Microsoft has released its quarterly results, exceeding expectations across much of its portfolio.
However, its recent layoffs had somewhat tempered these expectations beforehand.
Overall, Q2 revenues rose by two percent year-over-year, reaching $52.7BN.
Much of this growth stems from Azure cloud, which saw sales rise by 31 percent (YoY) last quarter.
A significant positive within this is that Azure ML revenue alone increased by over 100 percent for the fifth quarter in a row.
Nevertheless, the challenging economic backdrop has seemingly played a part in stalling its momentum in the enterprise communications, CRM, and data & analytics markets.
This trend had a significant influence on the following top CX takeaways, which cover the earnings results and the accompanying call with investors.
1. Dynamics 365 Growth Slows as CRM Take-Up Stutters
Dynamics 365 revenue continued to decelerate in Q2, growing by 21 percent. Compare this to the 45 percent growth rate recorded 12 months ago, and the difference is stark.
The downward trend may have surprised some, particularly after Microsoft launched a fully-fledged CCaaS platform last August, building on its Dynamics 365 for Customer Service solution.
However, some analysts have criticized the platform, most notably for its complexity.
As such, it may not have given the Dynamics portfolio the lift Microsoft had hoped for.
Moreover, its Microsoft Dynamics CRM is not disrupting the market dominance of Salesforce. Again, this may have limited the growth of its Dynamics 365 portfolio.
Indeed, Salesforce still outsells Microsoft by almost 4:1 in CRM, according to IDC research published in November 2022.
With that said, there remains immense potential for Microsoft in both markets, thanks to its terrifically broad ecosystem.
Yet, tying all this together into a compelling CX proposition will be a marathon, not a sprint.
2. The Native Calling Capabilities With Microsoft Teams Remain Unappealing for Many
Microsoft Teams now has 280 million monthly active users, up from the 270 million it announced 12 months ago. This represents a 3.6 percent YoY growth for the UCaaS platform.
As businesses have settled into their hybrid work routines, the growth is still strong as Teams continues to show durable momentum.
Nevertheless, the percentage of customers choosing to take up the native calling capabilities remains low – creating a gap in the market for CX players such as RingCentral and 8x8 to exploit.
Indeed, Microsoft only added five million PSTN seats to Teams over the past year, taking the total to approximately 17 million.
Compare this to its overall user base of 280 million, and it seems that only 6.1 percent use the full native voice calling capabilities within the UC platform.
Of course, an inhibitor here is that many new users of Teams may have existing contracts or leases.
