Teams grabbed the headlines in Microsoft’s FY21 Q1 results in the Microsoft 365 space with a 53% jump in daily active user (DAU) numbers from 75 million reported in April 2020 to 115 million now. Adding 40 million active users over six months is impressive. It’s even better when you consider that Microsoft boasted a 13 million number in July 2019 (Figure 1) when it announced that Teams usage had surpassed Slack.
Figure 1: Growth in Teams Daily Active Users since November 2019
Adding 102 million daily active users in 15 months is a great streak that’s come on the back of people needing to work from home and leverage features like video and audio conferencing more extensively. Satya Nadella said: “Microsoft 365 users generated more than 30 billion collaboration minutes in a single day this quarter.” He was talking about Teams at the time, but this might also include Skype for Business Online use. Another interesting data point is that Teams is being used by nearly 270,000 educational institutions for remote learning.
Microsoft has responded to customer demand by shipping a huge number of improvements and new features to make Teams more usable, to push the boundary to accommodate larger number of people on calls, and meet the needs of enterprises. Recently, Microsoft announced the intention to increase the number of members in a team to 25,000, up from 999 when Teams launched in 2017. Although the system sometimes shows signs of growth-created strain, Teams is obviously a huge success story.
Marketing drives demand, and in the case of Teams marketing the spend to help create the level of growth now reported has become so large as to be cited as a reason why operating expenses for the Productivity and Business Processes segment (Office 365, LinkedIn, Dynamics 365, and some other smaller products) grew 4% in the last quarter (Figure 2).
Figure 2: FY21 Q1 results for Productivity and Business Processes (source: Microsoft)
Slower but Profitable Growth for Office 365
At times you’d be forgiven for thinking that Office 365 revolves around Teams (successful marketing!). In fact, Exchange Online and SharePoint Online are still larger workloads and without these Teams couldn’t function. At the same time, a lot of SharePoint Online usage is driven by Teams and the way that every Microsoft 365 group is provisioned with a team site for members to store documents in.
Curiously, Microsoft didn’t update the Office 365 active user number. They did talk about growth in the number of Office 365 consumer subscribers to 45.3 million, which is nice, but it’s not related.
The last number Microsoft gave for commercial Office 365 usage was six months ago, when they changed the metric and said that Office 365 had 258 millionpaid seats instead of monthly active users. This time, we learned that paid Office 365 commercial seats grew 15% year over year (CFO Amy Hood clarified that the figure was for paid seats not usage in their analyst briefing). In October 2019, Microsoft reported 200 million monthly active Office 365 users. If usage tracks payments for seats, a 15% year-over-year gain puts the current number for monthly active users at 230 million (Figure 3).
Figure 3: Office 365 Monthly Active User Growth since November 2015
If Office 365 has 230 million active users then Teams is now used by half that population, which is pretty staggering for an application launched in 2017.
Difference Between Paid and Active
The delta in the numbers between paid seats and active usage is large enough to make me think that:
Growth is slowing in Office 365. Amy Hood noted that Office 365 now accounts for “over 70 percent of our existing Office commercial paid installed base.” If Office 365 is at 258 million paid seats, then the overall base is around 360 million, including the on-premises servers. However, the organizations which remain on-premises are harder to move to the cloud and many have good reasons to stay on-premises, so the easy pickings which once existed aren’t around any longer.
Companies are being more cautious with software licensing. Layoffs and furloughs resulting from the pandemic allied to some company failures reduce the demand for Office 365 licenses.
For several years, Microsoft grew Office 365 active users at between 3-3.5 million per month. A 30 million uptick in a year is good, especially on top of a large base, but the growth rate is slowing to around 2.5 million/month. This might be why Microsoft was so reticent in reporting a new number. On the upside, Office 365 commercial revenue grew 21%, reflecting the continued success in upselling customers to higher priced licenses and to use add-ons like Microsoft 365 E5 compliance. Overall, Productivity and Business Processes delivered operating income of $5.71 billion and the overall revenue for commercial cloud reached $15.2 billion, or an annualized run rate of $60.8 billion. That’s three times the $20 billion target set by Satya Nadella in 2015 reached three years ago.
