Microsoft Stops Counting Copilot Seats: Credit Users Up 75% in FY27 Q1

Microsoft reported results for the quarter to 30 September 2026 on 28 October, and the most interesting number in the Copilot section was the one that was missing. After announcing over 30 million paid Microsoft 365 Copilot seats in July, the company gave no updated seat count. CFO Amy Hood said so directly on the earnings call. What Microsoft offered instead was a consumption metric: Copilot customers "actively consuming credits through usage-based billing grew over 75 percent over the quarter." For anyone tracking whether enterprise AI is being paid for, that is a change of yardstick worth noticing.

What happened

The headline results were strong. Revenue was $92.3 billion, up 19%, and Microsoft 365 commercial cloud revenue rose 17% on a reported basis (18% in constant currency), according to the FY27 Q1 press release. Microsoft also recast its reporting into two segments; the new "Agents and Infra" segment brought in $76.8 billion, up 25%.

On Copilot specifically, Satya Nadella and Hood swapped seat totals for a set of usage and mix indicators:

• Customers with more than 50,000 Copilot seats increased more than eightfold year over year. No baseline was given.
• Daily users were "up nearly 50 percent quarter over quarter, and over 5X year over year." Again, no absolute number.
• Customers paying for Copilot credits through usage-based billing grew more than 75% in the quarter.
• Hood said the E7 suite, which Nadella described as bringing together Copilot, E5, Entra and Agent 365, "has already reached millions of paid seats."
• Agent 365 has more than 50 million agents in its registry, up over 30% quarter over quarter, and customers have used Purview to audit more than 7.6 billion agent activities.

Office 365 for IT Pros, which tracks these disclosures closely, noted the absence of a seat number and that overall commercial seats grew only 5%. Volkswagen's plan to put Copilot in front of more than 330,000 employees was the named-customer highlight.

The numbers

Why it matters

Nadella framed the shift explicitly on the call: the business model is "expanding from per-seat subscriptions to include consumption," with IT typically funding the subscription and business units funding the consumption on top. That is the same move Salesforce and ServiceNow are making, and it is the pattern I wrote about in the 2026 SaaS repricing: seats are a ceiling, credits are not.

The detail that deserves more attention is where that consumption is coming from. Hood said Microsoft's usage-based offerings are "primarily GitHub Copilot," and credited stronger GitHub Copilot adoption for Microsoft 365 commercial cloud beating expectations. Nadella said agent-generated pull requests on GitHub had grown sixfold in six months and that agents now open more than a third of all PRs on the platform. Asked about consumption-driven Copilot growth beyond developers, Hood said it "will be a slower move outside of coding."

So the strongest evidence of paid, metered AI demand inside the world's largest productivity suite is software engineers' agents opening pull requests. Office workers are still mostly on a flat seat, and Microsoft has stopped telling us how many of those seats there are.

What sceptics say

The generous reading is that seat counts are simply the wrong metric for agents, and that Microsoft is guiding investors to the metric that will matter. Hood also said Copilot revenue growth accelerated quarter over quarter, which would be an odd thing to say if seats were shrinking.

The less generous reading is that every Copilot number on the call was a growth rate without a base. "Over 8x" more customers with 50,000 seats is consistent with a base of a handful growing to a few dozen; we are not told. "Over 75%" growth in credit-paying customers says nothing about how much they spend. Companies tend to stop reporting a number when it stops flattering them, and UC Today has since noted that Microsoft stopped publishing a seat count it had reported for three quarters. Against calendar-year capex that Hood put at approximately $170 billion on the call, the revenue that is directly attributable to Copilot is still something investors have to infer.

My own read, as opinion: both things are true. The usage curve for coding agents is real and visible in public GitHub data. The office-worker Copilot story is still mostly a licensing story, and "millions of E7 seats" is partly a bundling decision rather than a demand signal.

What it means for engineering and DevOps teams

If your organisation is on Microsoft 365, the practical change is that Copilot spend is becoming two lines on the bill: a predictable seat line owned by IT and a variable credit line owned by whoever turns on agents. That second line behaves like cloud spend, not like a licence, and it needs the same treatment.

• Tag and budget credit consumption by team. The FinOps for AI playbook applies: allocate, set budgets, alert on anomalies. Do this before business units discover that agents run all night.
• Watch GitHub Copilot usage first. If Microsoft's own numbers are right, coding agents are where metered spend is growing fastest. Agent-opened PRs also add review load, which I covered in CI/CD when agents open the pull requests.
• Inventory agents. A registry with 50 million entries means a lot of agents nobody remembers creating. Whatever tool you use, know which agents exist, who owns them and what identity they run as.
• Renegotiate with the new model in mind. If the vendor is moving to consumption, ask for committed-use discounts and hard caps, the same way you would for a cloud provider.

FAQ

How many paid Microsoft 365 Copilot seats are there?

Microsoft's last disclosed figure was over 30 million paid seats, announced with fiscal fourth-quarter results in July 2026. In the 28 October 2026 earnings call, Amy Hood said Microsoft did not give an update this quarter and pointed to revenue and usage metrics instead.

What is Copilot usage-based billing?

It is a consumption model where customers buy credits that agents and advanced Copilot features draw down, on top of or instead of a flat per-user licence. Microsoft says the number of customers consuming credits grew more than 75% in the September quarter, and that most usage-based revenue so far comes from GitHub Copilot.

What is Microsoft 365 E7?

E7 is a suite that, per Nadella, bundles Microsoft 365 Copilot, E5, Entra and Agent 365. Microsoft says it has reached millions of paid seats and thousands of customers.

Related: Seats Are Dying. What the 2026 SaaS Repricing Looks Like From the Compute Layer, Usage-Based Billing in 2026: Stripe Bought Metronome, Adyen Bought Orb and FinOps for AI in 2026.