Microsoft Office commercial cloud revenue tops licensing

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Satya Nadella, Microsoft CEO

Microsoft’s collection of cloud apps for businesses have hit a new milestone. They now bring in more revenue than licenses for desktop Office apps and on-premises servers like Exchange.

“For the first time, Office 365 Commercial revenue surpassed revenue from our traditional licensing business,” Microsoft chief financial officer Amy Hood said Thursday on the earnings call for the fourth quarter of the company’s 2017 fiscal year.

The figure applies only to the quarter and does not include revenue for consumer subscriptions to Office 365, a spokeswoman told CNBC in an email.

In the quarter Office 365 commercial revenue grew 43 percent, according to Microsoft’s earnings report. That growth contributed partly to Microsoft’s annualized commercial cloud revenue run rate, which hit $18.9 billion.

“I feel very good,” Hood said, about meeting the goal Microsoft set two years ago to reach $20 billion in annualized commercial cloud revenue run rate.

Microsoft introduced Office 365 in 2010. Today commercial customers can get access to apps like Outlook, Word, Excel, PowerPoint, OneNote, and OneDrive. With certain subscription plans Exchange, SharePoint, Skype for Business, Microsoft Teams, Yammer and other apps are available.