Tracking License Usage
Obviously, there’s a big difference between licenses sold and people using them to interact with Office 365. Many large organizations buy substantial numbers of licenses and don’t use them all, which is one reason why ISVs offer license management products to help companies reduce the number of licenses back to what they really need. While ISV products offer lots of features, our Graph-based usage analysis script can help find inactive accounts free of charge. Either way, eliminating a bunch of $35/month Office 365 licenses assigned to inactive accounts is a good way of boosting the bottom line.
Azure AD Closes in on 400 Million Monthly Active Users
According to Nadella, Azure AD has “nearly 400 million monthly active users.” As Office 365 users discovered with recent outages, when Azure AD has a problem, applications like Teams come crashing to a halt because users can’t authenticate. Let’s hope that Microsoft continues to work on bullet-proofing Azure AD to avoid recurrences of those incidents.
Chapter 1 of the Office 365 for IT Pros eBook is where we cover stuff like this. Things move so fast in Teams, Office 365, and Microsoft 365 that we republish the book monthly.
14 Replies to “Half of Active Office 365 Users Now Use Teams”
I have used Teams only briefly on my last job and played around with Free Teams in a browser. On my current job we were testing Slack until it was decided to go with Teams, because it is free (E licenses). After using Slack for almost a year i can say that although not perfect it feels like a more modern app, more robust, fluid, intuitive and lightweight. My team is constantly sharing screenshots of Teams taking 600-1000 MB RAM in Task manager 🙂 Teams might have more integrations for the rest of our MS based services. And maybe someday they will iron out all the quirks. Now i’m struggling how to get notified on everything i care about with unread channels not being pushed to the top of the team list and having so many channels below my display border, so i have constantly scroll down to see if i am not missing anything. Such a simple thing which feels so natural in Slack.
{"id":null,"mode":"button","open_style":"in_modal","currency_code":"EUR","currency_symbol":"\u20ac","currency_type":"decimal","blank_flag_url":"https:\/\/office365itpros.com\/wp-content\/plugins\/tip-jar-wp\/\/assets\/images\/flags\/blank.gif","flag_sprite_url":"https:\/\/office365itpros.com\/wp-content\/plugins\/tip-jar-wp\/\/assets\/images\/flags\/flags.png","default_amount":100,"top_media_type":"featured_image","featured_image_url":"https:\/\/office365itpros.com\/wp-content\/uploads\/2022\/11\/cover-141x200.jpg","featured_embed":"","header_media":null,"file_download_attachment_data":null,"recurring_options_enabled":true,"recurring_options":{"never":{"selected":true,"after_output":"One time only"},"weekly":{"selected":false,"after_output":"Every week"},"monthly":{"selected":false,"after_output":"Every month"},"yearly":{"selected":false,"after_output":"Every year"}},"strings":{"current_user_email":"","current_user_name":"","link_text":"Virtual Tip Jar","complete_payment_button_error_text":"Check info and try again","payment_verb":"Pay","payment_request_label":"Office 365 for IT Pros","form_has_an_error":"Please check and fix the errors above","general_server_error":"Something isn't working right at the moment. Please try again.","form_title":"Office 365 for IT Pros","form_subtitle":null,"currency_search_text":"Country or Currency here","other_payment_option":"Other payment option","manage_payments_button_text":"Manage your payments","thank_you_message":"Thank you for supporting the work of Office 365 for IT Pros!","payment_confirmation_title":"Office 365 for IT Pros","receipt_title":"Your Receipt","print_receipt":"Print Receipt","email_receipt":"Email Receipt","email_receipt_sending":"Sending receipt...","email_receipt_success":"Email receipt successfully sent","email_receipt_failed":"Email receipt failed to send. Please try again.","receipt_payee":"Paid to","receipt_statement_descriptor":"This will show up on your statement as","receipt_date":"Date","receipt_transaction_id":"Transaction