COVID-19 Lifts Microsoft Teams Usage, Boosts Windows Virtual Desktop Demand

Microsoft Teams usage continues to rise sharply as COVID-19 forces millions of people to work from home.

Likewise, new remote work scenarios are lifting demand for Microsoft’s Windows Virtual Desktop, Dynamics 365 and its other cloud services.

More than 75 million workers now use Microsoft Teams, a figure that has nearly doubled since early March. Microsoft revealed the latest figures yesterday with its third quarter earnings report.

During the period ending March 31, Microsoft posted revenues of $35 billion, a 15% year-over-year increase. That beat forecasts of 10% growth. Microsoft’s $10.8 billion profit represented a nearly 11% increase.

Microsoft’s Satya Nadella

“As COVID-19 impacts every aspect of our work in life, we have seen two years’ worth of digital transformation in two months,” said Microsoft CEO Satya Nadella, speaking during the company’s earnings call with analysts. “We are working alongside customers every day to help them stay open for business in a world of remote everything. There is both immediate surge demand and systemic structural changes across all of our solution areas that will define the way we live and work going forward.”

Microsoft Teams usage was already growing steadily before COVID-19 required employees who don’t provide essential services to work at home. During its last earnings report in January, Microsoft counted 20 million Teams users, up from 12 million last summer. By early March, as much of the world economy started to shut down, the user count jumped to 38 million. A week later, Microsoft Teams usage spiked to 44 million.

Having nearly quadrupled since the beginning of this year, Nadella said Microsoft Teams usage was 4.1 billion minutes this month. The number of organizations integrating line-of-business apps from partners with Teams has tripled during the past two months.

Microsoft Teams usage could rise, because the chat and communications tool is included with all commercial SKUs of Office 365. Microsoft reported its latest tally of commercial Office 365 subscriptions is now up to 258 million.

Dynamics 365 and Windows Virtual Desktop Growth

Revenue for Dynamics 365 grew 47% year over year, lifted by demand from companies that quickly needed to shift to remote operations.

“Dynamics 365 is helping thousands of organizations accelerate digital transformation as they remote every part of their operations, from manufacturing, to supply chain management, to sales and customer service,” Nadella said. “[That’s] inclusive of new scenarios like curbside pickup contactless shopping, remote customer assistance and operations.”

The shift to remote work has also increased demand for Windows Virtual Desktop, which Microsoft released last fall. The company didn’t reveal specific figures. But in a webinar today, Microsoft corporate VP Brad Anderson said demand has exceeded the company’s forecasts.

Microsoft’s Brad Anderson

“What we’ve seen with Windows Virtual Desktop is just an explosion in the use way beyond any of our expectations that we had mapped out for our entire fiscal year,” Anderson said.

Headwinds from COVID-19

COVID-19, which has decimated many businesses, has been a mixed bag for the tech industry. AMD, IBM and SAP are among those that have reported weaker revenues or outlooks. Intel, however, which had a strong quarter, issued a weak outlook. Google on Wednesday reported weakness in its core ad-supported search business. But Google Cloud revenue of $2.8 billion was up 52% and YouTube revenue of $4 billion grew 33%.

Overall, Microsoft’s business has fared better than most during the COVID-19 crisis, though the company isn’t entirely immune from headwinds. CFO Amy Hood said transactional business across all of its segments slowed, notably from SMB customers. Also, consulting projects that were put on hold led to weaker enterprise services business. Microsoft’s LinkedIn Talent Solutions business also saw a slowdown in renewals, as a result of the weak job market.

Despite economic worries, Hood said Microsoft will continue to build out its cloud services.

“We will continue to provide increased support to our customers and partners as they navigate the uncertain future ahead, deepening our engagement and adding increased value,” she said.