Overview
- Xbox hardware revenue fell 29% year over year in Q1 FY26, which Microsoft attributed to lower console volumes.
- Xbox content and services revenue rose 1% on gains in Game Pass and third‑party titles, partially offset by weaker first‑party output versus a strong prior year.
- Total gaming revenue declined by about $113 million, or roughly 2%, for the quarter ended September 30, 2025.
- The quarter sat between May and October console price increases, while the Game Pass price hike began after the quarter and will be reflected in upcoming results.
- Guidance calls for continued hardware declines and a low‑ to mid‑single‑digit drop in content and services next quarter, as ASUS‑made Xbox ROG Ally handheld sales begin to show and Microsoft’s broader revenue and net income rose 18% and 12%.