Microsoft Announces Major Overhaul of its Financial Reporting

Microsoft said this week that it will update the way it reports its financial performance each quarter to be more transparent. The change appears to be a response of sorts to increasing pressure from investors, shareholders, and, let’s be clear, people like me who have been sounding the alarm on the company’s lack of transparency for many years.

“To reflect provide increased transparency to investors, we are updating our financial reporting to mirror how the business is operating, how we allocate resources, and where we are headed,” Satya Nadella said during a presentation to financial analysts. “Beginning with FY27 [which started July 1, 2026], we will transition from our current three reporting segments, Productivity and Business Processes, Intelligent Cloud, and More Personal Computing, to two segments: Agents and Infra and Devices and Consumer. 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.”

Agents and Infra is a terrible name for most of Microsoft’s businesses. It will encompass everything that is reported as part of Productivity and Business Processes and Intelligent Cloud today, two business units that accounted for 84 percent of all the companies revenues–or, $69.7 billion–in the most recent quarter. Azure, Microsoft 365 Cloud, Productivity and server licensing, Industry solutions (Dynamics, LinkedIn, and Healthcare), and Frontier and support services are all included in this segment.

Devices and Consumer is basically just a rebranded More Personal Computing; this business segment includes “search and advertising, XBOX, and Windows and OEM devices,” as Microsoft ordered those businesses in the announcement. In the most recent quarter, More Personal Computing delivered just 16 percent of Microsoft’s total revenues, or $13.2 billion.

Additionally, Microsoft will finally begin providing quarterly revenue numbers–hard numbers, as I call them–for Azure. This comes “after years of criticism from Wall Street regarding a lack of information about the company’s most important growth engine,” Bloomberg reports, though I don’t recall anyone seriously criticizing this issue for any amount of time besides me. The quarterly earnings calls with financial analysts are always a circle-jerk of softball questions answered poorly to much applause and congratulations.

In any event, in the most recent quarter, Azure generated $29.4 billion in revenues, Microsoft now says, and about $100 billion in the full fiscal year, up from $75 billion in the previous year. But it declined to comment on profitability, of course. And it isn’t being more transparent about revenues for any other businesses, nor is it opening up about its true spending on AI.

Of course, one of the problems with this change is that it makes it impossible to perform accurate financial performance comparisons with the past. Microsoft has restated its fiscal year 2025 and 2026 financial reports to match the new reporting scheme in accordance with its regulatory minimums, but that’s the end of that.

Whatever. I’ll take this is the minor victory that it is.