Microsoft reported its latest quarterly earnings results Wednesday, revealing that gaming revenue decreased $113 million (2%). The tech company attributing the decline to a dip in Xbox hardware sales “offset in part by growth in Xbox content and services.”
Xbox content and services revenue July-September quarter was $5.5 billion, up 1% from the comparable period in 2024.
Per Microsoft, “Xbox hardware revenue decreased 29% driven by lower volume of consoles sold. Xbox content and services revenue increased 1% on a strong prior year comparable with growth in Xbox Game Pass and third-party content, offset in part by a decline in first-party content.”
In the previous reporting quarter, which ran April-June, Xbox sales were down 22%. The next time Microsoft reports earnings, those results should include details on sales for the recently launched handheld devices, ROG Xbox Ally and ROG Xbox Ally X.
For Microsoft’s most recent quarter, which marks its first quarter of its fiscal year 2026, Wall Street forecast earnings per share (EPS) of $3.66 on $75.4 billion in revenue, according to analyst consensus data provided by LSEG. Microsoft reported adjusted EPS of $3.72 on $77.7 billion in revenue.
“Our planet-scale cloud and AI factory, together with Copilots across high value domains, is driving broad diffusion and real-world impact,” Satya Nadella, Microsoft chairman and CEO, said in a letter to shareholders. “It’s why we continue to increase our investments in AI across both capital and talent to meet the massive opportunity ahead.”
“We delivered a strong start to the fiscal year, exceeding expectations across revenue, operating income, and earnings per share,” said Amy Hood, executive vice president and chief financial officer of Microsoft. “Continued strength in the Microsoft Cloud reflects the growing customer demand for our differentiated platform.”
