Microsoft Revamps Segment Reporting Structure for Fiscal Year 2027

Microsoft has announced changes to its segment reporting structure for fiscal year 2027. The company has reorganized its revenue streams and product lines within each of its three primary business segments: Productivity and Business Processes, Intelligent Cloud, and More Personal Computing.

The Intelligent Cloud segment now combines all core cloud platform computing, Azure AI consumption services, and enterprise silicon infrastructure under the Azure & AI Infrastructure category. This change is intended to better reflect how executive management evaluates operations and allocates capital.

The Productivity and Business Processes segment has integrated Copilot subscriptions directly with Microsoft 365 Commercial Cloud revenue streams. Nuance-related specialized vertical AI services have been reallocated to better reflect enterprise workflow offerings in Dynamics 365 and Microsoft 365.

The More Personal Computing segment has refined its reporting around Surface hardware, Windows OEM, and Xbox content and services. Microsoft's FY26 full-year revenue reached $331.8 billion, up 18% year-over-year and 16% in constant currency. The company's commercial remaining performance obligation backlog stood at $678.0 billion at the end of FY26, up 84% year-over-year.

For Q1 FY27, Microsoft projects Intelligent Cloud revenue between $40.95 billion and $41.25 billion, with Azure growth expected to reach approximately 45% in constant currency. The company guided FY27 capital expenditures toward approximately $175 billion, directed at datacenters, networking, and custom silicon to meet demand for AI workloads and Azure capacity.