Microsoft Earnings FY25 Q3 - M365 Highlights
Microsoft posted another blockbuster quarter with $70.1 billion in revenue, and the M365 train continues to roll with 430 million paid seats (up from 400 million). The growth drivers? ARPU is up thanks to E5 and Copilot attach rates, and seat counts are up in SMB and frontline worker SKUs.
Copilot was mentioned 26 times on the call (across all products), but no absolute user numbers were given. When discussing Microsoft 365 Copilot, it was stated, "Hundreds of thousands of customers across geographies and industries now use Copilot, up 3X year-over-year," but no specific numbers were provided.
We didn't get any new Microsoft Teams numbers.
Meanwhile, the EU antitrust saga continues. Microsoft's latest offer to the commission: potentially widening the price gap between M365 and standalone Teams from $5 to $9, holding that line for 7 years, and committing to better interoperability for a decade. We'll see if Brussels accepts or if Microsoft are still potentially in line for an antitrust case.
News from Microsoft Build
Microsoft Build is a developer-focused conference, but we also see some overlap in the Microsoft 365 space, particularly with Copilot. This build was all about Agents. Some highlights:
- Copilot Tuning: Low-code customisation of Copilot using your organisation’s data and workflows via Copilot Studio.
- Multi-Agent Orchestration: Develop and manage collaborative AI agents that delegate tasks among themselves, enhancing complex workflow automation.
- Copilot support for MCP, Model Context Protocol (Public Preview)
- A2A - Agent-to-Agent protocol—an open standard enabling AI agents to communicate and collaborate across different platforms and ecosystems (Public Preview in Teams). Developers can build agents for Teams using the A2A protocol.
- Microsoft discussed “The Open Agentic Web” and proposed NLWeb - a natural language interface for websites that makes them more directly accessible for agents. Enabling the transformation of existing websites or APIs into agentic applications.
MCP (Model Context Protocol) in Copilot has me exctied. MCP is an open standard (originally from Anthropic) for AI agents to connect to and interact with external APIs and services.
What this means for Copilot users:
- Copilot can now connect to third-party tools and services that support MCP
- Actions can be automated across different systems without custom coding
- Developers can wrap existing APIs with MCP to make them Copilot-compatible
Example: Instead of manually pulling data from your CRM, updating a spreadsheet, and sending a Teams message, Copilot could orchestrate all three actions through MCP-enabled connections.
Microsoft Teams Roadmap Highlights
The Network Strength Indicator We've All Been Waiting For
No more "Is it your connection or mine?" debates. Microsoft is adding Real-time network strength indicators for everyone in calls and meetings. Automatic tips will appear for users with poor connections. Coming in August, MC1077865
Collaboration Improvements
- Reply to channel messages and break them into new threads (June 488300)
- Share files in external chats without the OneDrive share a link dance (July 492625)
AI in Teams gets Smarter
- Intelligent Recap will now capture shared screen content - a massive new ability that will improve recaps (July 490052)
- Interactive agents will be able to join calls and meetings in real-time (June 490564)
- Audio summaries let you catch up on meetings during your commute (July MC1073070)
Phone System Updates
- Use Copilot during calls WITHOUT transcription enabled (June MC1068906)
- Call waiting beep (yes, in 2025 Microsoft is adding the beep, I guess someone wanted it) (June MC1075913)
- Teams IP Phone Line key management from Teams Admin Center (July 493320)
- The UK now has three operators for Teams Phone Mobile (BT, Vodafone, VMO2), Power BI comparison report here.
Do you still have some users on Teams 1.0? They will get cut off in July.
If you received message MC1074970, “You are receiving this message because users in your tenant are still using classic Teams,". Make sure they are upgraded. Teams 1.0 will be blocked from the service as of July 1st.
Microsoft Teams Devices News
We are close to InfoComm, and I know there is a lot of Teams device news coming there (look out for some Teams Insider Podcasts). We still had some news this month:
Microsoft Teams Rooms on Android Gets Love: A Big May Update with Speaker Recognition, Facilitator Preview, PTZ Controls, and More. Check out an excellent overview from Graham Walsh (YouTube)
Logitech's Entry Level MTR on Windows Play: An entry-level Teams Room at $2,300. The MeetUp 2 with intelligent RightSight 2 features like Grid View, Speaker View, and Camera Zone; and RightSound 2 pair with Tap, with a 5-meter USB Kit with a 10.1” screen and HDMI ingest and a Lenovo Mini i3 compute,
MAXHUB's MAXHUB XBar 50 has quietly made it to the certified list. There is no new news yet, but I expect to see it and more at InfoComm.