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Microsoft changes its reporting structure

Microsoft said it will disclose Azure revenue on a quarterly basis for the first time, in a move designed to give investors a clearer view of its cloud business. The decision was announced alongside a broader overhaul of the company’s financial reporting structure, which will reduce its business units from three segments to two.

The old structure, used since 2015, will be replaced by two main divisions: Agents and Infra and Devices and Consumer. Under the new classification, Azure, Microsoft 365 cloud products, productivity and server licenses, industry solutions and support services will be grouped together. Search and advertising, Xbox, device sales and Windows licenses sold to device makers will be tracked in the Devices and Consumer segment.

How has Azure been redefined?

Microsoft is excluding some items from the Azure category in order to present it as a narrower, consumption-based infrastructure platform. As a result, GitHub cloud services, developer cloud services, Security Copilot, and cloud products focused on health care and life sciences will no longer be included in Azure revenue.

  • Under the previous method, Azure growth was reported over time together with some GitHub and Nuance Communications revenue.
  • Under the new method, Azure will be tracked as a more pure infrastructure and platform business.

What Azure growth and the new targets show

According to Microsoft’s updated presentation, Azure revenue for the June quarter was $29.42 billion under the new definition. That figure represented 42% growth year over year, compared with 43% growth under the previous “Azure and other cloud services” measure. In the latest quarter, Azure accounted for about 33% of Microsoft’s total revenue.

Management expects Azure revenue to rise by 44% to 45% in constant currency in the fiscal first quarter. In July, the company had forecast 45% growth under the old metric. On a segment basis, Microsoft expects revenue of $75.15 billion to $75.75 billion for Agents and Infra, and $14.7 billion to $15.2 billion for Devices and Consumer.

  • The company left its total revenue outlook unchanged.
  • Its forecast for cost of sales and operating expenses also remained the same.
  • Microsoft will also publish two years of restated financial results and updated guidance.

AI demand is putting the spotlight on Azure

The change comes at a time when artificial intelligence spending is flowing toward the largest cloud providers. Until now, Microsoft had only disclosed Azure’s annual growth rate, and it began providing actual sales figures on an annual basis only last year. Amazon has separately reported revenue for AWS, its market-leading cloud unit, since 2015, while Alphabet has broken out Google Cloud revenue since 2020.

Momentum in Azure is being driven by demand for artificial intelligence. Stifel analysts estimated in July that about half of Azure’s revenue growth in fiscal 2026 would come from OpenAI, and Microsoft’s cloud infrastructure is also said to be becoming increasingly important to Anthropic. The new reporting structure will give investors a more transparent view of both that AI-driven effect and the indirect contribution of products such as Microsoft 365 Copilot and GitHub Copilot.

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