Microsoft Earnings for FY27 Q1 - Xbox Total Revenue -2%, Content & Services -2%, Hardware -14%

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Link to the VGChartz article here.

Xbox Revenue Declines 2% in September 2026 Quarter, Hardware Revenue Falls 14%

Microsoft has released its earnings report for the first quarter of the 2027 fiscal year, which ended up September 30, 2026.

Total Xbox revenue was $5.38 billion for the quarter, which is down two percent from $5.51 billion in the same period a year ago. This is the fifth quarter in a row Xbox revenue has declined.

Xbox content & services revenue decreased two percent compared to the same quarter a year ago. This is slightly better than the forecast, which expected a decline in the mid single digits percent (-4% to -6%).  This was "driven by declines in third-party content and Xbox Game Pass, partially offset by growth in first-party content."

Xbox hardware revenue dropped 14 percent year-on-year. This is inline with the forecast, which was for a decline. Microsoft did increase the price of the Xbox Series X and S in the US on October 3, 2025, as well as worldwide on August 1, 2026.

Overall for the quarter, Microsoft reported for the quarter revenue was up 19 percent year-over-year to $92.3 billion, operating income increased 21 percent to $45.9 billion, and net income on a GAAP basis was up 32 percent to $36.6 billion.

"We remain focus on building great games and reaching players wherever they choose to play - across console, PC, mobile, and cloud," said Microsoft CEO Satya Nadella.

"Minecraft delivered a record quarter, reaching all-time highs in both engagement and revenue, while World of Warcraft had its largest beta in franchise history.

"We enter the holiday season with one of our strongest first and third-party lineups in years, including Modern Warfare 4, which launched last week to the best reviews for a Call of Duty game in more than a decade, and Grand Theft Auto VI, which is coming to Xbox next month."

Microsoft's forecast for the quarter ending December 31, 2026 expects Xbox content & services to grow in the mid to high single digits percent (4% to 9%) year-on-year "driven by the timing of content launches across both first and third party," said Microsoft CFO Amy Hood. "With content launch patterns through the year we expect growth to be the strongest in the second quarter (October to December 2026) with some deceleration in Q3 and further moderation in Q4." Xbox hardware is expected to decline year-over-year.

Microsoft's forecast for the quarter ending December 31, 2026 expects Xbox content & services to grow in the mid to high single digits percent (4% to 9%) year-on-year "driven by the timing of content launches across both first and third party," said Microsoft CFO Amy Hood.

"With content launch patterns through the year we expect growth to be the strongest in the second quarter (October to December 2026) with some deceleration in Q3 and further moderation in Q4." Xbox hardware is expected to decline year-over-year.

Xbox CEO Asha Sharma stated, "In Q1, XBOX revenue declined 2% YoY, compared with a 10% decline a quarter ago, while our accountability margin improved. Minecraft and WoW Forever set records, Call of Duty had its most acclaimed release in more than a decade, and our PC platform revenue grew double digits.

"Console sales remain constrained by supply, with more demand than consoles available. We’re working to get more consoles into players’ hands, including through our expanded refurbishment program. We’re making progress, with a lot more work ahead."

Last edited by trunkswd - 20 hours ago