Microsoft Will Publish Azure’s Quarterly Revenue as It Consolidates Segments

Microsoft will begin publishing quarterly Azure revenue in dollars, giving its cloud platform a direct financial measure for the first time. The company is making that change as it replaces three operating segments with two, centered on Agents and Infra and Devices and Consumer.

A clearer number, with new boundaries

Azure grew 42% year over year to $29.42 billion in Microsoft’s June quarter under the new definition, representing almost 33% of the company’s total revenue. Microsoft expects fiscal first-quarter Azure growth of 44% to 45% at constant currency; that is company guidance, not a reported result.

Microsoft had previously supplied Azure’s growth rate rather than quarterly dollar sales, although it began providing annual Azure sales last year. Amazon has disclosed AWS revenue since 2015, while Alphabet began reporting combined Google Cloud Platform and Workspace revenue in 2020.

The cloud line becomes more narrowly defined

The new Azure line is not the former Azure and other cloud services metric with a dollar label added. Microsoft says the old measure would have risen 43% in the June quarter, compared with 42% for newly defined Azure. The previous fiscal first-quarter outlook was 45% constant-currency growth for the older measure.

What Microsoft is moving around

• Azure will exclude GitHub cloud services, developer cloud services, Security Copilot, and healthcare and life sciences cloud products. Microsoft describes the revised Azure measure as a more purely consumption-based platform and infrastructure business.
• Agents and Infra will include Azure, Microsoft 365 cloud products, productivity and server licensing, industry solutions, and frontier and support services. Devices and Consumer will include search and advertising, Xbox, devices, and Windows licenses sold to device makers.

New revenue buckets, less old-margin detail

Microsoft is targeting $75.15 billion to $75.75 billion in fiscal first-quarter revenue for Agents and Infra, and $14.7 billion to $15.2 billion for Devices and Consumer. It will provide two years of recast results and adjusted guidance, but stop disclosing costs and operating margins for the three former segments.

The new Agents and Infra segment will also contain Microsoft’s commercial Microsoft 365 Copilot and GitHub Copilot offerings. Microsoft said it had more than 30 million paid Microsoft 365 Copilot seats in July, up from more than 20 million in April.