Microsoft gaming revenue up 43% year-on-year due to Activision acquisition
Microsoft noted a "net impact" of the ABK investment, with its Xbox content and services revenue up 61% YoY
Microsoft has released its financial results for Q1 of its fiscal year 2025, showing strong growth over its gaming segments following the Activision acquisition, though Xbox hardware revenue is down.
The numbers
For the three months ended September 30, 2024:
- Revenue: $65.6 billion (up 16% year-on-year)
- Net income: $24.7 billion (up 11% year-on-year)
- More Personal Computing (incl. Xbox) revenue: $13.2 billion (up 17% year-on-year)
The highlights
It's been a positive quarter for Microsoft as a whole, driven by its Cloud and AI services, and a particularly interesting one in its gaming divisions. The company doesn't share exact numbers within its More Personal Computing segment, which includes Xbox, but did share that its gaming revenue as a whole was up 43% year-on-year.
It noted "net impact from the Activision acquisition" on the revenue of its Xbox content and services branch, up 61% year-on-year. Xbox hardware, however, was down 29% compared to the same period last year.
However, CFO Amy Hood noted that results in Microsoft's gaming segment were above its expectations for the quarter due to strong performance in "both first and third-party content as well as consoles."
In the earnings call, CEO Satya Nadella shared that Game Pass set a "new Q1 record for total revenue and average revenue per subscriber," with the successful launch of Call of Duty Black Ops 6 likely continuing to drive these numbers since then as Microsoft said it broke records for Game Pass suscriptions (the title released after the end of Q1 and is not included in these results).
He also commented: "One year since we closed our acquisition of Activision Blizzard King, we are focused on building a business positioned for long-term growth, driven by higher-margin content and services. You already see this transformation in our results, as we diversify the ways that gamers access our content.
"We set new records for monthly active users in the quarter, as more players than ever play our games across devices and on the Xbox platform."
Looking ahead, Microsoft expects its gaming revenue to experience a decline in the "high single digits" for Q2, "due to hardware," and Xbox content and services revenue to be "relatively flat."