How’s the Xbox? Key Takeaways From the Latest Earnings Report

Business is booming at Microsoft, as the company recently posted its first quarter (July to September 2023) 2024 fiscal financial results. While there were some omissions, overall, revenue rose 13% and net income saw a 27% increase thanks in part to Microsoft’s cloud services, OEM revenue, and the division of Xbox recorded the highest Q1 and biggest non-holiday quarter overall.

On the gaming side, Xbox hardware revenue fell 7% despite the launch of a new Xbox Series S console that increased the available storage capacity of that device from 512GB to 1TB. The good news here is that Xbox content and services revenue increased by 13% and overall gaming revenue also increased by 9%. While Game Pass numbers haven’t been shared by Microsoft, it seems the subscription service is still going strong.

The last big update from Microsoft about Game Pass was back in January 2022 when the company announced that it had grown to 25 million subscribers, and in 2023 that saw the launch of games like Starfield, those numbers contributed to Game Pass winnings.

“At launch, we set a record for the most Game Pass subscriptions added in one day,” said Microsoft CEO Satya Nadella (via The Verge) about Starfield’s arrival on that platform. More than 11 million people have played the game so far, and the PC version accounts for almost half an hour spent on Bethesda’s sci-fi adventure.

With Activision Blizzard’s acquisition now closed, Microsoft can also focus on growing the PC Game Pass subscription base as in October Microsoft Gaming CEO Phil Spencer admitted that console subscriptions are starting to slow down. .

Overall, Microsoft generated $56.5 billion in revenue and recorded a net income of $22.3 billion during Q1. Some highlights–and some lowlights–from the financial results include:

  • Windows OEM revenue up 4%
  • Total device revenue fell 22% in Q1
  • Microsoft Office commercial products and cloud services revenue grew 15%
  • Microsoft 365 Consumer subscriptions grew 18% year-over-year, thanks in part to a new $2 per month basic subscription service
  • Microsoft Teams currently has more than 320 million monthly active users
  • Cloud business revenue generated $24.3 billion in revenue this quarter, a 19% increase
  • Revenue from Azure and other cloud services grew 29%

The next couple of months will be interesting for Microsoft following its acquisition of Activision Blizzard. Gaming revenue is expected to increase according to CFO Amy Hood, now that Microsoft owns the Call of Duty franchise and the profitable mobile games developed by King as part of this deal of nearly two year to complete.

Microsoft expects to see a mid-to-high 40% growth in total gaming revenue and a mid-to-high 50% increase in Xbox content and services in the second quarter of 2024. finances.

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