AI is the name of the game at the moment with Satya Nadella stating that their AI business is “on track to surpass an annual revenue run rate of $10 billion next quarter”. He also says it will be the fastest Microsoft business to reach that milestone.

There’s a lot of investment in AI with new datacentres and infrastructure being built all around the world – enough that it has brought the gross Year on Year margin down slightly. According to Nadella, Azure OpenAI usage has more than doubled in the last 6 months.

Productivity & Business Processes

Revenue= $28.3 billion, up 12%

• M365 Commercial cloud revenue up 15%
• Dynamics 365 revenue up 18%

Average Revenue Per User (ARPU) growth (a key metric for SaaS companies) was driven by M365 E5 and M365 Copilot.

Microsoft recently added “Agents” into their AI vocabulary and Nadella says the lineup is:

Copilot > Copilot Studio > Agents > Autonomous Agents

This will be a key focus from Microsoft – particularly, it seems, when competing with Salesforce (who are also all in on Agents).

Intelligent Cloud

Revenue = $24.1 billion, up 20%

This was driven by 33% growth in Azure. There continues to be a rise in the number of $10million+ contracts being signed for Azure as well as an increase in $100million+ contracts.

Earnings call highlights

First of all, “Copilot” was mentioned 71 times and, according to Copilot, “AI” is also mentioned 71 times. There were also 22 uses of “agent” – a new favourite term.

• There are now 39,000+ Azure Arc customers
• Nadella calls out increased use of Cosmos DB and Azure SQL DB Hyperscale in Azure
• Over 16,000 paying Microsoft Fabric customers
• Almost 75% of Enterprises who use Teams also buy Team Premium/Phone/Rooms

All in all, AI is the focus. Whether that’s on Azure, via Copilot, and/or through Agents – any conversation you have with Microsoft through FY25 (and beyond) will have an AI focus to it…so be prepared!