Microsoft is changing how it reports its finances to investors by splitting its businesses into two segments and disclosing quarterly revenue for its Azure cloud business for the first time. The changes are meant to reflect the ongoing impact of AI on Microsoft and how the company now operates.
The software giant has previously reported revenue from three segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing. This is now simplifying to two: Agents and Infra, and Devices and Consumer.
Devices and Consumer will include search and advertising revenues from LinkedIn and search advertising, as well as revenue from the Xbox division and Windows OEM and devices. Agents and Infra is essentially the rest of Microsoft, including Azure, Microsoft 365 Cloud, Microsoft 365 commercial and consumer, server products, industry solutions, and the enterprise and partner services that Microsoft now calls frontier and support services.
“There's no question AI represents a profound shift in both technology and business,†says Microsoft CEO Satya Nadella. “It is changing what we build and how we operate, and it is blurring the boundaries between our products and reshaping our business models.â€
The biggest change to this reporting structure will see Microsoft finally disclose how its Azure business is running on a quarterly basis. Microsoft has been providing year-over-year growth rates for its Azure business, reporting its Azure revenue for the first time last year. Azure revenue will no longer include GitHub cloud and other developer cloud services, nor Security Copilot and Healthcare and Life Sciences cloud revenues.
“Under this reporting structure, Azure becomes more purely our consumption-based platform and infrastructure business,†says Nadella. “Within each of these segments, you will have full transparency of quarterly revenue across each of our key businesses, including Azure, M365 Cloud, industry solutions, and ads.â€
Microsoft will start using these new financial reporting changes during its first quarter fiscal 2027 earnings in late October.
