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Microsoft's gaming revenues jump in Q4 of FY20 due to ongoing lockdowns

After several flat or down quarters in a row, Xbox content and services revenue up 65%

Original story: Amid stay-at-home orders and higher demand for all sorts of technological services, Microsoft closed its FY20 with continued strength across a number of sectors -- including gaming.

For Q4 ending June 30, 2020, Microsoft's 'More Personal Computing' segment, which includes gaming and a few other categories such as Windows and Surface, the company saw $12.9 billion in revenue -- up 14% year-over-year largely due to the strength of its gaming business.

Overall gaming revenue for the company was up $1.3 billion or 64%, largely driven by Xbox content and services revenue, which made up $1.2 billion of that increase. Per Microsoft, this was primarily due to record engagement and strength of third-party titles amid stay-at-home orders.

The jump in Xbox content and services revenue is a marked difference from previous quarters, with the category's revenue down 3%, steady, down 11%, and up 2% in each of the last four quarters, respectively. This quarter, it was up 65% year-over-year.

It's possible that this is due in part to the category no longer fighting with a "high prior year comparable, primarily from a third-party title" impacting its revenue increase or decrease year-over-year. This line has appeared in financial reports for the last three quarters, but the unknown title no longer appears to have a significant impact on the results.

Xbox hardware revenue was up 49% year-over-year, with Microsoft attributing the rise to an increase in volume of consoles being sold.

In total, for Q4 Microsoft posted $38 billion in revenue, up 13% year-over-year, and $13.4 billion in operating income, up 8% year-over-year. Net income was down 15% year-over-year to $11.2 billion.

For the full year, Microsoft as a whole saw $143 billion in revenue, up 14% year-over-year. Operating income was $53 billion, up 23%, and net income was $44.3 billion, up 13%.

Earlier this month, Microsoft reportedly laid off an unknown numbers of employees across the company as it re-evaluated its business in preparation for the new fiscal year.

Though a Microsoft spokesperson declined to comment on whether this impacted the company's gaming business, it's worth noting that the company also shut down its streaming service, Mixer on July 22.

Update: during today's earnings call, CEO Satya Nadella called Q4 a "breakthrough" quarter for gaming, saying the company saw record engagement and monetization, as well as record subscriber growth on Xbox Game Pass across both console and PC.

He also highlighted Minecraft as a particular driver for the business, noting that it had seen 132 million monthly active users over the quarter.

Looking ahead to Q1 of fiscal 2021, Microsoft anticipates continued growth across the whole business, though slightly more moderated as stay-at-home orders relax.

For gaming, the company looks for revenue growth in the high teens, with "continued strong user engagement."

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