Microsoft Financial Results: FY22


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Microsoft announced their results for FY22 Q4 and the full year and, as expected, the numbers are big and the percentage increases are (mostly) double digits. For the full year, revenue was $198.3 billion (an increase of 18%) and operating income was $83.4 billion (up 19%).

There were a few different things that negatively impacted the numbers in Q4 including:

  • Exchange rate changes – many of the “constant currency” growth figures are 5 or 6% higher than actual
  • COVID shutdowns in China cost over $300 million of Windows OEM revenue
  • Scaling back in Russia cost $126 million
  • An interesting one this – due to a “strategic realignment of…business groups”, Microsoft spent $113 million on employee severances.

but let’s take a look at some of the highlights for Q4:

FY 22 Q4

  • Revenue for the final 3 months was $51.9 billion, an increase of 12%.
  • Operating income was $20.5 billion, up 8%

Productivity & Business Processes

  • Revenue = $16.6 billion (up 13%)
  • Office 365 Commercial up 15%
  • LinkedIn up 26%
  • Dynamics 365 up 31%

Intelligent Cloud

  • Revenue = $20.9 billion (up 20%)
  • Azure up 40%

Earnings call highlights

  • Cosmos DB grew 100%+ YoY each quarter in FY22
  • 25 million Monthly Active Users (MAU) for Power Platform
  • Office 365 E5 is now 12% of the installed base (up from 8%)
  • Security revenue up 40%
  • Azure Virtual Desktop MAU almost 60% YoY increase
  • Office on-premises down over 30%
  • 25% of Fortune 500 using Viva

All these product areas are doing what Microsoft want them to do. As well as them innovating and creating products in the right areas, it also shows that their sales activities – direct and through partners – are paying off.

They said that E5 was strong both for renewals and new additions and Amy Hood mentioned they’re focusing on deployment and increasing usage of the suite. This makes sense as there are so many components of E5 these days that even customers getting value from E5 – typically via Office, Power BI, and a bit of security/telephony – have got some much more they could be using. I’d expect partners will be incentivized to get their customers utilising more of the E5 suite and it may mean that customers can use it to their advantage to extract concessions, POC funding etc. from partners and/or Microsoft.

On a similar note, Satya Nadella mentioned that Microsoft are now incentivizing their field sales teams to ensure that customer’s Azure bills “come down” through optimization efforts. This is a good thing to see from a cloud vendor and will hopefully lead to some legitimate savings for customers.

Microsoft Digital Contact Center


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Announced at Inspire 2022, the Microsoft Digital Contact Center (MDCC) is the latest in a relatively recent line of “Products that are actually bundles of other products and parts of other bundles” – namely the various “Industry Cloud for…” and the “Intelligent Data Platform”.

The MDCC is comprised of:

  • Dynamics 365
  • Teams
  • Power Platform
  • Nuance

It’s interesting to see Nuance appear in something outside the Cloud for Healthcare…Microsoft clearly had some plans when they made that acquisition! This new offering focuses in all the areas you’d expect such as:

  • Omni-channel engagement
  • Customer self-service
  • AI powered virtual agents
  • Voice & video engagement
  • Biometrics and customer security
  • Analytics
  • AI powered support & knowledge articles

Microsoft look to be using established partners in this areas to deliver solutions based on MDCC, at launch these include:

  • Accenture-Avanade
  • EY
  • HCL
  • Hitachi
  • KPMG
  • PWC
  • Avaya

and more. Check out more information from Microsoft here.

Microsoft Cloud for Sovereignty


A new “Cloud for…” has been announced and this one – Cloud for Sovereignty – is aimed at helping Public Sector organisations make the most of, and thus use more of, the Azure cloud. It does this by offering enhanced capabilities to meet the various rules and regulations around data location and access such as the GDPR.

https://blogs.microsoft.com/blog/2022/07/19/microsoft-cloud-for-sovereignty-the-most-flexible-and-comprehensive-solution-for-digital-sovereignty/

As the image shows, it focuses on 4 key areas:

  • Data Residency
  • Sovereign Controls
  • Governance & Transparency
  • Expertise

Data Residency

A key focus for public sector organisations is the location of data and Microsoft say they will soon be adding the “EU Data Boundary” which will ensure all EU & EFTA customer data is not only stored in the EU but also processed there too.

