Microsoft’s Office 365 commercial monthly active users number is now at 120 million, up from 100 million in April 2017, said officials during the company’s earnings report on October 26.
(Microsoft’s Office 365 consumer active user number is at 28 million for Q1 FY 2018, which is up from 27 million in Q4 FY 2017.)
As of last quarter, Microsoft officials said that Microsoft is generating more revenue from Office 365 Commercial subscriptions than Office sold via non-subscription licensing. That is still true as of this quarter, Microsoft officials said.
Microsoft officials said recently that the company expects to have two-thirds of its Office business customers in the cloud by some time in its fiscal 2019 (which kicks off on July 1, 2018).
Office 365 is believed to be providing the biggest contribution to Microsoft’s “commercial cloud,” its collection of several of its business cloud services, including Azure, Dynamics 365, Power BI and Enterprise Security + Mobility, along with Office 365. (Microsoft won’t break out any of these product lines separately.) This quarter, Microsoft realized its $20 billion annual run rate for its commercial cloud, a couple of months ahead of its original schedule, established two years ago.
LinkedIn, which Microsoft acquired last year, is not included as part of Microsoft’s “commercial cloud” bucket, but officials mentioned repeatedly during the company’s analyst call its positive growth and contribution to the company’s overall earnings.
For its first fiscal quarter in 2018, LinkedIn lost less money ($294 million) than it did in recent quarters. On revenues of $1.1 billion for the quarter, Microsoft execs said they’re “ahead of plan” with LinkedIn and are seeing record levels of growth and engagement for the platform. Microsoft has realized some of its planned integrations between Microsoft and LinkedIn services in the nine months since the LinkedIn acquisition closed, but not all of the ones outlined last year.
While most of Wall Street’s eyes are trained on the cloud, Microsoft’s “More Personal Computing” segment (Windows and hardware) is still contributing a sizable chunk of the company’s revenue.
Microsoft officials said this quarter is the last where the company would be dragged down by its gradual shut down of its Windows Phone business (phone revenue was down another $315 for this quarter).
Officials said to expect the Surface business to continue to be strong, as it was this quarter. Surface revenues were up $113 million compared to the year-ago quarter, putting the business over $1 billion.Microsoft attributed this growth to Surface Laptop, as this is a brand new hardware category for Microsoft and all sales are net-new (as opposed to Surface Pro, which is already an established product line for the company). Microsoft doesn’t disclose its Surface net income, so it’s not possible to know if this business is profitable.