Microsoft: revenue below forecast, but growing cloud

Picture: Microsoft.

Microsoft hasn’t released any new usage data for its Teams collaboration platform in a long time.

On July 26, when the company released its fiscal 2022 fourth quarter results, it provided a plethora of numbers on the collaboration platform without disclosing the number of users.

However, the software giant claims to be constantly growing and wanting to help its users “do more with less”.

Over 450 new features in Teams

In January 2022, Microsoft announced that Teams had surpassed 270 million monthly active users, up from 250 million in July 2021. The company has changed the way it presents platform usage data in 2021, moving from active users to monthly active users…perhaps to mask a slowdown in growth?

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

  • Over 450 features were added to Teams last year.
  • The platform is gaining promotions in all categories: chat, meetings, calls.
  • Teams Phone currently has over 12 million PSTN (Public Switched Telephone Network) users, nearly double the number from a year ago.
  • Over 60% of Fortune 500 companies have chosen Teams Rooms as part of their hybrid way of working.
  • 25% of Fortune 500 companies use Viva’s Teams-based employee engagement platform.

However, Microsoft hasn’t calculated the current number of active Teams users per month.

More than half of revenue is the share of Microsoft Cloud

Microsoft CFO Amy Hood also clarified on the conference call that Microsoft 365/Office 365, the most expensive and comprehensive E5 SKU, now accounts for 12% of commercial product installs. According to the latest data released by the company in 2021, E5 accounts for 8% of the commercial installed base.

Teams is one of the key components of the Microsoft Cloud product line, 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 the core, is considered the largest part of the 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. Forecasts counted on a turnover of 52.4 billion dollars.

40% growth in Azure

For Azure, Microsoft is reporting 40% quarter-on-quarter growth, according to numbers yet to be made public. For the company, the issues currently affecting Azure’s capabilities have not affected its relatively slower growth than in recent quarters. Instead, he attributes the lower-than-expected performance primarily to the unfavorable exchange rate.

The company adds that its commercial orders have exceeded expectations, largely due to larger, longer-term contracts with Azure. It says Q4 reached record numbers of $1B+ Azure contracts, $100M+ Azure contracts, and $10M+ Microsoft 365 contracts.

Microsoft announced last week 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, also suffered this quarter due to the unfavorable global context – the closure of suppliers located in China, the war between Russia and Ukraine, and an overall slowdown in advertising spending due to the slowdown. economy.

Windows OEM revenue was down 2% for the quarter, while Xbox content and services revenue was down 6%. And despite Microsoft placing more and more ads on its products and services, search and news ad revenue has only increased by 18%.

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

Source: .com

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