It’s been a while since Microsoft unveiled a new usage number for its Teams collaboration platform. On July 26 – the day it announced its FY’22 Q’4 earnings – it did not provide an update on the number of Teams users. Officials, however, provided a slew of Teams numbers in the name of the platform’s continued growth and helping customers “do more with less.”
In January 2022, Microsoft officials said Teams had surpassed 270 million monthly active users, up from 250 million monthly active users in July 2021. (Microsoft has changed the way it publicly discloses its Teams usage numbers. Teams, moving from daily active users to monthly active users in 2021, perhaps to mask slower growth.)
During its earnings call today, officials said:
- The company has added more than 450 features to Teams in the past year
- Teams takes part in all categories: chat, meetings, calls
- Teams Phone now has over 12 million PSTN users, nearly twice the number a year ago
- Over 60% of Fortune 500 companies have chosen Teams Rooms to connect in their hybrid workplaces
- Twenty-five percent of the Fortune 500 use the Viva employee experience platform, which is powered by Teams
Officials did not provide an updated monthly figure of Teams active users during today’s earnings call.
However, it wasn’t all SKU skew. Chief Financial Officer Amy Hood said on today’s earnings call that the most expensive and feature-packed Microsoft 365/Office 365 SKU E5 now accounts for 12% of the commercial installed base. The last number we had on this was E5, representing 8% of the base in 2021.
Teams is one of the key components of the group of products now known as “Microsoft Cloud” and formerly known as Microsoft’s “Commercial Cloud”. This bucket includes Microsoft 365/Office 365, Azure, Dynamics 365, parts of LinkedIn, and other Microsoft cloud services. Microsoft 365/Office 365 – of which Teams is a central part – is considered the biggest part of the Microsoft Cloud.
Microsoft officials said Microsoft Cloud, in total, generated $25 billion in revenue for the fourth quarter, more than half of the $51.9 billion total for the quarter. Analysts were expecting $52.4 billion in revenue this quarter and earnings of $2.29 per share versus $2.23 reported by Microsoft.
Speaking of Azure, Microsoft officials said Azure was up 40% by an as-yet-undisclosed number from the prior year quarter. Officials said ongoing Azure capacity issues did not play into Azure’s relatively slower growth compared to recent quarters; instead, they attributed the number, which was lower than some had hoped/expected, mainly to unfavorable exchange rates.
Officials said Microsoft’s commercial bookings were up, beating expectations, largely thanks to larger, longer-term Azure contracts. Officials said Microsoft hit a record number of Azure contracts over $1 billion, Azure contracts over $100 million and Microsoft 365 contracts over $10 million in the fourth quarter. Officials said last week that Microsoft plans to launch 10 new data center regions in the coming year.
Microsoft’s Windows business, advertising business, and Xbox business were all negatively impacted in the fourth quarter by vendor shutdowns in China, the ongoing Russian-Ukrainian war, and a general slowdown in ad spending due to slowing economies. Windows OEM revenue was down 2% for the quarter; Revenue from Xbox content and services was down 6%; and despite Microsoft placing more and more ads throughout its products and services, search and news ad revenue grew only 18%.
Hood told analysts on the earnings call that despite continued challenges in the macro environment, Microsoft expects double-digit constant currency revenue and operating income growth in its fiscal year 2023. (which began on July 1, 2022). However, she also said Microsoft Surface, Xbox and Windows businesses will all likely decline in the low numbers in the first quarter of FY23.
