Microsoft enhances reporting, clarifies AI benefits across units

Microsoft has changed the way its business units report to better show how AI has affected them. They have moved some advertising revenues to Azure and made Nuance’s AI services more in line with productivity.

Microsoft changed how its business units report their findings. Some search and news advertising revenue is now reported by the Azure cloud-computing unit. The tech giant is doing this to give investors a better picture of how AI has helped the company.

Nuance’s AI and speech technology services will now be reported under the company’s productivity business, which is home to the Office suite of apps, instead of its intelligent cloud section.

Microsoft said that the changes will make the reporting system more in line with how its businesses are run. Because of this, the company changed its estimate for the July-September quarter and restated the sales growth at its divisions for the last fiscal year.

Investors want big tech companies like Microsoft and Google to show that the billions of dollars they’ve been putting into AI systems will pay off. Only Microsoft and a few other big companies break down how much AI helped them in their quarterly earnings. This is because most companies haven’t seen a big boost from investing in AI yet.

Last month, Microsoft said that AI gave Azure a bigger boost in the June quarter, even though business as a whole slowed. Microsoft thinks that Azure will grow even faster in the second half of fiscal year 2025. It used to think that intelligent cloud income would be between $28.6 billion and $28.9 billion in the first quarter, but now it thinks it will be between $23.80 billion and $24.10 billion.

The company used to think that its personal computing section would bring in between $14.9 billion and $15.3 billion per quarter, but now it thinks it will bring in between $12.25 billion and $12.65 billion. This is because some units were moved from the business division to the productivity division. It is expected that productivity and business processes will bring in between $27.75 billion and $28.05 billion. This is more than the $20.3 billion to $20.6 billion that was brought in last year.