Microsoft still isn’t disclosing the size of its Azure business, providing only the growth rate for the cloud business and leaving investors guessing how its revenue compares to Amazon and Google
But in its much smaller Dynamics business, which includes software for salespeople, marketers and customer-service agents, Microsoft has suddenly opted for greater transparency.
Dynamics contributed $5.44 billion in revenue in the 2023 fiscal year, which ended June 30, growing 16% year over year, according to the filing, or double the growth rate of Microsoft as a whole. Dynamics expanded faster than any major product or service offering other than Server Products and Cloud Services, a grouping that contains Azure. It now represents 2.5% of Microsoft’s total revenue, up from 2.2% two years ago, the filing said.
“Dynamics surpassed $5 billion in revenue over the past fiscal year with our customer experience, service and finance and supply chain businesses, all surpassing $1 billion in annual sales,” CEO Nadella said.
Microsoft’s principal competitor when it comes to Dynamics is Salesforce, whose business is significantly bigger. Technology industry researcher IDC estimates that Salesforce controlled about 23.8% of the market for customer relationship management applications in 2021, more than any other provider, while Microsoft had 5.3%.
Partly motivated by Microsoft’s AI capabilities, some companies are switching to Dynamics from Salesforce, Dynamics can cost less money, and the underlying technology has improved.
“I’m seeing more requests to integrate into Dynamics, and more of my customers asking me to bring some of the things I have for Salesforce to carry over into Dynamics,” Medina said. “I’ve seen a spike in the last year.” Some of the momentum Outreach is seeing could be because the company began moving upmarket last year to serve larger companies.