Xbox hardware sales down 30% during Q3 FY23
Game Pass driving slight increase in content and services revenue for the quarter
Sign up for the GI Daily here to get the biggest news straight to your inbox
Microsoft just released its earnings for the three months ended March 31, 2023 (Q3 FY23), showing a steep decline in hardware sales and a slight dip in total gaming revenues.
Here's what you need to know:
The Q3 numbers
- Microsoft revenue: $52.9 billion (up 7% year-on-year)
- Microsoft net income: $18.3 billion (up 9% year-on-year)
- More Personal Computing (incl. Xbox) revenue: $13.26 billion (down 9% YoY)
- Gaming revenue: Down 4%
- Xbox content and services revenue: Up 3%
- Xbox hardware revenue: Down 30%
The highlights
CEO Satya Nadella shared that revenue from gaming subscriptions reached nearly $1 billion within the quarter, with Game Pass extended to 40 new countries during that period.
He added that the firm has surpassed 500 million lifetime unique users across its first-party titles as well, and that the company has reached record numbers for a Q3 in terms of monthly active users when it comes to gaming.
CFO Amy Hood gave more details on the financial results within the gaming category, saying that the 4% decline in revenue was "ahead of expectations."
"Xbox hardware revenue declined 30% and 28% in constant currency on a high prior year comparable that benefited from increased console supply," she added.
It's worth noting that, in Europe, Xbox Series X and S console sales were down 10% during the first quarter of the calendar year 2023.
As for the slight increase in Xbox content and services revenue, Hood said it was driven by "better-than-expected monetization in third-party and first-party content and growth in Xbox Game Pass."
The 7% growth across the entire company was attributed to Microsoft Cloud in the context of the rise of AI (Microsoft Cloud revenue reached $28.5 billion and was up 22% year-on-year).
Looking ahead, Hood said she expected gaming to grow "in the mid- to high single digits" during Q4, adding: "We expect Xbox content services revenue growth in the low to mid-teens, driven by third-party and first-party content as well as Xbox Game Pass."
Sign up for the GI Daily here to get the biggest news straight to your inbox