Microsoft Revamps Reporting Structure to Provide Clarity on AI Impact
Microsoft has updated its financial reporting structure to provide more visibility into the impact of AI on its business. AI-related revenue, including Nuance services, will now be reported under the productivity business division, which includes Office apps. This restructure intends to provide a more accurate depiction of AI's impact on business performance, including improved estimates for the next quarters.
In order to provide investors with a more comprehensive understanding of the contributions of artificial intelligence (AI), the technology giant is restructuring its reporting. It is important to note that Microsoft is transferring a portion of its search and news advertising revenue to the Azure cloud computing unit.
Revenue generated from AI and speech technology services, particularly from its Nuance unit, will now be classified under the productivity business division, which is the home of the popular Office suite of applications. The objective of this action is to more accurately represent the organization's management of its diverse enterprises.
Microsoft endeavours to offer a more precise depiction of the influence of AI on its operations by modifying its reporting structure. This restructuring has resulted in revised forecasts for the forthcoming July-September quarter and a restatement of revenue growth figures for the previous fiscal year.
Investors are increasingly pressuring technology giants such as Microsoft and Google to illustrate the returns on their substantial investments in AI infrastructure. Microsoft is one of the few significant companies that discloses AI contributions in their quarterly earnings reports, underscoring the significance of AI in enhancing business performance.
In its most recent financial report, Microsoft disclosed that AI was instrumental in augmenting Azure's performance during the June quarter, despite a general decline in business. Microsoft anticipates a significant increase in Azure's growth during the latter half of fiscal 2025.
Revenue from AI and speech technology services now falls under the productivity business division. Microsoft expects intelligent cloud revenue of US$23.80 billion to US$24.10 billion in the first quarter. Quarterly revenue for the personal computing segment is projected to be between US$12.25 billion and US$12.65 billion. Productivity and business processes revenue are forecasted to range from US$27.75 billion to US$28.05 billion.
Microsoft has revamped its financial reporting structure to offer clearer insights into the impact of AI on its business.
AI-related revenue, including Nuance services, will now be categorised under the productivity business division, home to Office apps.
This restructuring aims to provide a more accurate representation of AI’s influence on business performance, with revised forecasts for upcoming quarters.
Source: REUTERS