ID","receipt_transaction_amount":"Amount","refund_payer":"Refund from","login":"Log in to manage your payments","manage_payments":"Manage Payments","transactions_title":"Your Transactions","transaction_title":"Transaction Receipt","transaction_period":"Plan Period","arrangements_title":"Your Plans","arrangement_title":"Manage Plan","arrangement_details":"Plan Details","arrangement_id_title":"Plan ID","arrangement_payment_method_title":"Payment Method","arrangement_amount_title":"Plan Amount","arrangement_renewal_title":"Next renewal date","arrangement_action_cancel":"Cancel Plan","arrangement_action_cant_cancel":"Cancelling is currently not available.","arrangement_action_cancel_double":"Are you sure you'd like to cancel?","arrangement_cancelling":"Cancelling Plan...","arrangement_cancelled":"Plan Cancelled","arrangement_failed_to_cancel":"Failed to cancel plan","back_to_plans":"\u2190 Back to Plans","update_payment_method_verb":"Update","sca_auth_description":"Your have a pending renewal payment which requires authorization.","sca_auth_verb":"Authorize renewal payment","sca_authing_verb":"Authorizing payment","sca_authed_verb":"Payment successfully authorized!","sca_auth_failed":"Unable to authorize! Please try again.","login_button_text":"Log in","login_form_has_an_error":"Please check and fix the errors above","uppercase_search":"Search","lowercase_search":"search","uppercase_page":"Page","lowercase_page":"page","uppercase_items":"Items","lowercase_items":"items","uppercase_per":"Per","lowercase_per":"per","uppercase_of":"Of","lowercase_of":"of","back":"Back to plans","zip_code_placeholder":"Zip\/Postal Code","download_file_button_text":"Download File","input_field_instructions":{"tip_amount":{"placeholder_text":"How much would you like to tip?","initial":{"instruction_type":"normal","instruction_message":"How much would you like to tip? Choose any currency."},"empty":{"instruction_type":"error","instruction_message":"How much would you like to tip? Choose any currency."},"invalid_curency":{"instruction_type":"error","instruction_message":"Please choose a valid currency."}},"recurring":{"placeholder_text":"Recurring","initial":{"instruction_type":"normal","instruction_message":"How often would you like to give this?"},"success":{"instruction_type":"success","instruction_message":"How often would you like to give this?"},"empty":{"instruction_type":"error","instruction_message":"How often would you like to give this?"}},"name":{"placeholder_text":"Name on Credit Card","initial":{"instruction_type":"normal","instruction_message":"Enter the name on your card."},"success":{"instruction_type":"success","instruction_message":"Enter the name on your card."},"empty":{"instruction_type":"error","instruction_message":"Please enter the name on your card."}},"privacy_policy":{"terms_title":"Terms and conditions","terms_body":null,"terms_show_text":"View Terms","terms_hide_text":"Hide Terms","initial":{"instruction_type":"normal","instruction_message":"I agree to the terms."},"unchecked":{"instruction_type":"error","instruction_message":"Please agree to the terms."},"checked":{"instruction_type":"success","instruction_message":"I agree to the terms."}},"email":{"placeholder_text":"Your email address","initial":{"instruction_type":"normal","instruction_message":"Enter your email address"},"success":{"instruction_type":"success","instruction_message":"Enter your email address"},"blank":{"instruction_type":"error","instruction_message":"Enter your email address"},"not_an_email_address":{"instruction_type":"error","instruction_message":"Make sure you have entered a valid email address"}},"note_with_tip":{"placeholder_text":"Your note here...","initial":{"instruction_type":"normal","instruction_message":"Attach a note to your tip (optional)"},"empty":{"instruction_type":"normal","instruction_message":"Attach a note to your tip (optional)"},"not_empty_initial":{"instruction_type":"normal","instruction_message":"Attach a note to your tip (optional)"},"saving":{"instruction_type":"normal","instruction_message":"Saving note..."},"success":{"instruction_type":"success","instruction_message":"Note successfully saved!"},"error":{"instruction_type":"error","instruction_message":"Unable to save note note at this time. Please try again."