Xbox Revenue Slips to $5.38 Billion as Hardware Falls 14%

Microsoft reported results on October 28 for the first quarter of its 2027 fiscal year, covering July through September 2026. The company as a whole grew revenue 19% to $92.3 billion. Xbox shrank.

The Xbox numbers

From Microsoft’s earnings release:

• XBOX revenue: $5,379 million, down from $5,508 million a year earlier (recast), a drop of about 2%.
• XBOX content and services revenue: down 2% (down 1% in constant currency).
• Devices and Consumer segment, which includes Xbox: $15.5 billion, down 3%.

The release doesn’t break out console hardware. Microsoft’s quarterly filing does, and as reported by The Verge and Gaming Route, Xbox hardware revenue fell 14% on lower console sales. Gaming Route reports that the filing attributes the content and services decline to lower third-party content and Game Pass revenue, partly offset by growth in Microsoft’s own games. Microsoft didn’t give a Game Pass subscriber count.

Microsoft recast its prior-year figures this quarter to match the new segments it announced in September, so year-ago comparisons use the recast numbers.

“More demand than consoles available”

Xbox CEO Asha Sharma addressed the hardware drop on X after the results. “Console sales remain constrained by supply, with more demand than consoles available,” she wrote. “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.” The Verge reports Sharma also said Xbox’s PC platform revenue grew by double digits.

What’s next

On the earnings call, CFO Amy Hood said Xbox hardware revenue should decline again year over year this quarter, while content and services should grow in the mid to high single digits, according to The Verge.