During the first quarter of the current financial year, Microsoft's Xbox division experienced a two per cent decline in revenue. Although Xbox content and services remained largely unchanged, hardware sales fell once again.
Microsoft's gaming division generated revenue of $5.508 billion (€4.757 billion) in the first quarter of the 2025 financial year (July to September). This was just under two per cent (three per cent in constant currency) less than in the same quarter of the previous year. Amy Hood (CFO): "Against a strong prior year comparable, Xbox content and services revenue increased 1% and was relatively unchanged in constant currency, driven by better-than-expected performance from third-party content." Revenue from Xbox hardware decreased by 29%, driven by a lower volume of consoles sold.
On the one hand, CEO Satya Nadella highlights Copilot, and on the other, he focuses on the following segment's performance: "In gaming, we expanded our reach across every endpoint, focused on our higher margin content & services. (...) And set a new record for overall content and services revenue for the quarter." They also set a new record for PC players and saw "a great response" to the launch of Xbox Ally. Apart from mentioning the launches of Keeper, Ninja Gaiden 4 and The Outer Worlds 2, which took place outside the reporting period in October, he revealed that they had counted 155 million monthly active Minecraft users - a record high.
The outlook is cautious. Amy Hood: "And in Xbox content and services, we expect revenue to decline in the low to mid-single digits against a prior year comparable that benefited from strong first-party performance, partially offset by growth in subscriptions." The hardware revenue should also decline year-on-year.
The Xbox division, which is part of the "More Personal Computing" overarching division, generated $13.756 billion in revenue. Microsoft's total revenue was $77.673 billion, which is an 18.4% increase compared to the previous year. Net income was $27.747 billion (an increase of 12.5%). Server products and cloud services ($28.872 billion) and Microsoft 365 commercial products and cloud services ($23.966 billion) were once again the highest-grossing divisions.
| Xbox Gaming Revenue | $ (in billions) |
|---|---|
| Q1-24 | 3.919 |
| Q2-24 | 7.111 |
| Q3-24 | 5.451 |
| Q4-24 | 5.022 |
| Fiscal Year 2024 | 21.503 |
| Q1-25 | 5.621 |
| Q2-25 | 6.581 |
| Q3-25 | 5.721 |
| Q4-25 | 5.532 |
| Fiscal Year 2025 | 23.455 |
| Q1-26 | 5.508 |
