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Microsoft serves up lots of Teams numbers to demonstrate growth (except the latest number of users)

Microsoft's cloud businesses are continuing to grow during a challenging macro environment, but exactly how much is a bit tricky to determine.
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Microsoft Teams
Microsoft

It's been a while since Microsoft disclosed a new usage number for its Teams collaboration platform. On July 26 -- the day it reported its FY'22 Q'4 earnings -- it didn't provide an update on how many users Teams has. Officials did, however, deliver a host of Teams numbers in the name of showing the continued growth of the platform and helping customers "do more with less."

In January 2022, Microsoft officials said. Teams surpassed 270 million monthly active users, which was up from 250 million monthly active users in July 2021. (Microsoft changed the way it publicly disclosed its Teams usage figures, moving from daily active users to monthly active users in 2021, possibly as a way to disguise slowing growth.)

Today on its earnings call, officials said:

  • The company added more than 450 capabilities to Teams in the past year
  • Teams is taking share in every category: chat, meetings, calling
  • Teams Phone now has more than 12 million PSTN users, nearly two times the number a year ago
  • More than 60% of the Fortune 500 have chosen Teams Rooms to connect across their hybrid workplaces
  • 25%  of the Fortune 500 use the Viva employee-experience platform, which is built on Teams

During today's earnings call, officials did not provide an updated monthly active Teams user figure.   

It wasn't all skewing of SKUs, however. Chief Financial Officer Amy Hood did say on the earnings call today that the highest-priced and most fully featured E5 SKU of Microsoft 365/Office 365 is now 12%  of the commercial installed base. The last number we had on this was E5 comprising 8% of the base in 2021.

Teams is one of the key components of the bucket of products now known as "Microsoft Cloud" and formerly as Microsoft "commercial cloud." That bucket includes Microsoft 365/Office 365, Azure, Dynamics 365, some parts of LinkedIn and other Microsoft cloud services. Microsoft 365/Office 365 -- of which Teams is a central part -- is believed to be the biggest part of the Microsoft Cloud.

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Credit: Microsoft
msq4fy22
Credit: Microsoft

Microsoft officials said the Microsoft Cloud, all-up, generated $25 billion in revenues for Q4 -- nearly half of the total $51.9 billion for the quarter. Analysts had been expecting $52.4 billion in revenues this quarter and earnings of $2.29 per share vs. the $2.23 Microsoft reported.

Speaking of Azure, Microsoft officials said Azure grew 40% of some still publicly undisclosed number compared to the year-ago quarter. Officials said ongoing problems with Azure capacity did not play into Azure's relatively slower growth compared to recent quarters; instead, they attributed the number, which was smaller than some had hoped/expected, primarily to unfavorable foreign exchange rates.

Officials said Microsoft's commercial bookings were up, passing expectations, largely due to larger, long-term Azure contracts. Officials said Microsoft hit a record number of $1 billion-plus Azure contracts, $100 million-plus Azure contracts and $10 million-plus Microsoft 365 contracts in Q4. Officials said last week that Microsoft plans to launch 10 new datacenter regions in the coming year.

Microsoft's Windows, advertising, and Xbox business were negatively affected in Q4 by the shutdown of suppliers in China, the ongoing Russia-Ukraine war, and a general slowdown in advertising spending due to slowing economies. Windows OEM revenues were down 2% for the quarter; Xbox content and services revenues were down 6%; and in spite of Microsoft putting more and more ads everywhere in its products and services, search and news ad revenue was up only 18%.

Hood did tell analysts on the earnings call that despite continuing macro-environment challenges, Microsoft is expecting double-digit revenue and operating income growth in constant currency in its fiscal 2023 (which began July 1, 2022). However, she also said that Microsoft's Surface, Xbox and Windows businesses all will likely decline in the low single digits in Q'1 FY'23.

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