Microsoft announced its Q4 2020 earnings last week, completing the fiscal year with $38 billion in revenue for the last quarter. The strong earnings were partly due to gains from Windows, gaming, and Surface hardware. Additionally, the company also boasted that the commercial cloud porting of the larger Productivity and Business Process division “surpassed $50 billion in annual revenue”.
While the firm does not provide a further break-up of the performance of each of its offerings, a new report by ZDNet’s Mary Jo Foley suggests that the Microsoft 365 productivity service contributed to $20 billion in revenue of the total $143 billion for FY20. The information was reportedly divulged by CFO Amy Hood during an internal ‘Ready’ conference, which was shared with Foley by an attendee.
The commercial cloud business includes Azure, Office 365 and its related offerings such as Exchange Online, SharePoint Online, and more, Dynamics 365 Cloud services, Enterprise Mobility and Security Suite (EMS), and more. The Microsoft 365 suite that includes Windows, Office 365, and EMS contributed to $20 billion – a supposed 50% increase over last year’s $13.2 billion. Additionally, the demand for the top-tier E5 SKU of the Office 365 (Microsoft 365 E5) suite doubled in FY20, raking in $7.5 billion in revenue.
The Dynamics 365 offering - which likely includes both on-premises and cloud versions – contributed $2.2 billion in revenue, up from $1.6 billion last year. Lastly, Azure also saw a 59% increase quarter-over-quarter in Q4, apparently reaching a 60% growth target, the base for which was unknown. Foley reached out to Microsoft to clarify if all of Microsoft 365 revenues are calculated under the commercial cloud section. However, the Redmond firm has not responded yet.
It is interesting to see the demand for the top-tier E5 subscription doubling in the last year. E5 provides advanced security features such as Advanced Thread Protection (Plan 2) and compliance management features, which could have been preferred by enterprises owing to the pandemic and increased remote working scenarios.