Microsoft to Overhaul Financial Reporting Structure for Fiscal 2027

Microsoft Corp. (NASDAQ: MSFT) announced a significant restructuring of its financial reporting structure in a filing released on Wednesday. The company will transition from its current three-reportable segment model to a two-segment framework beginning in fiscal 2027. This change is intended to better reflect the company's operations and resource allocation as artificial intelligence increasingly integrates across its various business units.

The new structure consists of two primary segments: Agents and Infra, and Devices and Consumer. The Agents and Infra segment will combine Microsoft’s enterprise applications and agents, including Microsoft 365 and GitHub, with its Azure infrastructure business. Azure will be positioned to more closely represent the company’s consumption-based platform and infrastructure operations. Within this segment, GitHub cloud services and Security Copilot will move from Azure into the Microsoft 365 commercial cloud.

The Devices and Consumer segment will encompass search and advertising, Xbox, Windows OEM, and devices. Additionally, LinkedIn Marketing Solutions and LinkedIn Premium subscriptions will be included in the search and advertising reporting category.

The overhaul will alter several metrics used to track the company's growth. Microsoft plans to separately disclose revenue growth for Azure, Microsoft 365 commercial cloud, and industry solutions cloud, among other measures. Despite the structural changes, the company maintained its outlook for the fiscal first quarter. Microsoft expects first-quarter revenue to be between $89.85 billion and $90.95 billion. Specifically, Agents and Infra is projected to generate $75.15 billion to $75.75 billion, while Devices and Consumer is expected to bring in $14.7 billion to $15.2 billion.

The company also confirmed its expectations for costs, operating expenses, operating margin, tax rate, and capital expenditures. Microsoft anticipates capital spending to exceed $50 billion during the quarter. The stock was trading at $509.74 at the time of publication, reflecting a gain of 2.60%.