Microsoft has changed the way it reports its financial results.
The software giant released a regulatory notice on Wednesday announcing the creation of a segment called “Microsoft 365 Commercial Products and Cloud Services” to generate revenue from Office 365 Commercial, the Enterprise Mobility and Security (EMS) line, and the Windows Commercial Cloud.
This results in Microsoft’s “Productivity and Business Processes” segment with four subcategories: M365 Commercial, M365 Consumer, Dynamics and LinkedIn.
The new segments look like this:
Microsoft’s Reporting Segments for 2025 – Click to enlarge
One reason for the change is that all revenue from Copilot Pro was previously attributed to M356 Consumer. This obviously doesn’t make sense at a time when markets are nervous about whether the hyperscalers’ heavy spending on AI infrastructure will pay off.
The shift of EMS and some PowerBI revenue to M365 Commercial also means that Redmond’s Azure revenue reporting will be more aligned with consumption growth.
Some of the changes in this restructuring were made to appropriately reflect Microsoft’s current branding, but this type of change is often made to group revenue streams together so they produce more appealing numbers.
That’s not quite the case here. Forecast quarterly revenue for Microsoft’s Intelligent Cloud segment will fall to $23.8 billion to $24.1 billion from an expected range of $28.6 billion to $28.9 billion, while forecast revenue for More Personal Computing will fall to $12.25 billion to $12.65 billion from an expected range of $14.9 billion to $15.3 billion.
Microsoft has also changed the metrics it offers investors to measure growth:
| Sales growth in Office Commercial products and cloud services | M356 Commercial Cloud Revenue Growth |
| Sales growth in Office consumer products and cloud services | M356 Revenue growth in the consumer cloud sector |
| Growth in Dynamics products and cloud services | Revenue growth with Dynamics 365 |
| Sales growth in server products and cloud services | Revenue growth in Azure and other cloud services |
As you can see from the chart above, Microsoft will no longer use server product growth as a metric for investors. If you needed any more proof that Redmond is now all about the cloud, here it is.
These changes required an adjustment of the forecasts to reflect the new designations as follows:
Microsoft’s new metrics for 2025 – Click to enlarge
Investors may not bother to decipher the above numbers, as Microsoft’s top-line numbers — annual revenue of $245.1 billion and net income of $88 billion, up 16 and 22 percent, respectively — are already telling statements about its performance. In its fourth-quarter and fiscal 2024 results, the software giant also provided a growth forecast of between 10 and 29 percent for its various segments. ®
