Microsoft has published its quarterly results amid a period of financial turbulence, beating expectations despite a slowdown in cloud growth.
Sales in the three-month period to 30 September 2022 grew 11 percent to $50.1bn.
However, against a backdrop of uncertainty, the vendor’s cloud unit reported revenue below market expectations. Sales generated from Azure, the heart of Microsoft’s cloud business, saw sales rise 35 percent against 40 percent in the previous quarter.
Guidance given for the current quarter was also considered weak by analysts, leading to a share price drop of six percent after the results were published.
Despite this, Microsoft Teams continues to see impressive growth. The Microsoft exec team picked out several highlights from the quarter to demonstrate the collaboration platform’s continued strength in the market.
However, Microsoft stopped short of releasing solid usage numbers, failing to provide an updated figure on the 160 million monthly active users it revealed earlier this year.
UC Today has picked out the top takeaways from the earnings report and accompanying call with investors.
People use Teams A LOT
Although Microsoft didn’t reveal high-level figures, it did release some granular stats to show how people are using Teams.
CEO Satya Nadella said users interact with Teams 1,500 times per month on average.
“Microsoft Teams is the de facto standard for collaboration and has become essential to how hundreds of millions of people meet, call, chat, collaborate, and do business,” he claimed.
He also said that commercial users typically spend more time in Teams chat than they do in email. In addition, the number of users using more than one Teams function increased by more than 20 percent in the quarter (year on year).
Most companies are buying add-ons
Teams’ bread and butter is chat and video – features that are in the base-level platform. However, Microsoft said that the majority of customers are now purchasing some kind of add-on – be that Microsoft features such as Teams Rooms or Teams Phone, or third-party applications.
CEO Nadella said that some 55 percent of enterprise customers using Teams are also paying for Teams Rooms and Teams Phone.
“Teams is becoming a ubiquitous platform for business process,” Nadella said.
The CEO added that the number of monthly active enterprise users running third-party and/or custom applications in the Teams platform increased by nearly 60 percent year on year in the quarter.
This comes soon after Microsoft criticised UK businesses for failing to invest in their office space as we move out of the pandemic.
Research attributed to Microsoft Surface found that four in five workers are returning to the same office space they left in 2020. This means. Businesses have not refreshed these spaces to run alongside the collaboration platforms adopted over the past two years.
“Employees clearly need more enticement back to offices than an employer mandate,” Alan Slothower, Surface Business Group Lead at Microsoft UK, said.
PSTN is growing (but we don’t know by how much)
Enabling voice in Teams is seen as a huge opportunity for the UC and service provider market, with the number of users already connecting PSTN to Teams dwarfed by the total number of users on the platform.
Microsoft did not say how many users have connected Teams to PSTN but said users have grown in the double digits for five straight quarters. Microsoft first revealed PSTN users in X, pegging the figure at 12 million.
“Teams Phone provides best-in-class calling,” Nadella said.
At Ignite, Microsoft announced that Teams Phone Mobile is now available to all users, having rebranded the product from Operator Connect Mobile.
Teams Phone Mobile lets people use their Teams package over mobile data through their native smartphone dialer. They can also seamlessly switch between mobile, VoIP and video calls through the Teams platform.
Seat Growth Expected to Continue
Microsoft revealed more seat growth for the quarter, with paid Office 365 seats up 14 percent year on year, driven by a swelling of seats in the SMB space.
Microsoft CFO Amy Hood said that seat growth has gone on “much longer than many investors had expected”, claiming this will likely continue as Microsoft continues to target smaller businesses and SMBs.
“It really should continue in some ways because we’re focusing on frontline workers’ scenarios,” she explained.
“We’re continuing to focus on small and midsize business growth, and we’re adding new things to which you can grow, whether that’s Viva, whether it’s Teams.
“There are new things that enable us to add relevancy, frankly, and then to add value, and then to add seats.”
Microsoft Buoyant Despite Volatile Economy
Despite the lukewarm reception to Microsoft’s results from investors, CEO Nadella was bullish about the vendor’s potential.
“In a world facing increasing headwinds, digital technology is the ultimate tailwind,” he stated.
“In this environment, we’re focused on helping our customers do more with less while investing in secular growth areas and managing our cost structure in a disciplined way.”
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