Microsoft Copilot reaches 15 million paid seats, but only 3.3% of users are actually paying

Despite spending billions, only 3.3% of users pay for Microsoft Copilot

Microsoft reports 15 million paid seats despite 450 million free users Microsoft CEO Satya Nadella recently declared its Copilot platform is "becoming a true daily habit," noting growth across AI chats, search, browsing, shopping, and operating system integrations. On paper, Microsoft reports 15 million paid Microsoft 365 Copilot seats, showing 160 percent growth year over year. However The Register reports only 3.3% of Microsoft 365 and Office 365 users who access Copilot Chat actually pay for it. Analyst Mary Jo Foley points out that roughly 450 million commercial Microsoft 365 users have access to Copilot for free, meaning the paid base is comparatively tiny. Nadella emphasized daily habits, claiming "daily active users are up tenfold year over year," with conversations per user doubling. However, the scale of non-paying users undermines the perception of widespread adoption, despite the CEO's statements. Microsoft's investment in AI tools reached $37.5 billion in FY26 Q2, spanning Microsoft 365 Copilot, GitHub Copilot, and other productivity tools. CFO Amy Hood said judging AI spend solely by Azure revenue is misleading, explaining, "I think many investors are doing a very direct correlation between the capex spend and seeing an Azure revenue number." Hood added that a large share of AI capacity is first allocated to Microsoft products before external Azure clients. Nadella reinforced this, telling investors to focus on the long game rather than short-term uptake. These remarks acknowledge the current disconnect between massive AI spending and minimal paid Copilot adoption. Microsoft 365 Copilot launched in late 2023 as a $30-per-user monthly add-on. It integrates AI tools across Word, Excel, PowerPoint, Outlook, and Teams. Copilot acts on behalf of users, searching documents, analyzing meetings, and automating routine workflows. Microsoft claims it boosts productivity, and Lloyds Banking Group estimates it saves staff 46 minutes per day. Despite these claims, paid adoption remains low relative to Microsoft's global user base. Even within Microsoft, there are reports that Copilot's rollout is under review and the company may remove or streamline AI features in Windows 11. Not just Windows 11, the company is reportedly also willing to cut AI features in other apps where usage does not justify the investment. Foley notes the massive free user base further emphasizes how few users pay. Nadella insists Copilot is growing rapidly, yet the figures show the paid footprint is extremely limited. The gap between claimed "true daily habit" usage and actual revenue suggests the long-term payoff for Microsoft's AI investment remains uncertain.

Microsoft Finally Revealed How Many Paying Copilot Customers It Has. The Answer Was Shocking for More Reasons Than One. | The Motley Fool

For years, investors have tried to figure out how many users are actually paying for a product that is at the center of Microsoft's artificial intelligence strategy. For the first time ever, Microsoft (MSFT +3.24%) revealed key metrics for its Copilot artificial intelligence (AI) chatbot and assistant, a critical piece of the large conglomerate's AI strategy and somewhat viewed as a competitor to other chatbots like OpenAI's ChatGPT. Investors have long tried to understand how well Copilot is resonating among customers and whether it can truly be one of the main AI chatbots. Metrics revealed about Copilot were shocking in more ways than one. As described on Microsoft's website, "Copilot is a conversational, AI-powered assistant that helps boost productivity and streamline workflows by offering contextual assistance, automating routine tasks, and analyzing data." Examples of tasks that Copilot can execute include drafting presentations and reports by generating content and suggesting edits and revisions, analyzing data and creating charts, and summarizing email chains and drafting emails. Different Microsoft Copilot plans include different Copilot assistants and capabilities. The free Copilot version gives users access to Microsoft's AI chatbot and the capability to generate AI-powered images. Microsoft 365 Personal provides users with higher usage limits on AI features across Microsoft 365's suite of office products and on the Copilot app, advanced security and up to 1 terabyte of cloud storage for files and photos. Microsoft 365 Premium plan offers higher limits and more app usage than Microsoft 365 Personal. Copilot Studio enables users to build, test, and publish agents, while granting access to generative AI plugins to enhance these agents. On Microsoft's most recent earnings call, management said Microsoft 365 Copilot has 15 million paid Copilot seats, up 160% year over year. Businesses can pay $30 per user per month for Microsoft 365 Copilot. Furthermore, Copilot seems to be resonating deeply with some businesses, as several of Microsoft's customers now have over 35,000 seats using Copilot, including Fiserv, ING, University of Kentucky, University of Manchester, and the U.S. Department of the Interior. Management also said Copilot has seen the average number of conversations per user double year over year and daily active users increase by tenfold. Copilot also has a checkout feature in which Microsoft has partnered with payment and e-commerce sites like Paypal, Shopify, and Stripe, so users can make purchases directly from Copilot. Finally, Microsoft's GitHub Copilot, which is for developers, had 4.7 million paid subscribers, up 75% year over year. While growth may be strong, Copilot adoption is still low among Microsoft's total user base. The 15 million paid Microsoft 365 Copilot users only represent about 3.3% of the company's total 450 million 365 subscribers. The 4.7 million GitHub Copilot paid subscribers only represent about 3.1% of GitHub's total 150 million registered developers. Now, it's of course possible that adoption will simply take more time. However, Microsoft has already invested hundreds of billions in AI-related infrastructure and services, and it doesn't seem close to being a real competitor to some of the bigger chatbots, like OpenAI's ChatGPT, yet. "M365 revs growth is not accelerating due to Copilot, many checks on Copilot don't suggest a strong usage ramp (we plan to refresh our own checks in case we've missed a usage ramp) and the model market appears crowded and capital-intensive," UBS analyst Karl Keirstead wrote in a research note following Microsoft's latest earnings report. "We think Microsoft needs to 'prove' that these are good investments." The market clearly wants more. If you think about the average person, how many of them know about ChatGPT, and how many of them know about Copilot? There is clearly much work to be done to improve Copilot adoption. I still think Microsoft is likely to be one of the main beneficiaries of AI adoption, particularly in its Azure and cloud services business, but Copilot leaves much to be desired right now.