Microsoft will reveal three new financial metrics to its investors the next time it releases its quarterly results, the company said on Tuesday.
The most notable of the three is commercial cloud gross margin percentage, which tracks the gross margin on the company’s business-focused cloud products, including Microsoft Azure, Office 365, and Dynamics.
This is a big concession to Microsoft’s investors, notably former CEO Steve Ballmer, who have been calling for more transparency from the company when it comes to its cloud-computing revenue – especially given that Satya Nadella, the current CEO, has pegged so much of the company’s future on strong cloud growth.
Previously, Microsoft had sort of cherry-picked cloud numbers, disclosing information about users, usage, revenue, or margins for some cloud services but not others.
Still, while revealing gross margins is a step in the right direction, Ballmer’s real push was for the company to reveal actual cloud revenue, which he has contended will better help investors judge progress. It looks as if he’ll have to wait a little while longer.
- Jeff Gross/Getty Images
The other two new metrics Microsoft said it would provide are also interesting in their own right:
Gaming revenue: Microsoft has been slowly rethinking its video game business, from a series of products into a cross-platform service between Windows 10 and the Xbox console. While Microsoft no longer discloses sales of the Xbox One, which significantly lags those of the Sony PlayStation 4, it will now share the total revenue from its gaming business, including console sales, game sales, accessories, and the Xbox Live subscription service. Windows Commercial products and cloud services revenue growth: This merely tracks how much more revenue Microsoft has generated from sales of Windows and related tools to businesses this year than the year before. It replaces the previous “Windows volume licensing revenue growth y/y” metric.
On all counts, Microsoft is showing how much things are changing at the company: Instead of tracking how much money they’re making from any one product, Microsoft’s accountants are now looking at the recurring revenue that comes when you shift from boxed software into internet-delivered subscriptions. It’s yet another sign of the new ways Microsoft does business.
In case you were wondering, here are all 20 metrics Microsoft shares with investors, per an updated slide deck uploaded Tuesday: