Microsoft beats expectations with bumper Azure, Teams growth

Microsoft's fast-growing cloud business may have overtaken Windows for the first time, analyst suggests

Microsoft reported its fiscal first quarter earnings on Tuesday, beating analyst expectations on the strength of its Azure and Teams businesses. 

The business communications platform has grown 50% in just six months and now has 115 million daily active users, Microsoft CEO Satya Nadella said, while the company's cloud computing business also saw better-than-expect growth during the three month period. 

Microsoft's public cloud division increased by 48%, up from 47% in the previous quarter, as it continues to be the fastest-growing segment of its business. Microsoft doesn't disclose revenue from Azure in financial terms, but analysts had expected around 44% growth.

What wasn't expected was the growth in Microsoft Teams. At the start of the pandemic, the company reported 44 million daily active users - a figure disputed by rival firm Slack - but that increased to 75 million a month later as more and more people signed up during lockdown. Just six months later, however, that number has almost doubled to 115 million.

Only video conferencing platform Zoom managed higher numbers, recording 300 million daily active users earlier in the year, though a large number of those will be on its 'free' tier.

"Demand for our cloud offerings drove a strong start to the fiscal year with our commercial cloud revenue generating $15.2 billion, up 31% year over year," said Amy Hood, CTO of Microsoft. "We continue to invest against the significant opportunity ahead of us to drive long-term growth."

Such is the rate of growth in its cloud business, there is a suggestion that Azure might have overtaken Windows. Licensing revenue from Windows device makers declined 5% in the quarter, with licensing revenue for commercial devices tumbling around 22%.

Compared with the 4% decrease in the prior quarter, that is its worst performance in more than five years. 

"Microsoft's earnings call is over, but an analyst on the call just suggested that the company's Azure revenue has overtaken Windows for the first time. That's huge if true. No wonder @satyanadella joked 'Should I call Windows... Azure Edge' earlier this year," The Verge's Tom Warren tweeted

Featured Resources

Virtual desktops and apps for dummies

An easy guide to virtual desktop infrastructure, end-user computing, and more

Download now

The total economic impact of optimising and managing your hybrid multi-cloud

Cost savings and business benefits of accelerating the cloud journey

Download now

A buyer’s guide for cloud-based phone solutions

Finding the right phone system for your modern business

Download now

What’s next for the education sector?

A new learning experience

Download now

Recommended

Getting everyone on board with the corporate vision
Business strategy

Getting everyone on board with the corporate vision

13 May 2021
Basecamp loses a third of its staff over internal freedom of speech row
Policy & legislation

Basecamp loses a third of its staff over internal freedom of speech row

3 May 2021
Microsoft Teams will soon make it easier to switch calls between devices
video conferencing

Microsoft Teams will soon make it easier to switch calls between devices

14 Dec 2020
JetBrains launches collaboration tool targeting software devs
collaboration

JetBrains launches collaboration tool targeting software devs

11 Dec 2020

Most Popular

KPMG offers staff 'four-day fortnight' in hybrid work plans
flexible working

KPMG offers staff 'four-day fortnight' in hybrid work plans

6 May 2021
Hackers use open source Microsoft dev platform to deliver trojans
Security

Hackers use open source Microsoft dev platform to deliver trojans

14 May 2021
How to move Windows 10 from your old hard drive to SSD
operating systems

How to move Windows 10 from your old hard drive to SSD

30 Apr 2021