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Office 365 Strengthens Microsoft With Growth In Cloud Revenues!

The most compelling Microsoft productivity suite – Office 365 is noted as a cloud revenues drivers for Microsoft as it takes revenues up to £ 22.37 billion.

As on July 20, this year, Microsoft announced its results for the fiscal year 2016 -2017 which ends on June 30. As many thought, the announced results were really great; specifically for cloud products of Microsoft. There are many people who were quite curious to get these results and here we will tell you what was there in the Microsoft recently released report.

So, the report suggests that Microsoft succeeds in achieving its annual run rate that was £ 14.92 billion for commercial Microsoft cloud products which exceed to £ 22.37 billion over the year ahead.

What 10-K of Microsoft Suggests

To have more insight of what actually is occurring in this matter, we should check into the current 10-K filing of Microsoft. This report suggests that the annual run rate for cloud revenues of Microsoft was noted at £ 14.10 billion. According to Microsoft, the commercial cloud offerings of Microsoft include Office 365, Microsoft Azure, and Dynamics 365 with other properties of the cloud. Though MS office desktop apps and LinkedIn do not include to these cloud commercial products.

Moreover, the company also clarifies their meaning with the cloud commercial annual revenue run rate that comes by multiplying the revenue of the quarter’s last month by twelve. In simple words, the £ 14.10 billion revenue means that the company reserved £ 1.17 billion on cloud commercial revenue in the month of June this year which was the last month of this fiscal year. Just as always, several deals are made in the period as sales personnel strive to meet their quotas, as well as customers, wait till its last moment to finalize deals.

In the later part of Microsoft 10-K, it is suggested that the total cloud commercial revenue of Microsoft was £ 11.11 billion. It is that revenue amount which Microsoft had besides the ARR.

So, the difference between the actual revenue and ARR is something that hopes to observe in the developing market in which sales increase on monthly basis. More significantly, this revenue may increase by around 55% that is £ 4.03 billion over £ 7.08 billion that Microsoft gained on its cloud commercial products in previous FY. With such growth, we can easily see the way Microsoft is reaching to a new ARR that is £ 22.37 billion within 4 quarters and £ 22.37 billion looks to be the actual revenue in short period afterward.

As per the included sectors within the category, the growth of Microsoft Azure revenue is 99% that surpasses the commercial Microsoft Office 365 growth which is 46%. In addition, the revenue of Dynamics 365 rose by 78%; however off a narrower base as compared to Office 365 and Azure.

The Main Question To Consider

At this point, the key question that needs our consideration is that; Microsoft has not given any answer on any of the financial filing that how it has broken down the revenues across various Cloud commercial products like Office 365, Azure, Dynamics 365 and other cloud offerings. So, here, we all are left speculated about what may happen in the future.

Though we are perfectly aware of the fact that Microsoft Office 365 enjoys a user-base for over 100 million active monthly users as said by Microsoft in April this year. As per its performance in last quarter, we can speculate that Microsoft Office 365 is a dynamic product that enjoys around 110 million paying subscribers and thereabouts.

So, a monthly subscription for a business plan of Office 365 ranges from £ 5.97 (E1) to £26.10 for a month (E5). The Kiosk or first-line work plan is priced at £2.98 for a month and it comprises of several add-ons such as MyAnalytics which can be bought to grow the monthly bill.

Thus, the paying subscribers of Office 365 count varies across every quarter. And to make everything simpler, if we expect that if each monthly paying user of Office 365 pays £5.97 every month, then each user would contribute £71.59 in a year. This way, the contribution of only Office 365 subscribers goes up to £7.88 billion in a year. This assumption leaves us to believe that Azure and other cloud products would contribute with £3.24 billion only.

To get more help on Office 365 products and to know more on Microsoft Azure you can email Server Consultancy at [email protected] 

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This post first appeared on Latest IT News - Server Consultancy, please read the originial post: here

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