Microsoft CEO: Teams Surges To 115M Daily Users, Helps Power ‘Strong’ Q1

The company also reported Azure revenue growth of 48 percent during its fiscal first quarter 2021.

Microsoft’s Teams collaboration app continued a stunning pace of user growth even beyond the initial shift to remote work and learning earlier this year, helping to bolster an expectations-beating fiscal first quarter for the tech giant.

The total for daily active users of Teams now stands at 115 million, Microsoft CEO Satya Nadella disclosed on Tuesday. That’s an increase of 53 percent from the last time Microsoft shared the figure, in late April, when Teams daily active users had reached 75 million.

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“As companies move online, they also want one unified platform--from meetings to phone systems--which Teams delivers,” Nadella said Tuesday during a quarterly earnings call with analysts.

Teams is “exciting” because it’s “like a shell” for so many key workplace capabilities, he said.

“It’s meetings, it’s chat, it’s collaboration, as well as business process applications--[all] integrated into Teams,” Nadella said.

Along with huge user growth, “we’re also seeing significant growth of usage across all of these modalities inside of Teams,” he said.

Teams has now seen its daily active user base more than triple since March 11, much of it driven by the COVID-19 pandemic and resulting move to working and learning from home.

The boom in Teams usage has created major opportunities for solution providers, said Ric Opal, principal and national GTM and strategic partnerships leader at BDO Digital.

“Teams is a fantastic platform. But when you deploy it and you don’t think about compliance, and you don‘t think about risk, and you don’t think about regulatory impact--then there’s an opportunity to go assess those environments,” Opal said. “For Microsoft partners in general, there are opportunities to go back and look at things that maybe weren’t cared for properly when people raced to get remote--such as governance, compliance, cybersecurity.”

Some customers that are not on Office 365 are also finding it harder to ignore because of Teams. At New York-based solution provider Valiant, some customers that had transitioned to Google’s G Suite are now considering a move back to Office 365, lured by Teams, said Ryan Loughran, service manager at Valiant.

“They want Teams as well, and so we have to evaluate if it’s worth keeping them on Gmail,” Loughran said.

“We always push the Microsoft stack” as the default, he said. “But it’s nice when prospects come to us asking, ‘Are you good with Teams? Because we’re thinking of moving to Sharepoint and Teams.’”

Growth from Office 365 was among the highlights of Microsoft’s fiscal first quarter 2021, ended Sept. 30. Office 365 Commercial revenue grew 21 percent during the quarter--contributing to 11 percent growth in Microsoft’s Productivity and Business Processes segment, which reached $12.32 billion during the fiscal Q1.

Overall, Nadella said the first-quarter results show that Microsoft is “off to a strong start in fiscal 2021, driven by the continued strength of our commercial cloud.”

Microsoft’s quarterly revenue on the whole jumped 12 percent to $37.15 billion, from the same period a year earlier, compared to the $35.72 billion that a consensus of analysts had forecast.

Net income reached $13.89 billion, or $1.82 per diluted share--well above the analyst consensus estimate of $1.54 per diluted share. Net income had been $10.68 billion, or $1.24 per diluted share, during the same period the year before.

The strong quarterly report from Microsoft “definitely reflects what we’re seeing in the marketplace”--including with Microsoft’s Azure cloud platform, said Matt Dierolf, enterprise architect at Blue Bell, Pa.-based Anexinet, No. 212 on CRN’s Solution Provider 500.

Anexinet partners with both Amazon Web Services and Microsoft, “but from what I see, I think Microsoft is definitely gaining ground,” Dierolf said.

Microsoft reported that Azure revenue surged 48 percent during its fiscal first quarter, year over year. The company’s Intelligent Cloud segment was Microsoft’s largest business during the quarter, pulling in revenue of $12.99 billion--up 20 percent from the year before.

When it comes to choosing between Azure and AWS, “the integration with Office 365 and Active Directory through Azure makes things very user friendly compared to AWS,” Dierolf said. “It’s familiar for a lot of people-- they know Microsoft for the most part, they’ve managed it on-premise. If you’re used to that, it’s an easier transition to go right to Azure.”

And Nadella suggested during the call Tuesday that Microsoft is still just getting started with the Azure opportunity--as distributed cloud infrastructure becomes even more essential for modernizing existing applications and creating new ones.

“If you add those up, I think that we are still in early innings,” Nadella said.

Microsoft’s personal computing segment also grew during the company’s fiscal Q1, though more modestly than its other two segments--rising 6 percent from a year earlier, to $11.85 billion.

Windows OEM revenue fell 5 percent, resulting from “lower commercial demand across all customer segments,” as well as strong results from the same quarter last year due to the end of support for Windows 7, Microsoft CFO Amy Hood said during the earnings call.

Still, revenue for Windows Commercial products and cloud services rose 13 percent during the quarter, while revenue for Microsoft’s Surface devices jumped 37 percent.