Microsoft is adding ‘commercial’ LinkedIn revenues to its ‘Commercial Cloud’ tally | Industry

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Ever since closed on its acquisition at the end of 2016 and began publicizing the unit's revenues, Redmond has kept those LinkedIn figures separate from the rest of the company's tallies. In many ways, this makes a lot of sense, as is largely treating LinkedIn as a completely separate entity and there's been fairly little integration between LinkedIn and its parent company.

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On September 20, however, Microsoft announced a change in the way it is reporting its numbers. It is now including the “” portion of LinkedIn's business in its Commercial Cloud metrics, and is restating its FY18 numbers to include LinkedIn's commercial business.

What constitutes LinkedIn “commercial”? LinkedIn Recruiter, Sales Navigator, Premium business subscriptions and “other” services targeted at organizations. Marketing services and subscriptions targeted at individual users are not included in the number.

Here's what that looks like for the last four quarters:

linkedinmicrosoftrevenues.jpg

Credit: Microsoft

Microsoft's Commercial Cloud is the company's self-defined bucket of cloud services . The main services that are part of commercial cloud are Azure; Office 365 business services (Exchange Online, SharePoint Online, Skype for Business Online, Microsoft Teams); Dynamics 365; and its Enterprise Mobility + Security Suite (EMS). On-premises products are not included in the total. In 2015, Microsoft officials said they expected Microsoft to hit a $20 billion annual run rate for commercial cloud by 2018. Microsoft already surpassed that prediction.

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In fiscal 2018 (July 1, 2017 to June 30, 2018), Microsoft's commercial cloud revenues were $23.2 billion. With the LinkedIn commercial business added in, that total is $26.6 billion. Gross margins for Microsoft's commercial cloud business in FY18 were 57 percent for the year; with LinkedIn added, they were 58 percent.

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Microsoft also is adding a new metric — LinkedIn revenue growth — to the earnings numbers it has disclosed and will be disclosing moving forward. This number includes both commercial and consumer services.

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