Microsoft announced changes to its financial reporting structure. As outlined in an investor briefing last week, the company will report Azure revenue on a quarterly basis starting in the new fiscal year, splitting the divisions into two segments instead of the previous three: Agents & Infrastructure and Devices & Consumer.
In addition to Azure, the Reseller and Infrastructure segment includes Microsoft 365 cloud products, office and server licenses, industry solutions and edge services and support, and enterprise artificial intelligence products. The Devices and Consumer segment includes PC makers’ Windows licensing, device, Xbox, search engine and advertising revenue. “There is no doubt that artificial intelligence represents a profound transformation in technology and business. CEO Satya Nadella said. — It’s changing the way we create and work, blurring the lines between our products, and reshaping our business models. “
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In addition, Microsoft has also narrowed the scope of Azure, excluding GitHub cloud services, developer cloud services, Security Copilot Assistant, and healthcare and life sciences cloud products from the report. “As part of this reporting framework, Azure becomes more of a business where we provide consumption-based platforms and infrastructure,” Nadella pointed out in his speech.
Previously, Microsoft reported Azure’s growth rate but did not disclose sales. The reporting changes will allow direct comparisons of its cloud platform’s results with the performance of computing market rivals Amazon and Google (owned by Alphabet). However, Amazon has been reporting AWS revenue separately since 2015. Alphabet has been doing the same thing with Google Cloud since 2020, although that number also includes the Workspace service. Microsoft will also provide revised two-year financial performance and adjusted guidance, but will no longer report costs and operating income separately for the three traditional segments.
During the presentation, the company also reported Azure’s most recent quarter and fiscal 2026 results, which ended on June 30. The segment’s revenue was $29.42 billion, up 42% from the same period last year (up 43% on a traditional basis). For the entire fiscal year 2026, Azure revenue was $101.94 billion. That means Azure accounts for almost a third of Microsoft’s total revenue. as mentioned before ReutersThe figures put Microsoft behind Amazon, which had $42.2 billion in cloud services revenue in its most recent quarter, but ahead of Google, which had $24.8 billion in cloud services sales in its most recent quarter.
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The new reporting structure specifically demonstrates how large Azure is as a cloud platform itself. This becomes even more important as cloud infrastructure plays a central role in artificial intelligence. Stifel analysts previously estimated that about half of Azure’s revenue growth in fiscal 2026 will come from OpenAI, while Anthropic becomes more dependent on Microsoft’s cloud. CNBC.
Microsoft expects this quarter’s revenue to grow 44-45%. In July, the company predicted 45% growth for Azure and other cloud services. Microsoft expects agency and infrastructure revenue of $75.1 billion to $75.75 billion, and equipment and consumer products revenue of $14.7 billion to $15.2 billion. Total revenue, cost of sales and operating expense forecasts remain unchanged. The company said that starting in 2027, investors will have “comprehensive quarterly revenue transparency across all major businesses.”
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