Microsoft to Report Business Under Two Segments From FY27

Microsoft is changing the way it reports its business to investors, moving from three reporting segments to two as artificial intelligence (AI), cloud computing and software become more closely connected.

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The new structure will take effect from the company’s first-quarter results for fiscal 2027.

The company will replace its existing segments — Productivity and Business Processes, Intelligent Cloud, and More Personal Computing — with two new segments: Agents and Infra and Devices and Consumer.

Microsoft said the change is intended to better reflect how the company operates and allocates resources.

Two new reporting segments

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The Agents and Infra segment will bring together businesses including Azure, Microsoft 365 Cloud, server products, industry solutions and enterprise and partner services. It will also include AI-related software and services.

The Devices and Consumer segment will cover Windows, Xbox, search and advertising businesses. Microsoft is also bringing its advertising businesses together under the new structure.

Also Read: Deloitte Launches New AI Practice: What It Means for Future Skills?

Some businesses will be reclassified between the segments. LinkedIn, for example, will be split across the two reporting groups, with LinkedIn Marketing Solutions and LinkedIn Premium Subscriptions moving under Search and Advertising, while LinkedIn Talent Solutions and Sales Solutions will be part of Industry Solutions.

Azure revenue to get more visibility

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One of the biggest changes is that Microsoft will begin providing quarterly revenue figures for Azure. Until now, the company had mainly reported Azure’s year-on-year growth rate rather than its quarterly revenue.

Microsoft said Azure generated $29.4 billion in revenue in its latest quarter and $101.9 billion for fiscal 2026, which ended June 30, 2026. The company’s latest disclosure gives investors a clearer view of the scale of its cloud business as Microsoft competes with Amazon Web Services and Google Cloud.

Microsoft will also change what is included in its Azure reporting. Some revenue previously associated with GitHub and other developer cloud services will move into Microsoft 365 Cloud, giving Azure a narrower focus on its consumption-based cloud infrastructure business.

What it means for the business

Microsoft CEO Satya Nadella said AI is changing both technology and business, including what the company builds and how it operates. He also noted that AI is blurring the boundaries between Microsoft’s products and changing its business models.

The change does not mean Microsoft is creating only two operating divisions or carrying out a company-wide workforce restructuring. It is primarily a change in financial reporting and business classification designed to give investors a clearer picture of how Microsoft’s businesses are organised around its current products and growth areas.

For businesses and HR leaders, the shift is another indication of how AI is affecting the way large technology companies organise products, skills and investments. As AI becomes part of cloud, software, security and workplace tools, traditional boundaries between technology businesses are becoming less distinct.

Microsoft will begin reporting under the new structure with its FY2027 first-quarter earnings, expected in October 2026.