Microsoft to Disclose Azure Sales After Years of Investor Gripes

Microsoft Corp. will begin disclosing quarterly sales for its Azure cloud unit, reversing course after years of criticism from Wall Street regarding a lack of information about the company’s most important growth engine.

Given Azure’s size and scale, “it feels like the right moment to bring the extra level of transparency,” investor relations chief Jonathan Neilson said in an interview.

The world’s largest software maker has historically shared only a growth rate, rather than revenue, for its Azure business, which sells data storage and software services. This drew the ire of investors and analysts, who wanted a clearer picture of Azure’s performance, which has become a bellwether for the company’s artificial intelligence business.

Microsoft announced the planned accounting change on Wednesday as part of the company’s first major overhaul of its main reporting segments since 2015.

Two reporting buckets — Intelligent Cloud (Azure, server products) and Productivity and Business Processes (Microsoft 365, the old Office suite) — are being collapsed into a single segment called Agents and Infra. More Personal Computing, which includes Windows, search advertising and Xbox, will become Devices and Consumer.

Microsoft is also making a variety of other reporting changes, including grouping much of LinkedIn’s growth with Bing search and other businesses that derive their revenue from ads. The new structure will take effect when Microsoft reports earnings for the first quarter of its fiscal year this fall.

The development of artificial intelligence “is changing what we build and how we operate, and it is blurring the boundaries between our products and reshaping our business models,” Microsoft Chief Executive Officer Satya Nadella said in a note on the reporting changes.

The company has periodically disclosed Azure revenue. Microsoft said the unit passed $100 billion in sales for the fiscal year that ended in June, up from $75 billion in the prior year, and about 30% of total revenue.

Steve Ballmer called for Microsoft to be clearer about cloud sales way back in 2015.

“It’s sort of a key metric,” the former Microsoft CEO and major shareholder told Bloomberg at the time. “If they talk about it as key to the company, they should report it.”