Sovereign Controls

Microsoft say these new protection and encryption capabilities will span the entire Microsoft cloud from IaaS & PaaS through to SaaS such as M365, D365, and Power Platform.

Governance & Transparency

This will give eligible organisations access to source code and the ability to audit Azure compliance processes.

Expertise

Microsoft position this as a partner-led offering and it seems this is, at least partly, related to the recent cloud licensing changes they announced for “European” cloud providers.

See more about the offering here.

Microsoft Power Automate Pay As You Go


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Microsoft have announced that Power Platform is the latest product to get a Pay As You Go (PAYG) licensing option, following PowerApps and Dataverse.

How does it work?

You link your Power Automate environment to Azure, and different teams/parts of the business can use their own Azure subscriptions to pay for Flows that run.

Pricing

Cloud Flows

$0.60 per cloud flow run

Desktop Flows (Attended)

$.060 per attended desktop flow run

Desktop Flows (Unattended)

$3.00 per unattended flow run

Pricing rules

Charges won’t apply when you’re testing them in the designer or resubmitting failed flows. Also, “child flows” won’t incur additional charges for cloud/attended flows…but both parent and child flows will be charged for unattended flows.

Flow runs triggered by “per user” licensed users won’t incur costs – as long as the usage is within their license terms. However, if they use features outside of their license i.e. if someone licensed with “Power Automate per User” runs an “attended RPA” flow, that will be charged as their license doesn’t cover attended RPA usage.

Conclusion

As with PowerApps, this lowers the barrier of upfront payment which will – Microsoft hope – make more organisations willing to take the plunge into Power Platform. With 25 million Monthly Active Users (MAU) at the moment, it’s doing well but there’s a lot of growth potential out there for sure.

I think organisations should be cautious with how they adopt this model, as I can foresee it becoming difficult to properly monitor and manage costs and usage further down the line.

Check out some of the Microsoft pages here:

Announcement

Set up a PAYG plan

Pricing

PAYG meters

Microsoft Viva Engage


Microsoft have added another member to the Viva family – Microsoft Inspire 2022 saw the announcement of Viva Engage. It’s hard to hear that and not picture Captain Jean Luc Picard isn’t it?!

Built on the existing Yammer Communities app, it’s another way for employees to connect within an organisation and will include “stories” and “storylines” to enable sharing of thoughts, ideas etc. – very “social media-esque”.

https://techcommunity.microsoft.com/t5/yammer-blog/introducing-viva-engage/ba-p/3571377

Viva & Yammer

The Yammer Communities app in Teams will be re-branded “Viva Engage” and all content, networks, customer branding etc. will remain in place. Being licensed for Yammer is a requirement to use Viva Engage so current Yammer users shouldn’t lose anything in this change/rebrand.

Conclusion

This is another step on the journey of making Viva more important to the fabric and wellbeing of organisations – Microsoft clearly want Viva to be integral to the smooth operation of the business/employee relationship. Viva is going to be a core pillar of Microsoft’s business within a few years, bringing HR and employee satisfaction parts of a customer into Microsoft’s world too.

It also further the positioning of Teams as the central point for business communication and the focal point for each user’s day.

See the Microsoft announcement here.

Microsoft Product Terms June 2022


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Some new M365 F5 Security bundles made available – further expanding what’s possible for protecting frontline workers.

Microsoft Sustainability Manager added. This is what we’ve been calling Microsoft Cloud for Sustainability…it seems that will be now an umbrella term and Sustainability Manager will come under that.

