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<\/p>\nMicrosoft reported $82.9 billion in total revenue from the quarter, up 15 percent year on year ignoring foreign exchange.<\/p>\n
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Microsoft reported growing usage of its artificial intelligence tools while detailing a business model that is evolving beyond per-seat applications and consumption-based cloud infrastructure to an AI-era model combining the two.<\/p>\n
Satya Nadella (pictured), chairman and CEO of the Redmond, Wash.-based technology giant, said that the vendor\u2019s coding business is already user-based and usage-based at scale and described an evaluation-based or outcome-based model where customers pay based on value created by AI agents working with users or on their behalf\u2014a model members of Microsoft\u2019s 500,000-member partner ecosystem are also exploring with customers.<\/p>\n
\u201cWhether it\u2019s customer service, whether it\u2019s individual productivity, team productivity, a business process, some cost per [user] is either decreasing because of the use of agents, or some revenue is increasing because of agents\u2014because it was able to compress these workflows,\u201d Nadella said Wednesday during the vendor\u2019s quarterly earnings call, covering its third fiscal quarter for the three months ended March 31.<\/p>\n
[RELATED: Microsoft Partner Chief Nicole Dezen Details E7, Agent 365 Push<\/a>]<\/p>\n Microsoft Q3 Earnings Highlights<\/p>\n Microsoft CFO Amy Hood said on the call that the vendor\u2019s bookings measure is also changing to have per-seat licenses and a meter like the Azure cloud business.<\/p>\n \u201cYou\u2019ll just bill for usage,\u201d Hood said on Wednesday\u2019s call. \u201cIf that usage has great value to customers \u2026 then you\u2019ll keep spinning [the meter], and they\u2019ll keep using those agents if they\u2019re adding direct value or growth to your business.\u201d<\/p>\n As an example of Microsoft\u2019s Copilot AI assistant reaching a habitual level of use with customers, Nadella said that the AI tool has reached the same level of weekly engagement as Microsoft\u2019s Outlook email application.<\/p>\n \u201cWe are at the beginning of one of the most consequential platform shifts that will change the entire tech stack as agents proliferate and become the dominant workload,\u201d Nadella said. \u201cThis will drive TAM [total addressable market] expansion and change the value creation equation across the entire economy.\u201d<\/p>\n Microsoft Eyes Usage-Based, Outcome-Based AI Pricing<\/p>\n Nearly 60 percent of Microsoft customer service customers are already purchasing usage-based credits, Nadella said on the call. The Microsoft Copilot credit consumptive offer nearly doubled quarter over quarter as customers increasingly extend Copilot with custom agents tailored to their workflows.<\/p>\n Microsoft is also moving GitHub Copilot to a usage-based pricing model to align pricing to actual usage and costs, Nadella said. That starts June 1.<\/p>\n The CEO looks at seat-based pricing as an entitlement to some consumption with some base usage rights bundled in. Beyond a certain level of consumption, users can see overages into pure consumption pricing. Long-term commitments to consumption can come with discounting.<\/p>\n Customers will evaluate where token value results in outcomes and then refine their budgets. IT budgets in the AI era could see reallocation from operating expenditures and other line items on customer income statements, the CEO said.<\/p>\n Compared with Microsoft\u2019s business model transition in the consumption-focused cloud era, the vendor\u2019s AI margins have actually been better, Hood said.<\/p>\n \u201cWhat we\u2019ve been really focused on is making sure that the business models reflect how these applications are both getting built and the value that they\u2019re bringing,\u201d the CFO said.<\/p>\n Nadella Details Copilot, GitHub, Agent Adoption Milestones<\/p>\n Microsoft\u2019s CEO provided his regular updates on usage across a variety of Microsoft products and services.<\/p>\n Microsoft Foundry, the unified Azure Platform-as-a-Service offering, saw the following.<\/p>\n More than 10,000 customers now use more than one model on the platform In agents and Copilot:<\/p>\n Nearly 90 percent of the Fortune 500 now have active agents built with Microsoft\u2019s low- code, no-code tools In security and devices:<\/p>\n The number of Security Copilot customers doubled year over year In database and AI context:<\/p>\n Azure Cosmos DB saw 50 percent revenue growth year over year driven by AI app workloads \u201cOur North Star remains the same\u2014giving customer value with highest-quality and top-class innovation,\u201d Nadella said. \u201cThis is what gives me confidence in our ability to shape the next phase of growth for our company and our customers.\u201d<\/p>\n Nadella On OpenAI Partnership, Microsoft\u2019s AI Advantage<\/p>\n
\n 5,000 customers use open-source models
\n The number of customers that have used Anthropic and OpenAI models doubled quarter over quarter
\n More than 300 customers are on track to process more than 1 trillion tokens on Foundry this year, accelerating 30 percent quarter over quarter<\/p>\n
\n Tens of thousands of companies are already managing tens of millions of agents in Agent 365
\n Microsoft 365 Copilot seat adds more than doubled year over year, representing its fastest growth since launch
\n Microsoft now has more than 20 million Microsoft 365 Copilot paid seats
\n The number of customers with more than 50,000 seats quadrupled year over year
\n Monthly active usage of first-party Microsoft agents grew sixfold year to date
\n Copilot queries per user grew nearly 20 percent quarter over quarter
\n Nearly 140,000 organizations now use GitHub Copilot, and enterprise subscribers nearly tripled year over year
\n GitHub Copilot\u2019s command line interface (CLI) usage nearly doubled month over month<\/p>\n
\n Data security triage agents handled more than 2 million unique alerts in the quarter
\n Microsoft Purview has audited 35 billion Copilot interactions to date, up sevenfold year over year
\n Monthly active Windows devices surpassed 1.6 billion<\/p>\n
\n Microsoft now has 35,000 paid customers of the Microsoft Fabric Software-as-a-Service analytics platform, up 60 percent year over year
\n The amount of data in the Microsoft Fabric OneLake data lake increased nearly fourfold year over year
\n More than 15,000 customers now use both Foundry and Fabric, up 60 percent year over year
\n Thousands of enterprises already are accessing context across the Microsoft Fabric, Foundry, Microsoft 365 and security graph that make up Microsoft\u2019s unified IQ layer
\n The system of work behind Work IQ now spans more than 17 exabytes of data, growing 35 percent year over year
\n Each day, Work IQ receives billions of emails, documents and chats; hundreds of millions of Teams meetings; millions of SharePoint sites<\/p>\n