Microsoft has announced a major restructuring of its financial reporting, moving search and news advertising revenue under the Azure cloud computing division. The shift is intended to give investors a clearer view of the contributions of artificial intelligence (AI).
As part of the restructuring, revenue from artificial intelligence and voice technology services, previously part of the intelligent cloud division, will now be reported in the productivity segment. That segment includes the Office suite of applications. The company said the change would better align its reporting structure with the management of its business units.
The restructuring led Microsoft to reassess its revenue growth figures for the previous fiscal year and revise its guidance for the July-September quarter. The company noted that despite an overall slowdown in business, AI significantly boosted Azure’s performance in the June quarter. Microsoft expects Azure growth to accelerate in the second half of fiscal 2025.
Under pressure from investors to prove the return on their massive investments in AI, Microsoft is one of the few major tech companies to detail AI contributions in its quarterly results. Many other companies have yet to see meaningful results from their AI investments.
The tech company now expects intelligent cloud revenue to be in the range of $23.80 billion to $24.10 billion for the next quarter, down from its previous projection of $28.6 billion to $28.9 billion. Quarterly revenue from the personal computing segment is expected to be in the range of $12.25 billion to $12.65 billion, down from its previous estimate of $14.9 billion to $15.3 billion, following the transfer of some units to the productivity division.
On the other hand, revenues from productivity and business processes are expected to be between $27.75 billion and $28.05 billion, an increase from the previous forecast of $20.3 billion to $20.6 billion.