Clarification that the SQL Server Enterprise SA benefit of running Power BI Server applies in a fail over OSE too

Tidying up of various clauses and terms.

No mention of the major changes they announced for cloud BYOL rules around Windows Server, Windows desktop, and Office.

Microsoft Entra – another security bundle


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Microsoft have announced, yet another, security bundle – this time we welcome Microsoft Entra. This newest addition covers three areas:

  • Azure Active Directory
  • Cloud Infrastructure Entitlement Management (CIEM)
  • Decentralised Identity

Their aim is to “serve as a trust fabric for theĀ entireĀ digital ecosystem” – Microsoft really looking ahead to the future and setting themselves up to be a big part of that once again.

Cloud Infrastructure Entitlement Management (CIEM)

The product is Microsoft Entra Permissions Management – built on the CloudKnox acquisition from 2021. It does things such as “help detect, right-size, and monitor unused and excessive permissions” and enforces the principle of least privilege across Azure, AWS, and GCP. It will integrate with the Defender for Cloud dashboard too.

This will be a standalone product available from July 2022.

Decentralised Identity

The product here is Microsoft Entra Verified ID, which aims to make “portable, self-owned identity possible” and to give more control over what information is shared and also it taking back that data.

This will be a standalone product available from August 2022.

https://www.microsoft.com/en-us/security/business/microsoft-entra

Security is a huge focus for governments, organisations, and individuals right now and, as more things become more digital, it will only continue to be so. Creating a safe and secure platform for digital interaction – both B2B & B2C – is a great business move from Redmond but may well also serve to help the “digital revolution” to carry on and succeed.

However, for those of us who must navigate Microsoft’s products and licensing – this only serves to confuse matters! We have Priva, Purview, and now Entra…what’s next?

Further Reading

Microsoft Entra page

Microsoft Entra announcement

Windows 365 new features


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Microsoft have announced a range of new features for Windows 365 that all serve to make it a more interesting and robust offering. The 2 that most interest me are:

Windows 365 Boot

Enabled by a local install of Windows 11, this features enables users to boot straight into their cloud pc instance from login. Microsoft use the example of a shared device where each user’s login takes them to their personalised Windows 365 device.

Windows 365 Offline

Pretty much the biggest issue with any cloud based service is “what about when I haven’t got internet?” such as when working on a train or simply a dodgy internet connection. With this upcoming feature, users can work offline and then changes will sync with the cloud once connectivity is regained.

I’m still not totally convinced by Windows 365 – particularly due to its cost – but these additions definitely help its case.

Resources

Microsoft announcement

Microsoft non-profit price increases – 2022


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Microsoft have announced a set of price increases for the non-profit sector from September 1, 2022. The pricing is as follows:

ProductCurrent priceNew price (Sept 22)
Office 365 E1$2.00$2.50
Office 365 E3$4.50$5.75
Office 365 E5$14.00$15.20
Microsoft 365 E3$8.00$9.00
Microsoft 365 Business Premium$5.00$5.50

Microsoft call out that these price increases can be used to drive adoption of Microsoft 365 E5 – which, just as with the commercial SKUs, doesn’t have a price increase planned.

Other changes

April 2022 also saw the end of Microsoft’s free grants for on-premises software – although non-profits in areas where Azure isn’t available can still get grants for Windows Server & SQL Server.

Microsoft are now making grants of 50 Windows Pro licenses available to non-profits, with additional discounted licenses being available

Resources

Microsoft page re: price increase

Microsoft page re: other changes

Microsoft Product Terms – February 2022


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Another relatively quiet month in Feb 22 but there are a couple of things to note:

  • Microsoft have added a number of education and government SKUs to the eligible SKUs for a range of add-on licenses. This includes Office 365 A1 being an eligible pre-requisite for Business Voice and bringing the Privacy Management SKUs to government.
  • The Azure “Hosting Exception” is now called the “Azure Customer Solution”
  • Terms have been added for the Microsoft Cloud for Retail offering – see more details in this post here.
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