“Four years since our acquisition, GitHub is now at $1 billion in annual recurring revenue,” reported Microsoft CEO Satya Nadella yesterday, speaking to analysts on an earnings conference call. He added that “more than 90 million people now use the service to build software for any cloud and any platform, up 3 times.” Microsoft’s acquisition of GitHub was completed on Oct 26th 2018.
An unknown, but substantial, proportion of the 90 million pay nothing for the service. GitHub’s free offer is generous, especially for open-source projects; and even closed-source developers can have unlimited repositories and 2000 CI/CD (continuous integration/delivery) minutes a month.
Since the acquisition though, GitHub has come up with premium features including Codespaces, cloud developer environments hosted on Azure, billed pay-as-you-go; and Copilot, an AI code suggestion service which costs $10 per month or $100 per year when billed annually. It also has paid plans for Team and Enterprise users, and a self-hosted option which commands a license.
Over those four years, Microsoft has also integrated GitHub with Visual Studio Code, its mostly open-source development tool used by nearly 75% of developers, ahead of any other IDE, according to the most recent StackOverflow survey. VS Code and its Monaco Editor are a key component of Codespaces, enabling browser-based coding and debugging.
Nadella did not say to what extent GitHub is profitable if treated as a standalone business. GitHub ran at a loss prior to the $7.5 billion acquisition. The likely goal though is to drive developers towards other Microsoft services, such as those offered by the Azure cloud. GitHub works fine with “any cloud and any platform,” as Nadella noted, but Microsoft can at least ensure that Azure gets its fair share of integration features and perhaps a halo effect from GitHub’s huge userbase.
Although Microsoft’s net income was down slightly in the latest quarter, compared to the same quarter in 2021, Azure performed well, with the company reporting that “Azure and other cloud services revenue grew 35%,” while operating income in the “Intelligent Cloud” segment grew by 17% – though the extent to which GitHub drove some of that growth is a matter for speculation.
Reputational impact can also work in reverse; and the top complaint from developers is downtime such as the September 8th incident which caused pull request merge failures over a period of just over 5 hours. The matter of whether reliability has been worse since the acquisition is sometimes debated; it is a slippery subject but although the platform is generally reliable, outages still occur and can have a big impact.
There is also disquiet about the implications of Copilot for open source code and licenses, and how much it is really AI and how much a copy and paste service. A legal battle is possible. The open source advocacy group Software Freedom Conservancy urged developers to give up GitHub earlier this year.
During the analyst conference call, Nadella promised Copilot news at the forthcoming GitHub Universe event, set for November 9th, and said that both Copilot and AI in general is “an area of huge investment” – though carefully avoiding any discussion of ethical or legal issues.