(Reuters) – Microsoft on Wednesday overhauled the way it reports financial results for its business units, transferring some search and news advertising revenue to its cloud-computing unit Azure as the tech giant seeks to give investors a clearer picture of the contribution of artificial intelligence.
The company said revenue from the AI and voice technology services offered by the Nuance unit will fall under its Productivity business, home to its Office suite of apps, rather than its Intelligent Cloud division. The reorganization allows Microsoft to align its reporting structure with how it manages its business, the company said.
As a result, the company revised its revenue growth rates for each division from the previous fiscal year and revised its forecast for the July-September quarter.
Big tech companies, including Microsoft and Google, are under pressure from investors to show they will benefit from the billions of dollars they have invested in AI infrastructure.
While most companies have yet to see big incremental benefits from their AI investments, Microsoft is one of the few large companies disclosing AI contributions in its quarterly earnings.
The Windows maker reported last month that AI provided a big boost to Azure in the June quarter, even as its overall business slowed, and Microsoft expects Azure growth to accelerate in the second half of fiscal 2025.
The company now expects first-quarter intelligent cloud sales to be between $23.8 billion and $24.1 billion, up from its previous guidance of $28.6 billion to $28.9 billion.
Personal Computing revenue for the quarter is now expected to be between $12.25 billion and $12.65 billion, down from the company’s earlier guidance of $14.9 billion to $15.3 billion, after the company moved some of its personal computing division into its productivity division.
Productivity and business processes revenues are now expected to be between $27.75 billion and $28.05 billion, compared with $20.3 billion to $20.6 billion previously.
(Reporting by Aditya Soni and Jaspreet Singh in Bengaluru; Editing by Arun Koyyuru)
