Microsoft Xbox Revenue Down 7% in Q4, More Declines

Microsoft’s latest financial filing and earnings remarks point to continuing pressure on the Xbox business, with revenue falling in the most recent quarter and management projecting additional declines into the next reporting period.

Xbox revenue fell in the latest quarter

Microsoft’s 10-K filing reports that Xbox revenue dropped in the fourth quarter by 7%, a decline of $1.7 billion. The company links the decrease to weaker performance across Xbox content and services as well as Xbox hardware.

Xbox content and services revenue decreased by 5%
Xbox hardware revenue decreased by 29%

What Microsoft expects next

During Microsoft’s fourth-quarter earnings conference call, CFO Amy Hood forecast that Xbox revenue would decline “in the mid-single digits” year over year for both content and services, alongside hardware revenue declines.

Microsoft CEO Satya Nadella also framed the results as part of a broader reset, saying Xbox is making “the necessary decisions required across our content portfolio, platform, and operations to reset the business for long-term growth.”

Xbox leadership says growth should return by FY27

Xbox CEO Asha Sharma added perspective in a tweet, pointing to an audience mismatch: she said that in fiscal year 2026, “over 200 million new players came to Xbox and our games,” but Xbox’s business did not grow at the same pace as that player influx.

Sharma said the plan to address the gap involves investing in what players value, adding that the process will take time and that Xbox expects to return to growth by the end of fiscal year 2027.