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Almost $100 Billion in Annualized Microsoft Cloud Revenues
Another three months have passed, and another set of Microsoft results appears (including an increased Office 365 number of users). The FY22 Q3 results delivered a bumper $23.4 billion number for the Microsoft Cloud (up 32% year-over-year), equivalent to a $93.6 billion annualized run rate. That’s a world removed from the relatively puny $8 billion achieved in July 2015 and demonstrates just how far Microsoft has come on its cloud journey (Figure 1).
Office 365 User Numbers
Microsoft has been cagey about providing data about the Office 365 number of users recently. A year ago, Microsoft stopped discussing active users (monthly or daily) and began focusing on paid seats. At the time, they claimed “Office 365 now has nearly 300 million paid seats.” Now, the Office 365 user number is “nearly 345 million,” broadly aligning with the 17% year-over-year increase in Office 365 commercial revenue. The number of active users is always less than those with paid licenses. I’ve tried to keep track of the active user number using growth numbers given by Microsoft and calculate that the active user number is now around 321 million (Figure 2). But only Microsoft knows, and they’re not saying.
Microsoft didn’t give a new number for Teams users, so we’re left with the 270 million claimed in the FY22 Q2 results. Possibly they didn’t want to draw attention to resignation earlier this week of Rish Tandon as Corporate VP of Teams engineering, something which might impact Microsoft’s ability to deliver the much-ballyhooed Teams 2.0 client, supposedly due later in 2022. On the other hand, the reason might also be that Teams growth is finally tapering off after the massive spurt during the Covid-19 pandemic.
Although all Office 365 plans include Teams, it’s not clear how the Teams number is made up. I assume it includes Teams usage in the Microsoft 365 business plans and maybe even Teams personal (aka Teams consumer). I certainly do not think that 78% of Office 365 paid seats use Teams. That would be a stretch.
Other interesting data points released by Microsoft include:
- 45% of Office 365 seats are bought as part of Microsoft 365 plans. I assume these mean the Microsoft 365 E3 and E5 plans. In July 2021, Microsoft said that 8% of the Office 365 base had Microsoft 365 E5. Given Microsoft’s continued quest for increased average revenue per user (ARPU), that number is likely higher now.
- Enterprise Mobility and Security, which is included in the Microsoft 365 enterprise plans, now has 218 million users. That number was 196 million two quarters ago.
- Azure Active Directory has 550 million daily active users, an increase of 50 million in six months, and 125 million more since the 425 million mark achieved in January 2021. The numbers show that a good chunk of the Azure Active Directory user base comes from outside Microsoft 365.
- In the last quarter, Microsoft said that “Viva is being used by more than 1,000 paid customers.” This time round they said that Viva has “more than 10 million monthly active users.” However, Microsoft didn’t break out the usage for different parts of the Viva suite like Connections, Insights, Topics, and Learning.
For more results information, read the transcript of Microsoft’s post-announcement conference with market analysts.
Strong Growth in Microsoft Cloud
Although strong growth continues for Microsoft Cloud services, there’s no doubt that Microsoft results deliver a masterclass in selective obfuscation when it comes to informing people about what’s happening in terms of the Office 365 number of users and other data. On the one hand, this is natural because Microsoft doesn’t want to give away valuable information to competitors. On the other, shifting how they report usage from daily active users to monthly active users to paid seats makes it seem like there’s something to hide. Only Microsoft knows…
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