Microsoft earnings report for FY23 Q3 are out. Link to the VGChartz article here.

Xbox Reports 2nd Best March Quarter Ever, Gaming and Hardware Revenue Drops

Microsoft has released its earnings report for the third quarter of the 2023 fiscal year, which ended up March 31, 2023.

Xbox gaming revenue declined four percent year-on-year. This is the second best third quarter (January to March) ever for Xbox, only behind last year.

Xbox content & services revenue increased three percent. This was due in part by "growth in Xbox Game Pass." Xbox hardware revenue decreased 30 percent year-on-year. This was due to a "prior year comparable that benefited from increased console supply."

Xbox gaming and Xbox content & services revenue performed better than what Microsoft forecasted. Xbox gaming was expected to drop in the "high single digits," while it actually dropped in the low single digits. Xbox content & services was expected to decline in the "low single digits," while it ended up seeing growth in the low single digits. There was now forecast for hardware revenue.

Overall, Microsoft reported revenue up seven percent year-over-year to $52.9 billion and net income up nine percent to $18.3 billion.

"The world's most advanced AI models are coming together with the world's most universal user interface - natural language - to create a new era of computing," said Nadella. "Across the Microsoft Cloud, we are the platform of choice to help customers get the most value out of their digital spend and innovate for this next generation of AI."

Microsoft executive vice president and CFO added, "Focused execution by our sales teams and partners in this dynamic environment resulted in Microsoft Cloud revenue of $28.5 billion, up 22% (up 25% in constant currency) year-over-year."

As of right now there are no plans to adjust Xbox estimates following Microsoft's earnings report. Though, we will see what is said during their earnings call. 

VGChartz has Xbox sales down 25% year-on-year, while Microsoft reported hardware revenue down 30%. The Xbox Series S holiday $250 deal was still available through the beginning of the year and Xbox Series X stock has not been good. So the average selling price of the Xbox Series X|S should be lower than a year ago to make up the 5% difference. 

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