Microsoft absolutely clobbered its third-quarter earnings, beating expectations on every level from revenues to profits and even cloud growth. All three of Microsoft's major business units posted double-digit growth with two posting more than $10 billion in revenue for the quarter (and the last one coming in just below the $10 billion mark).
Even the margin-bears — those who said Microsoft's cloud was 'hugely unprofitable' and would drag down overall profitability — don't have much to find fault with this quarter. The company's gross margin was a healthy 67%, up from 1% from the year-ago-quarter.
And yet, if you had to quickly name a successful Microsoft product released since Satya Nadella took over as CEO five years ago, could you?
There's definitely one. It's called Enterprise Mobility. This is cloud software that helps organizations secure and track their mobile devices. It competes with products from VMware, Blackberry, MobileIron, among others.
On Wednesday, Microsoft said that Enterprise Mobility's installed base grew over 53% to more than 100 million seats. That means that companies are paying Microsoft to use this software on 100 million devices.
The product was launched with fanfare in 2014, right after Nadella took over as CEO, and a year later it was growing so fast that Microsoft executives hailed it as a potential new $1 billion business. Microsoft hasn't released revenue numbers and this cloud software is often bundled into larger enterprise contracts with volume discounts applied. So we don't know how much money Microsoft actually brings in each year per seat. In fact, this product is part of a bundle called Microsoft 365, which also includes Office 365 and Windows 10.
Microsoft's advertised price for Enterprise Mobility as a standalone service is $8.74 per user/month for a simple version, or $14.80 per user/month, for a version with more features. If you just use those numbers, Enterprise Mobility could be a billion dollar business right now.
To be fair, under Nadella many new versions of Microsoft products have been launched, most famously Windows 10. Still, for the most part, Microsoft's blockbuster products have been around since long before he took over as CEO, including its cloud, Azure (although he ran the cloud unit before becoming CEO); its biggest cloud software, Office 365; even its Salesforce competitor which compelled him to buy LinkedIn, Dynamics 365.
While Microsoft named Enterprise Mobility as a highlight of Microsoft's cloud growth this quarter, it wasn't the only one. Azure revenue grew 73% overall, it said.
