Long time blog readers will know. I like to follow the Microsoft earnings calls for insights around Microsoft Teams and Microsoft 365. Microsoft just announced their earnings and revenue for the fiscal second quarter, the last calendar quarter of 2022. This quarter has some good insights; quotes are from the earnings call transcript, and everything outside the quotes is my commentary.
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- Microsoft Teams “surpassed 270 million monthly active users this quarter”. Up from the 250M number we got in July 2021. It’s worth noting that Microsoft don’t break out numbers for Teams Consumer and Teams Commercial (Business/Enterprise/Health/Everything with an Office 365 account really). Microsoft recently included Teams Consumer with Windows 11. I wonder how much of this bump can be attributed to Windows 11/consumer accounts? The Windows 11 user numbers were not broken out, but we did get that “There are now more than 1.4 billion monthly active devices running Windows 10 or Windows 11”. I would guess the vast majority are still Windows 10 right now, but even a small percentage of that being Windows 11 could have an impact
- “Over 90 percent of Fortune 500 companies used Teams Phone this quarter, and we continue to take share across PSTN and VOIP”. I notice here that “PSTN and VoIP” is mentioned. We have seen previously that Microsoft has included VoIP use when talking about “Teams Phone” rather than a strict definition of user with PSTN/Teams Phone licences.
- “Monthly usage of third-party applications and custom-built solutions [in Teams] has grown 10X in the last two years”. Microsoft is making a real push for Teams to be more than just UC and land it as collaboration and a platform. Tighter integration with Power Platform really helps this story “Marks & Spencer used Power Apps and Teams to streamline internal help desk requests”
- “The number of active Teams Rooms devices more than doubled year over year.”. That’s impressive growth, especially considering supply chain constraints. The Hybrid work experience is a hot topic in most enterprises right now.
- “Frontline worker usage [of Microsoft Teams is] up 2X year over year“. Walmart chose Teams for their more than 2 million frontline workers this quarter.
- Teams Essentials got a mentions from both Satya and Amy Hood as one of the strategies to focus on growth in SMB. “It’s early days, but we’re already encouraged by strong demand”.
- “Viva is being used by more than 1,000 paid customers – including Blum, Nationwide, and REI – to help address challenges like employee burnout and retention”
- “Office 365 commercial revenue growth of 19% was driven by installed base expansion across all workloads and customer segments, as well as higher ARPU”. You see Microsoft increasingly focusing on getting The Average Revenue Per User up by pushing more users towards E5 and even beyond with additional beyond E5 services like Viva, Advanced Communications, Microsoft Teams Room Premium and other “add-on” SKUs
- “Office 365 commercial seats increased 16% year-over-year, driven by another strong quarter of growth in our small and medium business and frontline worker offerings.”. The difference in seats growth vs revenue growth indicating some increase in ARPU.
- “Dynamics revenue grew 29% year-over-year driven by Dynamics 365, which grew 45% and 44% in constant currency”. Dynamics growth was mentioned, but no mention of Dynamics Voice Channel/Microsoft in the Contact Center market. Maybe it’s a bit early for any meaningful results in this area, but I expected a nod to the potential.
Overall, Microsoft’s numbers are up and beating projections. The global changes caused by the pandemic have accelerated cloud adoption, particularly of Microsoft Teams and hybrid working/new ways of working continue to be hot topics for organisations. 2022 will be a big year for Teams Phone as organisations that moved to Microsoft Teams for meetings and collaboration consolidate their Unified Communications onto Microsoft Teams.