Key Points
- Microsoft restructures from three reporting segments to two to reflect AI transformation
- Azure cloud revenue to be disclosed quarterly for the first time at $29.42 billion
- Microsoft 365 Copilot reaches 30 million paid seats up from 20 million in April
Microsoft has announced a major restructuring of its financial reporting, moving from three business segments to two and disclosing Azure cloud revenue on a quarterly basis for the first time, as artificial intelligence reshapes how the company operates and generates revenue.
The Redmond-headquartered company will now report under two segments: Agents and Infra, and Devices and Consumer. The previous structure, comprising Productivity and Business Processes, Intelligent Cloud, and More Personal Computing, had been in place since 2015.
By the numbers
- $29.42 billion
- Azure quarterly revenue under new definition
- 30 million
- Microsoft 365 Copilot paid seats
- $100 billion
- Azure annual revenue in fiscal 2026
The Agents and Infra segment will consolidate Azure cloud infrastructure, Microsoft 365, GitHub, productivity and server licensing, industry solutions, and frontier and support services. Devices and Consumer will cover search and advertising, Xbox, Windows operating system licences, and device sales.
“There’s no question AI represents a profound shift in both technology and business,” said 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.”
Azure disclosure
For the first time, Microsoft will report Azure revenue figures every quarter, a disclosure investors and analysts have long sought. Under a new, narrower definition that excludes GitHub cloud services, developer cloud services, the Security Copilot assistant, and healthcare and life sciences cloud products, Azure revenue grew 42 per cent to $29.42 billion (about ₹2.5 lakh crore) in the June quarter.
The previous metric, Azure and other cloud services, showed 43 per cent growth for the same period. Azure now represents roughly 33 per cent of the company’s total revenue.
For the fiscal first quarter of 2027, the company guided for Azure revenue growth of 44 to 45 per cent at constant currency. For its two new segments, it projected Agents and Infra revenue of $75.15 billion to $75.75 billion and Devices and Consumer revenue of $14.7 billion to $15.2 billion.
The restructuring brings the company’s advertising businesses together under one segment for the first time. The company said its guidance for total revenue, cost of revenue and operating expenses remains unchanged.
AI expansion
Azure, the company’s cloud computing platform that provides on-demand computing resources and services to businesses, has been central to its AI expansion. The company reported that Azure revenue surpassed $100 billion for the first time in fiscal year 2026, with cloud services growing 43 per cent in the fourth quarter.
Microsoft 365 Copilot, the AI assistant integrated into the company’s productivity suite, had surpassed 30 million paid seats as of the most recent quarter, up from 20 million in April. The growth shows enterprise adoption of generative AI tools for document creation, email management and data analysis.
The company said it is providing two years of recast financial results under the new structure but will stop disclosing costs and operating margins for the three former segments. This change will give investors forward-looking visibility under the new structure while limiting historical comparisons.
For Indian enterprises that rely on Azure for cloud infrastructure and Microsoft 365 for productivity, the restructuring signals the company’s strategic direction. The emphasis on agents, AI systems that can perform tasks autonomously, suggests future product development will centre on automation and intelligent workflows rather than standalone software tools.
The disclosure of standalone Azure revenue will also provide clearer benchmarks for enterprise procurement teams evaluating cloud spending against competitors such as Amazon Web Services and Google Cloud Platform.
Your Questions, Answered
What are Microsoft's new reporting segments?
Microsoft will now report under two segments: Agents and Infra, covering Azure, Microsoft 365, GitHub and enterprise services; and Devices and Consumer, covering search, advertising, Xbox and Windows.
Why is Microsoft changing its reporting structure?
The company says AI is blurring boundaries between its products and reshaping business models, making the previous three-segment structure from 2015 outdated for how it now operates.
How much is Azure revenue under the new definition?
Under the narrower definition excluding GitHub cloud and Security Copilot, Azure revenue grew 42 per cent to $29.42 billion in the June quarter, representing about 33 per cent of total revenue.
How many Microsoft 365 Copilot users are there?
Microsoft 365 Copilot has surpassed 30 million paid seats as of the most recent quarter, up from 20 million in April.
