting Azure’s capabilities have not played into its relatively slower growth than in recent quarters. Instead, it attributes the lower-than-expected number to unfavorable exchange rates, primarily.

The company adds that its commercial bookings are up, beyond expectations, largely due to larger, longer-term Azure contracts. It says it hit a record number of $1 billion+ Azure contracts, $100 million+ Azure contracts, and $10 million+ Microsoft 365 contracts in the fourth quarter.

Last week, Microsoft officials announced that the company plans to launch 10 new data center regions over the next year.

Contextual difficulties

The Windows and Xbox divisions as well as the group’s advertising activities were also all negatively affected this quarter by an unfavorable global context – the closure of suppliers located in China, the war between Russia and Ukraine and a general slowdown in spending. advertising due to slowing economies.

Windows OEM revenue was down 2% in the quarter, and Xbox content and services revenue was down 6%. And despite Microsoft placing more and more ads all over its products and services, revenue from search and news ads only increased by 18%.

During Tuesday’s conference call, Amy Hood announced that Microsoft expects double-digit revenue and operating income growth for its fiscal year 2023 (which began July 1, 2022), despite the persistent difficulties related to the macro-environment. However, she also clarified that the Surface, Xbox and Windows businesses would likely experience a single-digit decline in the first quarter of the fiscal year.


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