Microsoft discloses Azure revenue and announces reporting overhaul

Microsoft has announced a major overhaul of its financial reporting structure, transitioning from three business segments to two starting in fiscal year 2027. The new segments will be ‘Agents and Infra’ and ‘Devices and Consumer’. This change is intended to better reflect the company’s resource allocation as artificial intelligence becomes a central component of its operations.

As part of this shift, Microsoft disclosed Azure revenue in dollar amounts for the first time. For the fiscal year ending June 2026, Azure generated $101.9 billion in revenue, representing a 40% increase. This figure surpasses the $100.3 billion generated by Microsoft 365 cloud.

The restructuring also retires the ‘Intelligent Cloud’ segment, which previously combined Azure with other services. While the new reporting provides greater transparency for Azure revenue, the previous segment saw its gross margin decline from 64.2% to 57.1% over eight quarters, driven by rising costs for AI infrastructure. Additionally, Microsoft reported a significant increase in cash capital spending, which rose 80% to $115.9 billion.