}},"email_for_login_code":{"placeholder_text":"Your email address","initial":{"instruction_type":"normal","instruction_message":"Enter your email to log in."},"success":{"instruction_type":"success","instruction_message":"Enter your email to log in."},"blank":{"instruction_type":"error","instruction_message":"Enter your email to log in."},"empty":{"instruction_type":"error","instruction_message":"Enter your email to log in."}},"login_code":{"initial":{"instruction_type":"normal","instruction_message":"Check your email and enter the login code."},"success":{"instruction_type":"success","instruction_message":"Check your email and enter the login code."},"blank":{"instruction_type":"error","instruction_message":"Check your email and enter the login code."},"empty":{"instruction_type":"error","instruction_message":"Check your email and enter the login code."}},"stripe_all_in_one":{"initial":{"instruction_type":"normal","instruction_message":"Enter your credit card details here."},"empty":{"instruction_type":"error","instruction_message":"Enter your credit card details here."},"success":{"instruction_type":"normal","instruction_message":"Enter your credit card details here."},"invalid_number":{"instruction_type":"error","instruction_message":"The card number is not a valid credit card number."},"invalid_expiry_month":{"instruction_type":"error","instruction_message":"The card's expiration month is invalid."},"invalid_expiry_year":{"instruction_type":"error","instruction_message":"The card's expiration year is invalid."},"invalid_cvc":{"instruction_type":"error","instruction_message":"The card's security code is invalid."},"incorrect_number":{"instruction_type":"error","instruction_message":"The card number is incorrect."},"incomplete_number":{"instruction_type":"error","instruction_message":"The card number is incomplete."},"incomplete_cvc":{"instruction_type":"error","instruction_message":"The card's security code is incomplete."},"incomplete_expiry":{"instruction_type":"error","instruction_message":"The card's expiration date is incomplete."},"incomplete_zip":{"instruction_type":"error","instruction_message":"The card's zip code is incomplete."},"expired_card":{"instruction_type":"error","instruction_message":"The card has expired."},"incorrect_cvc":{"instruction_type":"error","instruction_message":"The card's security code is incorrect."},"incorrect_zip":{"instruction_type":"error","instruction_message":"The card's zip code failed validation."},"invalid_expiry_year_past":{"instruction_type":"error","instruction_message":"The card's expiration year is in the past"},"card_declined":{"instruction_type":"error","instruction_message":"The card was declined."},"missing":{"instruction_type":"error","instruction_message":"There is no card on a customer that is being charged."},"processing_error":{"instruction_type":"error","instruction_message":"An error occurred while processing the card."},"invalid_request_error":{"instruction_type":"error","instruction_message":"Unable to process this payment, please try again or use alternative method."},"invalid_sofort_country":{"instruction_type":"error","instruction_message":"The billing country is not accepted by SOFORT. Please try another country."}}}},"fetched_oembed_html":false}
I have used Teams only briefly on my last job and played around with Free Teams in a browser. On my current job we were testing Slack until it was decided to go with Teams, because it is free (E licenses). After using Slack for almost a year i can say that although not perfect it feels like a more modern app, more robust, fluid, intuitive and lightweight. My team is constantly sharing screenshots of Teams taking 600-1000 MB RAM in Task manager 🙂 Teams might have more integrations for the rest of our MS based services. And maybe someday they will iron out all the quirks. Now i’m struggling how to get notified on everything i care about with unread channels not being pushed to the top of the team list and having so many channels below my display border, so i have constantly scroll down to see if i am not missing anything. Such a simple thing which feels so natural in Slack.