● Covered by 1 source · 1 reportMedium impact1 neutral
Microsoft Q4 Earnings: Xbox Revenue Drops 10% While Cloud and AI Business Surges
Key points
- Xbox revenue decreased 10% in Q4, with hardware sales down 13%.
- Microsoft Cloud revenue grew 27% to $59.3 billion.
- Azure revenue surpassed $100 billion for the first time.
- Microsoft 365 Copilot reached over 30 million paid seats.
Xbox Performance Decline
Microsoft's fourth-quarter earnings report revealed a 10% drop in Xbox revenue, encompassing both content and services, including Game Pass subscriptions. Xbox hardware sales also saw a 13% decline during the same period. This follows recent changes within the Xbox division, including layoffs and the spin-off of four game studios.
Strategic Changes in Xbox
Xbox head Asha Sharma initiated a "reset" plan for the division, which involved organizational restructuring. Other changes include lowering Game Pass prices, testing free ad-supported cloud gaming, and making Gears of War: E-Day and Clockwork Revolution Xbox exclusives. Xbox also plans to increase console prices by $100 or more starting August 1st.
Cloud and AI Business Growth
In contrast to the gaming segment, Microsoft's cloud and AI businesses demonstrated strong growth. Microsoft Cloud revenue surged 27% to $59.3 billion, contributing to the company's overall revenue of $90 billion. Azure revenue reached over $100 billion for the first time, indicating significant expansion in its cloud services.
Productivity and Windows Segments
Revenue from Microsoft's productivity business, which includes services like Microsoft 365 and LinkedIn, increased 14% to $37.8 billion. Microsoft 365 Copilot also achieved more than 30 million paid seats. However, the Windows OEM and devices segment decreased by 7%, attributed to lower PC market demand. Microsoft recently unveiled a new Surface device featuring RTX Spark, Nvidia's Arm-based processor, and is implementing updates to Windows 11.
✨ This summary was generated by AI from the outlets' reporting listed below. It is not independently verified and may contain errors — check the original sources. How BrevFeed works →
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Reporting from
Microsoft's fourth-quarter earnings report shows a 10% decline in Xbox revenue, including content, services, and hardware sales. This decline occurred as the company's cloud and AI segments experienced significant growth, with Microsoft Cloud revenue increasing by 27% to $59.3 billion and Azure revenue exceeding $100 billion for the first time. The shift highlights Microsoft's strategic focus on cloud computing and artificial intelligence as key growth drivers, contrasting with challenges in its gaming division.