Satya Nadella says Microsoft Cloud tops $100 billion revenue; analysts ‘unhappy’

Microsoft's cloud business Azure surpassed $100 billion in annual revenue for the first time, according to CEO Satya Nadella during a recent earnings call. However, this significant milestone hasn't satisfied analysts who argue the company's financial reporting still lacks transparency compared to its competitors. In Microsoft's most recent annual report, it only mentioned that Azure and other cloud services revenue increased by 41% for the fiscal year ending June 30, without providing actual dollar figures, comparisons to the previous year, or breakdowns of expenses or profits specific to Azure.

When Nadella revealed Azure's annual revenue had crossed $100 billion on an earnings call, he chose not to break it out separately, instead combining it into a broader category called "Intelligent Cloud" alongside older legacy software products. This practice leaves investors guessing about where legacy revenue ends and Azure's actual growth begins, as opposed to companies like Amazon who report Amazon Web Services separately with detailed sales figures, expenses, and margins.

Microsoft's capital spending numbers also appear inconsistent, with a $115.9 billion figure shown in its cash-flow statement for property and equipment last year, while a separate release reported total capital expenditure of $145.3 billion, including assets acquired through finance leases. The company hasn't provided any explanation reconciling the difference between the two numbers.

The lack of segment-level clarity regarding Azure's financials has major implications for investors trying to understand how Microsoft allocates its massive capital spending, which is mainly funneled into Azure, the platform powering much of today's internet and AI models.