Microsoft Q1 results: Xbox content offsets 2% revenue dip as hardware falls 14%
Microsoft has exceeded expectations for the first quarter, reporting $92.3 billion in revenue, a 19% increase year-on-year. However, the devices and consumer segment, which includes Xbox, saw a 3% decline, bringing in $15.5 billion.
Within the Xbox content and services division, revenue decreased by 2%, primarily driven by lower performance from third-party content and Game Pass. This decline was partially offset by growth in first-party content. Notably, Minecraft achieved all-time highs in both revenue and player engagement.
Xbox CEO Asha Sharma noted that the 2% revenue decline is an improvement compared to the 10% drop recorded in the previous quarter. Regarding hardware, sales revenue fell by 14%. Sharma attributed the current console sales to supply constraints, stating that demand currently exceeds available stock. To address this, the company is working to increase availability through an expanded refurbishment program.
The company is also undergoing significant restructuring. Following a 20% workforce reduction, additional layoffs are expected in November and January. Earlier this month, up to 60,000 Microsoft employees in the US, UK, Canada, and India were offered voluntary exit packages.
Looking ahead, Microsoft CFO Amy Hood expects Xbox content and services revenue to grow by mid-to-high single digits in Q2, driven by the timing of content launches. Microsoft CEO Satya Nadella emphasized that the company is entering the holiday season with a strong lineup, including the recent release of Call of Duty: Modern Warfare 4 and the upcoming launch of Grand Theft Auto 6 on Xbox next month.
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