Xbox Q4 revenues flat as hardware drops 13%

Xbox revenues remained relatively flat for the final quarter of Microsoft's financial year, showing a 1% increase for the three months ended June 30.

Microsoft's Q4 results show the company's total revenue was up 8% year-on-year to $56.2 billion, although the More Personal Computing segment (which includes Xbox) saw a 4% decline, dipping to $13.9 billion.

Here's what you need to know:

The numbers

For three months ending June 30, 2023

• Total revenue: $56.2 billion (up 8% year-on-year)
• More Personal Computing revenue (incl. Xbox): $13.9 billion (down 4%)
• Operating income: $24.3 billion (up 18%)
• Net income: $20.1 billion (up 20%)

For fiscal year ending June 30, 2023

• Revenue: $211.9 billion (up 11%)
• Operating income: $88.5 billion (up 6%)
• Net income: $72.4 billion ("decreased slightly")

The highlights

Microsoft reported the 1% increase in its total gaming revenue was lower than expected, with CEO Satya Nadella attributing this to "weakness in first-party and third-party content performance" during an earnings call.

Xbox content and services revenue fared better, growing by 5% thanks to third-party content sales and Xbox Game Pass.

Microsoft reported that this was a record Q4 in terms of monthly active users for Xbox, as well as a record Q4 for Game Pass, where hours played rose by 22%.

However, Xbox console sales enjoyed less success with hardware revenue falling by 13% year-on-year during the three-month period.

Looking forward, Nadella expects gaming revenue growth in mid-single digits, with mid-to-high single digit growth for content and services.

The More Personal Computing segment was actually the lowest revenue generator for Microsoft, outperformed by Productivity and Business Processes ($18.3 billion, up 10% year-on-year) and Intelligent Cloud ($24 billion, up 15%).

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